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Dr. Vinok K. Singhania on the Income-tax Act, 1961
  • Section 234A

    by HIREN on Wednesday, August 12, 2015 at 01:07 PM

    Good Afternoon, My Client has paid Self Assessment tax on 25th March 2014 calculating interest u/s 234A till March 2014 and return was filed on 25th March 2015. Due date for return was 30th September 2013. In Assessment order interest u/s 234A is being charged from October 2013 to March 2015. Please advise the correct provision applicable as per income tax Act, 1961

    Replied byDr. Vinod K SinghaniaTax Management Consultant Date: 17/08/2015

    In the case of CIT v. Pranoy Roy [2009] 179 Taxman 53(SC), the Apex Court held that – 

    a. if self-assessment tax is paid before the due date of submission of return of income
       and return is submitted after the due date, interest under section 234A is not 
       applicable [Case (a)]; and 

    b. if self-assessment tax is paid after the due date of submission of return of income, 
        interest under section 234A is applicable [Case (b)]. 

    However, the Court’s ruling is silent on the point whether in Case (b), interest is payable till the date of payment of self-assessment tax or till the date of submission of return of income. The Court’s ruling gives consideration to the fact that when self-assessment tax is paid before submitting return of income [under Case (a)] interest should not be payable after the deposit of self-assessment tax (there being no loss to the revenue). A similar view should be taken in Case (b) as well. If self-assessment tax is paid after the due date of submission of return of income (assume date of payment is December 20, 2015) and return is submitted belatedly after payment of tax (say, return is submitted on January 20, 2016 for the assessment year 2015-16), interest under section 234A should be payable up to date of payment of self-assessment tax (i.e., up to December 20, 2015).

 
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