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Interest u/s 234

TheIneffable (Chartered Accountant MBA aspirant) (60 Points)

18 May 2013

In the case of Ms Laxmi, you are required to compute the interest u/s 234A, 234B & 234C from the following details—

Tax on total income: 2,00,000

Due date for filing the return: 30.09.2013

Actual date of filing the return: 1.10.2014

Tax paid on 30.09.2013: 2,00,000

The tax amount is paid on the due date for filing the return. It doesn't affect the revenue interest of Government.

So is section 234A applicable here?

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7 Replies

CA Dron Bharadwaj (CA in Practice) (250 Points)
Replied 18 May 2013

No interest payable u/s 234A IF the tax was paid on or before the due date of filing of Income Tax Return.

Held in:

CIT v. Dr. Prannoy Roy and Another, 19 DTR 102 (SC)

Ishan kewlani (Article) (172 Points)
Replied 18 May 2013

234A attracted for filing return after due date. So here interest @ 1 % per month payable for 13 months i.e from due date to date of filing the return.

sanjana (article) (80 Points)
Replied 18 May 2013

Interest u/s 234(a) is Rs.0.

Interest will be calculated on the outstanding amount of tax that is to be paid. In this case tax is remitted on due date itself, though belated filing. Hence no tax outstanding as on due date. so intrest is Rs.0

Ishan kewlani (Article) (172 Points)
Replied 18 May 2013

Yes judgement given by court in case of Dr. Prannoy Roy would prevail & no interest would be levied under section 234A. A reference link is provided for above case law. https://www.bcasonline.org/articles/artin.asp?867

TheIneffable (Chartered Accountant MBA aspirant) (60 Points)
Replied 18 May 2013

Absolutely, there must be no interest under section 234A. But in the Direct Taxes ICWAI Inter RTP for June 2013, the following solution is given.

CA Dron Bharadwaj (CA in Practice) (250 Points)
Replied 19 May 2013

The answer given in the RTP issued by ICAI (erstwhile ICWAI) is not in line with the judgement delivered by Hon'ble Supreme Court.

The answer given in the RTP is simply based on the language of Sec 234A and has ignored the various judgements delievered by the Courts.

I suggest that you answer this question in the examination hall as per the RTP (even if this answer is not correct as on date).

Amit Raghav (Internal Auditor) (134 Points)
Replied 19 May 2013

section 234A deals with "Interest for default in furnishing return of income" not payment of Income hence interest shall be payable as per Income Tax Act

However the judgement in case CIT v. Dr. Prannoy Roy and Another, 19 DTR 102 (SC) is reversed

But in case of Examination ans. should be solved as per provision of IT Act but more better understanding releveant case and conclusion should be mentioned at the last of question

CIT v. Dr. Prannoy Roy and Another, 19 DTR 102 (SC)

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