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Interest u/s 234b 234c

CS Arjun Rajagopal (B.com, ACS) (1056 Points)

07 September 2015

Our company has nil income and book profit u/s 115jb of Rs. 7,89,883. Our company main business is investment in shares and the whole income was generated on transactions entered after March 15,2015. My question is whether we are supposed to pay interest u/s 234b and 234c. During the period 01.04.2014 - 15.03.2015 we have got nil income. Kindly expedite.

Regards,

Arjun

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8 Replies

Rashi Bajaj (CA) (752 Points)
Replied 07 September 2015

While interest u/s 234C is payable on the returned income, interest u/s 234B is on assessed income.

Since the returned income computed by you for the purpose of Advance tax was NIL, you would not have to pay interest u/s 234C.

However, I am not sure about 234B. In my opinion, there should be no interest considering the nature of your business. But I would appreciate expert views on the same.

CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 07 September 2015

Thanks Rashi for your reply.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 11 September 2015

Hello ,
I am not agree with Rashi ..
Assessee is liable for interest u/s 234B and 234C.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 11 September 2015

HELLO

Kindly refer the case law

Binani Cement Ltd., Kolkata vs Assessee on 27 February, 2015

Rashi Bajaj (CA) (752 Points)
Replied 11 September 2015

I would only partly agree with Vishal. I studied your case law. It has as specific proviso for Interest u/s 234C stating that:

"

Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate--

(a) the amount of capital gains; or

(b) income of the nature referred to in sub-clause (ix) of clause (24) of section 2, and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause (a) or clause (b), as the case may be, had such income been a part of the total income, as part of the1[remaining instalments of advance tax which are due or where no such instalments are due], by the 31st day of March of the financial year:]

"

Although the income earned by the assessee in business income, nevertheless you cannot deny that the nature of such income is "capital gains" and one cannot predict the accrual of such income.

Although, I will have to say that, Such interest would not be payable only if the entire amount of tax was paid by 31-3-2015.

Further, interest u/s 234B has to be calculated after the calculation of interest payable in accordance with sec 234C. Hence, where no interest under section 234C arises, sec 234B interest would also not be attracted.

Therefore, if the assessee has duly paid the Basic Tax on MAt income on or brfore 31-3-2015, no interest under 234 B and C would arise.

Case law for reference: Smt. Premlata Jalani vs Astt. Cit on 27 March, 2002

CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 11 September 2015

In our case we have deposited MAT on June 2015. The shares were sold in between march 16 and mar 31. The whole income was generated after march 15. So can we conclude that we are not liable to pay interest u/s 234B and 234C. Experts views are appreciated on this query.