The Income Tax Appellate Tribunal ( ITAT ) recently held that advance tax under section 234B of income Tax act 1961 is not applicable when entire income is subject to Tax Deduction at Source.
The appeal is filed by the assessee Umaxe Projects Pvt. Ltd upholding the order of Commissioner of Income Tax Appeal that assessee is liable to be charged with interest under section 234B and 234C of the Income Tax Act 1961
Under section 234 B Of the Income Tax Act 1961 provides that if assessee failed to pay advance tax assessee liable to pay an interest of 1% per month.
R.K. Kapoor counsel for assessee contended that when whole income of the assessee was subject to TDS then the provisions of payment of advance tax under section 234B Income Tax Act 1961 are not applicable.
Sunil Kumar Yadav, counsel for revenue, relied upon the orders of authorities below.
After considering the contentions of the both parties the division bench of ITAT comprising Anubhav Sharma, (Judicial Member) and Shamim Yahya (Accountant Member) allow the appeal filed by the assessee and observed that “The payer who was obliged to deduct tax at source and therefore, the assessee was not liable to pay tax and to what extent and require to tax deduct at source as per provisions of the Act, the assessee was not required to pay advance tax.
Further the bench observed that in such circumstances, the assessee was entitled to claim the credit of TDS deducted by the payer. Therefore of the opinion that the interest under section 234B/C Income Tax Act 1961 is not chargeable, if the entire income of the assessee was subjected to TDS.
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