Your APA produced extra income for a year whose advance tax dates passed long ago, and you paid s.234B and s.234C interest on it in the modified return. Can you get it back?
Yes, before this Bench. The Tribunal directed the jurisdictional Assessing Officer to delete the additional s.234B and s.234C interest levied on the income added by the APA and to refund it, and allowed the appeal. It gave that direction in one sentence, as following the precedents placed before it; it did not set out reasoning of its own on the interest question.
Decided by the ITAT (Dr. B.R.R. Kumar, Vice President and T.R. Senthil Kumar, Judicial Member) on 2026-01-29, reported as ITA No. 466/Ahd/2025, assessment year 2016-17; heard 08-01-2026, pronounced 29-01-2026 at Ahmedabad. It bears on section 92CD, section 234B, section 234C, section 115-O, section DTAA art 11 of the Income Tax Act 1961, in Assessment & Scrutiny and Refunds, Interest & Condonation matters.
Every APA with rollback years throws up additional income for years whose instalment dates are long gone, and the modified return computes ss.234B and 234C on the whole figure. This is a direction to delete that interest and refund it, given even though the assessee had computed and paid the interest itself. What it is not is a reasoned decision: the argument that the incremental income crystallised only on signature is counsel's, and the Bench adopted the result without restating the ground for it.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, whose shares were held as to 99.98 per cent by Sophos Limited and 0.02 per cent by Sophos Nominee Limited, both residents of the United Kingdom, entered into an advance pricing agreement with the CBDT signed on 19 August 2019 and filed a modified return under s.92CD on 14 November 2019 declaring total income of Rs 157,70,06,240, paying the additional tax. That figure included incremental income of Rs 8,47,09,100 produced by the APA. In the modified return the assessee itself computed interest under s.234B of Rs 55,60,425 and under s.234C of Rs 19,55,705 on the whole of the income, including the incremental portion, and paid it. The order records that the TPO had made no additions. The lower authorities gave no relief; the CIT(A) had set the issue aside to the Assessing Officer (para 8.1). Five grounds came before the Tribunal: the rate of dividend distribution tax on dividends paid to the United Kingdom shareholders, 10 per cent under Article 11 of the India-United Kingdom treaty as against the 20.36 per cent paid under s.115-O; the s.234B interest; the s.234C interest; short grant of TDS credit of Rs 5,78,321; and the validity of the CIT(A)'s order.
The appeal was allowed (para 12). On the interest grounds the Tribunal's direction is contained in a single sentence at para 9.1: 'Following the above judicial precedents we hereby direct the Ld JAO to delete the levy of additional interest u/s. 234B and 234C of the Act and refund the same as per the provisions of law.' On the dividend distribution tax ground the Assessing Officer was directed to charge DDT at 10 per cent under Article 11 of the India-United Kingdom treaty and to refund the excess, following the Bombay High Court in Colorcon Asia (para 7.4). On TDS credit the Assessing Officer was directed to verify the claim and grant credit as claimed in the modified return (para 10). The ground on the validity of the CIT(A)'s order was dismissed as not requiring separate adjudication in view of the relief granted (para 11).
The Bench states no reasoning of its own on ss.234B and 234C. Para 8 records counsel's submission that the issue is squarely covered by the Delhi Bench in Colt Technology Services (I) Pvt Ltd v. DCIT, ITA No. 536/Del/2015, where the levy of additional interest under ss.234B and 234C on the additional income arising under an APA was held illegal and void and the Assessing Officer was directed to delete it, and lists four further authorities placed by counsel in support. Para 9 is a recital of the assessee's case, in the course of which counsel's argument is set out: that the advance tax instalments were due and payable between April 2015 and March 2016 and the time for filing the original return ran only to 30 November 2016, whereas 'the incremental income got crystallized and determined only pursuant to the signing of the APA on 19-08-2019, which is a subsequent event which could not have been foreseen by the Assessee', so that estimation was impossible and advance tax could not have been paid on the incremental income. That sentence follows the words 'Ld Counsel further submits that' and is the argument, not a finding. Para 9 closes by setting out an extract from Colt Technology Services. The Bench then gives its direction at para 9.1 as following 'the above judicial precedents', without identifying which of them or adopting any particular passage. The crystallisation argument is therefore the argument that succeeded, and is the only articulated basis for the result, but it is counsel's and the Tribunal did not restate it as its own.
we hereby direct the Ld JAO to delete the levy of additional interest u/s. 234B and 234C of the Act
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Handle my notice → Ask a CA on WhatsAppYes, before this Bench. The Tribunal directed the jurisdictional Assessing Officer to delete the additional s.234B and s.234C interest levied on the income added by the APA and to refund it, and allowed the appeal. It gave that direction in one sentence, as following the precedents placed before it; it did not set out reasoning of its own on the interest question. This was decided by the ITAT (Dr. B.R.R. Kumar, Vice President and T.R. Senthil Kumar, Judicial Member) and bears on section 92CD, section 234B, section 234C, section 115-O, section DTAA art 11 of the Income Tax Act 1961. It is reported as ITA No. 466/Ahd/2025, assessment year 2016-17; heard 08-01-2026, pronounced 29-01-2026 at Ahmedabad. Every APA with rollback years throws up additional income for years whose instalment dates are long gone, and the modified return computes ss.234B and 234C on the whole figure. This is a direction to delete that interest and refund it, given even though the assessee had computed and paid the interest itself. What it is not is a reasoned decision: the argument that the incremental income crystallised only on signature is counsel's, and the Bench adopted the result without restating the ground for it. If it applies to you, the first step is this: Separate the incremental income produced by the APA from the income originally returned, and compute the interest referable to each.
