HM Journal

Section 234B of Income tax Act is for default in payment of advance tax

Facts:

Appellant is revenue department aggrieved that assessee (respondent) failed to pay tax as per section 234B of Income Tax Act. Assessment order was passed against respondent. Respondent went to CIT but CIT dismissed the appeal of respondent. Then Respondent went to ITAT. ITAT held in favour of respondent. High Court also held in favour in respondent. Hence this appeal.

Observation:

We do not find force in the contention of the Revenue that Section 234B should be read in isolation without reference to the other provisions of Chapter XVII. The liability for payment of interest as provided in Section 234B is for default in payment of advance tax.

Section 209 of the Act which relates to the computation of advance tax payable by the assessee cannot be ignored while construing the contents of Section 234B.

Principle:

The amount of income-tax which is deductible or collectible at source can be reduced by the assessee while calculating advance tax and it that case it cannot be held to have defaulted in payment of its advance tax liability.

Judgment:

Appeal filed by revenue dismissed.

Link to the Judgement –

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