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Scrutiny????

RAKESH (Almost CA) (2199 Points)

01 February 2010

HI Everyone .

Please help me out. Can anyone just tell me how to calculate Interest U/s., 234B and C in cases where the Income tax officer has made an addition. For Ex. : Total Taxable Income at the original filing time was 6,00,000/- and the case was selected for scrutiny and addition of Rs. 40,000/- was made. At the time of filing assessee paid Rs. 2000 as interest for 234-B and 700/- For Interest 234-C. So now after taking into consideration the addition made by ITO we have to pay interest till date in case of 234B . so how to calculate . does anybody have a calculator for that. Whether 234C will change or not. Please help me out how to calculate or else provide a calculotor.

Thanks

Regards

Rakesh

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18 Replies

Anumanchipalli Sathikonda (Tax Consultant) (1559 Points)
Replied 01 February 2010

Mr.Rakesh You have not mentioned the staus of the assessee. Best Wishes Sathikonda

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Amir (Learner) (4016 Points)
Replied 01 February 2010

Dear Rakesh,

In respect of additions made by AO during assessment,

Interest u/s 234 B shall be levid from first day of the assessment year till the month in which payment of tax is made...

Interest u/s 234 C will not changed unless u have revised ur return...

preeti (student) (143 Points)
Replied 01 February 2010

As per the question asked by Rakesh, the interest calculation will be in the same way as it is calculated originally but this time the total income including the income added in the scrutiny assessment will be taken into consideration for calculating the income tax as well as the interests. And the amount(income tax+interest) already paid as per the return already filed should be deducted from the amount(increased income tax+increased interest) that has to be now paid.

Amir (Learner) (4016 Points)
Replied 01 February 2010

Dear Preeti,

The period for which interest is calculated cannot be same as that of return filed..It has to be calculated from till the date of payment of tax on the additions made.

preeti (student) (143 Points)
Replied 01 February 2010

okay amir u mean to say that the interest has to be paid only on the increased amount as added by the assessment and that too from the date the return has been file right??

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Shiva Kumar (CA Final) (208 Points)
Replied 01 February 2010

Amir is Right,

234C is on returned Income, so irrespective of what assessing officer adds to your tax liability, it will not change. But check the interest computation once.

234B, will change with the Income computed by the Income tax officer. A Draft is Uploaded.

Shiva

Attached File : 21 234b draft.xls downloaded: 361 times

Amir (Learner) (4016 Points)
Replied 01 February 2010

Dear Preeti,

Interest is to be calculatede from first day of Assessment year & not from the date of filing ROI.

To calculate Interest only on the increased amount is basically a shortcut since a calculation on total tax then by deducting the tax paid earlier will lead to the same result..

I hope u r getting what i m saying...

C.Balaji (Learner) (1867 Points)
Replied 01 February 2010

Dear Preeti..

Waht Mr.Amir has said is right....

Interest should be calculated from the 1.4. and not from the date of return filing....

preeti (student) (143 Points)
Replied 01 February 2010

Thanks everybody.

1 Like

preeti (student) (143 Points)
Replied 01 February 2010

i found 2 views to the date from which the date of interest u/s 234B should be calculated-

Mr. Shiva kumar in the xls file has calculated the period starting from the next day on which the self assessment tax was paid.

Mr.Amir has said that the period will start from the start of the relevant assessment year.

Please clarify.

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preeti (student) (143 Points)
Replied 01 February 2010

As per Section 234B, it seems that the date of calcuation of interest on the added income from scrutiny assessment should be from the 1st of april of the relevant assessment year. Please correct me if i m wrong.

C.Balaji (Learner) (1867 Points)
Replied 01 February 2010

Dear Preeti

Int u/s 234 B should be from the 1st of april of the relevant assessment year..... You are correct..... don't get confused....

Shiva Kumar (CA Final) (208 Points)
Replied 01 February 2010

Originally posted by : preeti
	i found 2 views to the date from which the date of interest u/s 234B should be calculated- Mr. Shiva kumar in the xls file has calculated the period starting from the next day on which the self assessment tax was paid. Mr.Amir has said that the period will start from the start of the relevant assessment year. Please clarify.

Preeti,

Why get confused. You have to read 234B and 140A together.

Interest u/s 234B begins from the first day of the Relevant Assessment year. That is what i have also done in my excel sheet.

What I proceeded further was, if the assessee pays a self assessment and that tax is not sufficient enough to cover the tax liability, then, interest will be calculated as follows

1. Interest from 01-Apr-of the relevant assessment year till the date of self assessment tax.

2. Find out shortfall of tax even after Self - assessment tax. For this balance, interest is chargeable from the next on which the self assessment tax is paid till the date of final payment of tax.

Please go through my sheet carefully once again.

Shiva