The Mumbai bench of the Income Tax Appellant Tribunal (ITAT) has held that failure in payment of advance tax towards unexpected income doesn’t attract interest under section 234C(1) of the Income Tax Act,1961 and deleted the demand of interest.
The appellant was represented by Sh. Piyush Chhajed, C. A and the respondent was represented by Sh. Prasoon Kabra.
The assessee, M/s Hamilton Industries Pvt. Ltd filed its return of income u/s 139(1) of the Income Tax Act,1961. Assessee declared a total income of Rs 10, 66, 15,871/- under the normal provisions and Rs 13, 95, 37,529/- under the provisions of MAT. Accordingly, the appellant company had paid taxes with interest under MAT provisions of Rs 2,97,79,541/-.
The assessee paid advance tax on 15-03-2018 and 31-03-2018 for the capital gains that arose on 28-02-2018 and 28-03-2018 respectively. The assessee had applied rectification u/s 154 which was rejected by CPC Bangalore. The appeal before the National Faceless Appeal Centre (NFAC), Delhi was also rejected.
It was established law that provisions of sec 234C are applicable in the case of Income chargeable to tax u/s 115JA/115JB. The provisions of S. 234C (1) regarding payment of interest shall not apply to any shortfall in the payment of the advance tax due on the returned income.
It was observed that when the assessee was not possible to estimate accrual or receipt of income at any time when the payment of the first, second, third or fourth instalment of advance tax then the assessee is not liable to pay advance tax on the respective due dates in respect of such windfall gain.
The Tribunal viewed that if the returned income is higher due to unexpected income received after earlier due dates, the shortfall in payment of advance tax instalment on an earlier date may not attract interest.
Further, observed provisions of S. 234C (1) shall not apply to any shortfall in the payment of the advance tax due on income like windfall gain/unexpected income under other heads of income.
Shri Aby T Varkey, judicial member and Shri Gagan Goyal, accountant member while allowing the appeal filed by the assessee, deleted the interest charged amounting to Rs. 12, 31,304/- u/s. 234C and allowed the ground of appeal raised by the appellant.
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