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Interest under section 234(b) and (c) of the income tax act

Manian (CM) (209 Points)

15 June 2018

In respect of Assessees whose income is only under Salaries , Department have raised demand by working out Interest under Section 234(b) and (c) without considering the Relief claimed under section 89(1) thru Form-10E. Incidently the relief is allowed by the Department but Interest has been worked out and demand raised.This has happened only in the Assessment Year 2017-18. Why the Department is not taking into account the relief claimed while working out Interest U/S.234(b) & (c)? The TDS from Salaries are regularly paid by the Employer. The Employer is incidently one of the leading Central Public Sector undertaking in the Oil sector .

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2 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (172491 Points)
Replied 15 June 2018

Actually department is right in levy of interest over tax relief claimed for earlier year/s.

Assessee claims that the income should be assessed in that earlier year; so department claims interest over the tax which was required to be paid in that year, but received in current year !!!

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Manian (CM) (209 Points)
Replied 20 June 2018

I agree but I disagree on one thing that u/s.234(b) , Interest is payable only when the Assessee failed to pay Advance Tax or where the Advance Tax paid is less than 90% of the assessed Tax. In the present cases the Relief is not more than 5% of the Assessed Tax for the respective Assessment Years. To my knowledge, Interest u/s. 234(b) & (c) was not levied in case of Relef u/s.89(1) except for the Assessment Year 2017-18. Also Relief u/s.89(1) can be claimed only when Employees were paid the arrears. It is not a fault on Salary People. The arrears arise only out of Seventh Pay Commission of the Government. Who is at fault whether the Public Sector or the poor Assessee.