Credit of self assessment tax paid can not be denied for charging interest under section 234A

In a recent order, ITAT Ahmedabad has held that the credit of self assessment tax paid which has the same effect as advance tax, and tax deducted or collected at source, can not be denied for the purpose of charging interest upon the assessee under section 234A.

Case Details:
ITA.No.2476/Ahd/2015; Asstt. Year: 2013-2014
Jyotiben Mukundbhai Rana  vs. ITO
Date of Order/Judgment: 01/04/2016

Brief Facts of the Case:
The assessee had filed her return of income for AY 20013-14 on 27.4.2014 wheras the due date of filing of return was 5.8.2013.However, the Assessing Officer (AO) charged interest under section 234A and 234B of the Income Tax Act. The assessee filed an application under section 154 for rectification of the intimation served u/s 143(1) which was rejected by the AO. Dissatisfied with the order of the AO, the assessee carried the matter before the CIT(A).

Before CIT(A), the assessee contended that that Self Assessment Tax of paid on 30.11.2013, 03.01.2014 & 25.03.2014 should be considered while working out the interest payable u/s.234A  in view of the provision of sub-section (2) of section of 234A  which provides that the amount of self-assessment tax paid shall first be adjusted against the interest payable u/s.234A of the Act and balance sum shall be considered to be the amount paid towards the Self Assessment Tax. However, CIT(A) concluded that the provision of section 234A says that

if any return is filed after “due date”, the assesses shall be liable to pay simple interest @ 1% for every month (or part of the month) on the amount of tax determined u/s.l43(l) or determined under regular assessment as reduced by the amount of: –
advance tax
any tax deducted or collected at source

Accordingly, CIT(A) held that the contention of the assessee for reduction of amount of Self Assessment Tax against tax payable was not in accordance with law.

Excerpts from ITAT Judgment:

According to the above finding of the ld. CIT(A), section 234A of the Income Tax Act contemplates reduction of tax amounts on which interest would be charged are of two amounts viz, advance tax, and any tax deducted or collected at source. Though the assessee has not filed the return within due date but she had paid the taxes. The amounts were deposited in Government Treasury. The interest on such taxes collected from the assessee ought to have given. In other words, how the credit of these amounts can be denied for the purpose of charging interest upon the assessee under section 234A. The calculation made by the assessee in her submission, are in accordance with the procedure contemplated in section 234A and 234B. I allow the appeal of the assessee and direct the AO to grant her the credits of the amount claimed in the calculation.

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