The assessee, whose shares were held as to 99.98 per cent by Sophos Limited and 0.02 per cent by Sophos Nominee Limited, both residents of the United Kingdom, entered into an advance pricing agreement with the CBDT signed on 19 August 2019 and filed a modified return under s.92CD on 14 November 2019 declaring total income of Rs 157,70,06,240, paying the additional tax. That figure included incremental income of Rs 8,47,09,100 produced by the APA. In the modified return the assessee itself computed interest under s.234B of Rs 55,60,425 and under s.234C of Rs 19,55,705 on the whole of the income, including the incremental portion, and paid it. The order records that the TPO had made no additions. The lower authorities gave no relief; the CIT(A) had set the issue aside to the Assessing Officer (para 8.1). Five grounds came before the Tribunal: the rate of dividend distribution tax on dividends paid to the United Kingdom shareholders, 10 per cent under Article 11 of the India-United Kingdom treaty as against the 20.36 per cent paid under s.115-O; the s.234B interest; the s.234C interest; short grant of TDS credit of Rs 5,78,321; and the validity of the CIT(A)'s order. The matter was decided on 2026-01-29 by the ITAT (Dr. B.R.R. Kumar, Vice President and T.R. Senthil Kumar, Judicial Member). On those facts the ITAT held as follows. The appeal was allowed (para 12). On the interest grounds the Tribunal's direction is contained in a single sentence at para 9.1: 'Following the above judicial precedents we hereby direct the Ld JAO to delete the levy of additional interest u/s. 234B and 234C of the Act and refund the same as per the provisions of law.' On the dividend distribution tax ground the Assessing Officer was directed to charge DDT at 10 per cent under Article 11 of the India-United Kingdom treaty and to refund the excess, following the Bombay High Court in Colorcon Asia (para 7.4). On TDS credit the Assessing Officer was directed to verify the claim and grant credit as claimed in the modified return (para 10). The ground on the validity of the CIT(A)'s order was dismissed as not requiring separate adjudication in view of the relief granted (para 11).
The Bench states no reasoning of its own on ss.234B and 234C. Para 8 records counsel's submission that the issue is squarely covered by the Delhi Bench in Colt Technology Services (I) Pvt Ltd v. DCIT, ITA No. 536/Del/2015, where the levy of additional interest under ss.234B and 234C on the additional income arising under an APA was held illegal and void and the Assessing Officer was directed to delete it, and lists four further authorities placed by counsel in support. Para 9 is a recital of the assessee's case, in the course of which counsel's argument is set out: that the advance tax instalments were due and payable between April 2015 and March 2016 and the time for filing the original return ran only to 30 November 2016, whereas 'the incremental income got crystallized and determined only pursuant to the signing of the APA on 19-08-2019, which is a subsequent event which could not have been foreseen by the Assessee', so that estimation was impossible and advance tax could not have been paid on the incremental income. That sentence follows the words 'Ld Counsel further submits that' and is the argument, not a finding. Para 9 closes by setting out an extract from Colt Technology Services. The Bench then gives its direction at para 9.1 as following 'the above judicial precedents', without identifying which of them or adopting any particular passage. The crystallisation argument is therefore the argument that succeeded, and is the only articulated basis for the result, but it is counsel's and the Tribunal did not restate it as its own. In the words reproduced by the source cited on this page: "we hereby direct the Ld JAO to delete the levy of additional interest u/s. 234B and 234C of the Act" The decision followed or applied Colt Technology Services (I) Pvt Ltd v. DCIT, ITA No. 536/Del/2015 (ITAT Delhi) — the decision counsel relied on at para 8 and the only authority on the interest question set out and extracted in the order, at the close of para 9; the direction at para 9.1 follows it, though the Bench does not say so in terms; Prime Securities Ltd. v. ACIT, ITA No. 711 of 2004 (Bombay High Court) — in counsel's list at para 8; within the 'above judicial precedents' referred to at para 9.1 but not separately discussed; CIT, Vadodara v. National Dairy Development Board, ITA No. 361 of 2017 (Gujarat High Court) — in counsel's list at para 8; not separately discussed; CIT, Mumbai v. JSW Energy Ltd., ITA No. 1468 of 2013 (Bombay High Court) — in counsel's list at para 8; not separately discussed; FIL India Business & Research Services Pvt. Ltd. v. DCIT, ITA No. 1948/Del/2021 (ITAT Delhi), dated 25 June 2025 — in counsel's list at para 8; not separately discussed; Colorcon Asia Pvt. Ltd. v. JCIT, Tax Appeal No. 5 of 2024 (Bombay High Court), dated 28 November 2025 — expressly followed by the Bench at para 7.4, on the separate dividend distribution tax ground.
