In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) held that interest under Section 234C of the Income Tax Act, 1961, should be calculated based on the returned income of the assessee, Goldman Sachs.
In this case, the assessee, Goldman Sachs (India) Securities Pvt. Ltd., raised several grounds in its appeal before the ITAT. One of them was whether the assessing officer (AO) was justified in levying additional interest under Section 234C of the Income Tax Act, 1961, without considering that it should be calculated based on the returned income filed by the Appellant, as per the Act.
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While passing the final assessment order, the AO levied an interest of Rs. 6,93,313 under Section 234C of the Income Tax Act on the assessed income of the assessee.
The counsel on behalf of the assessee submitted that the interest under Section 234C of the Act should be computed on the returned income filed by the assessee instead of assessed income.
The Departmental Representative (DR) strongly contended that the computation made by the AO was correct.
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The ITAT observed that, according to Section 234C of the Income Tax statute, the interest is levied either on failure to pay the advance tax by the assessee or on shortfall in payment of advance tax as compared to tax due on returned income.
The bench further observed that “Thus, it is pertinent to note that section 234C refers to the term “returned income” in comparison to section 234B, which refers to the term “assessed tax” for levying interest.“
Thus, the Mumbai ITAT, comprising Amarjit Singh (Accountant Member) and Sandeep Singh Karhail (Judicial Member), directed the AO to compute the interest under Section 234C of the Income Tax Act on the assessee’s returned income.
The bench allowed the above-mentioned ground for statistical purposes.
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