INCOME TAX ACT, 1961

Section 234B

Interest under section 234B - Leviability - Non-deduction of tax at source under section 195 -

Assessee sold an immovable property during the year. It admitted capital gain after claiming brokerage, indexed cost of acquisition and cost of improvements on the said sale of the immovable property and filed return of income admitting income, which included interest income. The return was processed by CPC and the assessee paid taxes. It was claim of the assessee that interest under sections 234B and 234C was not chargeable in its case as purchaser of the property ought to have deducted the tax payable on the capital gain arising on transfer of the property. CPC did not agree with the contention of the assessee and charged interest under sections 234B and 234C. On appeal, CIT(A) granted part relief to the assessee to the extent of the interest levied under section 234C and confirmed the interest levied under section 234B. Assessee contended that purchaser of the property should have deducted the entire tax payable by him in view of provisions of section 195. Held: Assessee sold a property and received full consideration. He was aware of the fact that tax had not been deducted under section 195, so, he was required to deposit Advance Tax by 31st March of previous year. Further, the assessee was also aware about the delay in deposit of tax and filing of return and the same could not be shifted to buyer/deductor. The language of section 234B states that interest is chargeable on the shortfall in Advance Tax payment, as reduced by Tax Deducted (and not tax deductible). Hence, the onus was on the assessee to have paid the full amount of tax on or before 31st March. Accordingly, CIT(A) was justified in confirming the interest levied under section 234B.

REFERRED :

FAVOUR : Against the assessee

A.Y. :

SUBSCRIBE FOR FULL CONTENT