It was decided by the ITAT on 2026-01-29 and is reported as ITA No. 466/Ahd/2025, assessment year 2016-17; heard 08-01-2026, pronounced 29-01-2026 at Ahmedabad. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 92CD, section 234B, section 234C, section 115-O, section DTAA art 11, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed (para 12). On the interest grounds the Tribunal's direction is contained in a single sentence at para 9.1: 'Following the above judicial precedents we hereby direct the Ld JAO to delete the levy of additional interest u/s. 234B and 234C of the Act and refund the same as per the provisions of law.' On the dividend distribution tax ground the Assessing Officer was directed to charge DDT at 10 per cent under Article 11 of the India-United Kingdom treaty and to refund the excess, following the Bombay High Court in Colorcon Asia (para 7.4). On TDS credit the Assessing Officer was directed to verify the claim and grant credit as claimed in the modified return (para 10). The ground on the validity of the CIT(A)'s order was dismissed as not requiring separate adjudication in view of the relief granted (para 11). It arises in Assessment & Scrutiny and Refunds, Interest & Condonation matters, on section 92CD, section 234B, section 234C, section 115-O, section DTAA art 11 of the Income Tax Act 1961, and was decided by Dr. B.R.R. Kumar, Vice President and T.R. Senthil Kumar, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Fix the date the APA was signed and show it falls after the advance tax instalment dates and after the due date for the original return for the year. Plead the point in the form counsel pleaded it here: the advance tax instalments fell due before the APA was signed, the incremental income was a subsequent event that could not have been foreseen, and estimation was therefore impossible. Raise it as a ground even where the interest was paid voluntarily in the modified return; it was paid inadvertently here and was still ordered refunded. Ask in terms for deletion and refund, which is the form of the direction at para 9.1. Read Colt Technology Services (ITA No. 536/Del/2015) before you rely on this order, because that is the decision the order rests on and this order does not restate its reasoning.
Searched for later treatment; none was found. That is not the same as a source affirming it. Pronounced 29 January 2026 and too recent for later treatment. Nothing applying, doubting or overruling it was located, and nothing was found about any departmental appeal to the High Court. It is a Tribunal order and binds nobody outside the case. Because the Bench sets out no reasoning of its own on the interest question, what carries forward from it is the result and the precedent it follows, not any analysis it supplies. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order was read to its last paragraph. Take care with what is attributed to the Bench on ss.234B and 234C. The Tribunal's only words of its own on that issue are the single sentence at para 9.1. Paragraph 9 is a recital of the assessee's case: the passage that the incremental income 'got crystallized and determined only pursuant to the signing of the APA', and that the event could not have been foreseen so that advance tax could not have been paid on it, comes after the words 'Ld Counsel further submits that' and is counsel's argument. It is the argument that succeeded, and there is no competing explanation of the result in the order, but it is not the Bench's reasoning and should not be quoted as a holding. The order rests on precedent it does not restate: para 9.1 says only 'Following the above judicial precedents', and the precedents above it are Colt Technology Services, set out and extracted at the close of para 9, together with the four authorities counsel listed at para 8, none of which the Bench discusses or distinguishes. Anyone relying on this order should read Colt Technology Services for the reasoning. Two further points. The extract from Colt Technology Services printed in para 9 is that earlier order's own text, including its record of the submission made in it, and is not this Tribunal's language. The first ground, on dividend distribution tax, was allowed at para 7.4 on the strength of the Bombay High Court in Colorcon Asia; that part of the order is separate from the interest question and rests on a High Court decision the Bench expressly and respectfully followed. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed (para 12). On the interest grounds the Tribunal's direction is contained in a single sentence at para 9.1: 'Following the above judicial precedents we hereby direct the Ld JAO to delete the levy of additional interest u/s. 234B and 234C of the Act and refund the same as per the provisions of law.' On the dividend distribution tax ground the Assessing Officer was directed to charge DDT at 10 per cent under Article 11 of the India-United Kingdom treaty and to refund the excess, following the Bombay High Court in Colorcon Asia (para 7.4). On TDS credit the Assessing Officer was directed to verify the claim and grant credit as claimed in the modified return (para 10). The ground on the validity of the CIT(A)'s order was dismissed as not requiring separate adjudication in view of the relief granted (para 11).
TaxSphere, “Sophos Technologies Pvt Ltd v DCIT”, https://taxnotice.vittsphere.com/caselaw/case/sophos-technologies-no-234b-234c-interest-on-income-crystallising-only-on-the-apa/ (validity last checked 2026-09-16)
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