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Interest U/s 234 C

Rohika PS (student) (263 Points)

04 December 2019

1.whether 234c interest is calculated on returned or assessed income??
2.Please provide case law along with the provision.

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8 Replies

Priyank (CA Final Student) (139 Points)
Replied 04 December 2019

Section 234C of the Income Tax Act, 1961 contains various provisions that are applicable in case of delay in the payment of advance tax by a taxpayer. The tax department expects timely payment of advance tax as per the scheduled four installments i.e. once every quarter of a financial year.

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Rohika PS (student) (263 Points)
Replied 04 December 2019

In case of scrutinies & Assessments intrest u/s 234 c is calculated on the returned income but there is some doubt regarding this

Priyank (CA Final Student) (139 Points)
Replied 04 December 2019

The Income Tax Department wants you to pay your Advance Tax in 4 instalments to ease the burden of tax. These installments must be paid on or before the due date. If you fail to do so, then the tax department can impose interest penalty u/s 234C.

Kapadia Pravin (17264 Points)
Replied 04 December 2019

Interest u/s 234C is to be levied on Assessed or Returned income whichever is less

BNG KUMAR (53 Points)
Replied 04 December 2019

234c is on returned income

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rama krishnan (12244 Points)
Replied 04 December 2019

234c is charged on shortfall in payment of advance tax payments on returned income

Kapadia Pravin (17264 Points)
Replied 05 December 2019

Interest u/s 234C is to be levied on Assessed or Returned income whichever is less

In the case of Abhishek Cotspin Mills Ltd. v ACIT it is held by ITAT Pune that whenever the Assessee declares the returned income which is higher than the actual Asseessed Income, then interest would be charged under section 234C on the assessed Income and In case assessed income is higher than returned Income Than such Interest will be charged on returned Income.

The law is not at all clear regarding the chargeability of interest under section 234C of the I.T. Act in a case where the assessment is completed at a figure below the returned income. Further, the Hon’ble Tribunal observed that, merely because the assessee has declared higher income due to some error or mistake, the assessee shall not be liable to pay interest under section 234C of the I.T. Act on the returned income when the assessed income falls below the returned income.

Accordingly, the impugned order was set aside and AO was directed to re-compute the interest under section 234C of the I.T. Act on the assessed income.
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