Interest under section 234b & c on arrears of salary received.

Department is right in charging interest over late receipt of tax (or TDS) of preceding year in previous year.

Employer may not be at fault always, as he may have to pay additional salary as arrears because of court/commission order. (ordered in previous year)

Employer pays the amount of arrears in previous year with TDS deduction as per the total salary paid in previous year.

But when employee wishes to claim that arrears as of preceding year/s, he has to also pay for the late payment of TDS as the same was supposed to be paid to department in corresponding (preceding year), but paid in previous year.

In future, form 10E may get modified to adjust the interest calculation for the adjustment of salary as arrears of preceding year.

Hope you would have understood the point from department's angle.