Section 234B

Section 234B — the law in short

What the courts have decided on section 234B, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• DIT v Mitsubishi Corporation Supreme CourtCuts both ways
  My Indian payer did not deduct tax at source and paid me gross. The Assessing Officer says I should have paid advance tax and has charged s.234B interest. Which years can he do that for?
  Only from financial year 2012-13 onwards. The Supreme Court held that for every assessment up to and including financial year 2011-12, s.209(1)(d) entitled the assessee to reduce, in computing its advance tax, the income-tax that WOULD BE deductible at source, even though it had in fact received the full amount without deduction — so no s.234B interest could be charged. The proviso to s.209(1)(d) inserted by the Finance Act 2012 with effect from 1 April 2012 reverses that, and from financial year 2012-13 the assessee cannot reduce tax that the payer failed to deduct.
• JCIT v Rolta India Ltd Supreme CourtHelps department
  My company paid no advance tax because we only knew we would fall under MAT once the accounts were audited — is interest under sections 234B and 234C still chargeable on the tax on book profit?
  Yes. The Supreme Court held on 7 January 2011 that interest under sections 234B and 234C is payable on failure to pay advance tax in respect of tax payable under section 115JA or section 115JB. Neither interest section makes any exception for the minimum alternate tax, and assessed tax means the tax determined on regular assessment, which is the tax determined by applying those provisions. Both sections 115JA and 115JB expressly say that all other provisions of the Act apply to a MAT company, and the Finance Acts provided for advance tax on them. Circular No. 13/2001 therefore has no application.
• CIT v Tulsyan NEC Ltd Supreme CourtHelps taxpayer
  The Assessing Officer computed interest under s.234B and s.234C first and only then gave me credit for MAT under s.115JAA. My refund has turned into a demand. Is that the right order?
  No. MAT credit admissible under s.115JAA must be set off against the tax payable before interest under s.234B and s.234C is calculated, not after. The right to the set-off crystallises when the tax under s.115JA (now s.115JB) is paid and does not depend on any determination by the Assessing Officer, so an assessee may take the credit into account even when estimating advance tax on its current income.
• Brij Lal v CIT Supreme CourtCuts both ways
  My settlement application was admitted years before the Commission passed its final order — can it charge me section 234B interest for that whole period, and reopen the settled order later to add interest it forgot?
  No to both. A Constitution Bench of the Supreme Court held on 21 October 2010 that sections 234A, 234B and 234C do apply to Settlement Commission proceedings, but only up to the order admitting the case under section 245D(1). Parliament did not extend the liability beyond the date of the settlement application, so no interest runs between admission and the final order under section 245D(4). Hindustan Bulk Carrier, which had taken the section 245D(4) date as the terminus, does not survive on that point. And the Commission cannot reopen its concluded proceedings under section 154 to levy interest it did not levy at the time, section 245I making its order final.
• CIT v Hindustan Bulk Carriers Supreme CourtHelps departmentPartly overruled — read this first
  I went to the Settlement Commission. Up to what date can section 234B interest be charged on the income I disclosed there?
  Up to the date of the Commission's order under section 245D(4), the Supreme Court held. Interest under section 234B runs from 1 April following the relevant financial year to the date of that order, and is charged on the consolidated income, that is the income already returned plus the income disclosed before the Commission. The Special Bench of the Commission had fixed different end points depending on whether a regular assessment or a reassessment had been made; that view was rejected. After the Commission acts under section 245D, the separate interest under that section takes over. The Revenue's appeals were allowed.
• CIT v Anjum M.H. Ghaswala Supreme CourtHelps department
  Can interest under ss.234A, 234B and 234C be waived?
  Not by the authority hearing your case. The levy is mandatory and automatic, and even the Settlement Commission cannot reduce or waive it. The only route to relief is a CBDT circular issued under s.119.
• Xiaomi Technology India Private Limited v DCIT High CourtHelps taxpayer
  The Assessing Officer has provisionally attached our deposits under s.281B saying a large demand is likely. Is an expected demand enough?
  No. A mere apprehension that huge tax demands are likely to be raised on completion of assessment is not enough. The officer must record his own formation of opinion, on tangible material, that the assessee is likely to defeat the demand and that attachment is necessary - not merely expedient - to protect the revenue, and the attachment must be proportionate. An order resting on the Investigation Wing's and the Transfer Pricing Officer's findings is borrowed satisfaction, and the Principal Commissioner's approval is not an empty formality.
• M/s Gie Jewells v PCIT High CourtHelps departmentNo later treatment found
  My client is a firm, not a company. It paid alternate minimum tax under s.115JC when it filed its return, along with the accountant's report. The Assessing Officer has charged interest under s.234B for not paying that tax as advance tax. Can advance tax provisions apply to AMT?
  Yes, on this Court's view. The Rajasthan High Court dismissed the assessee's appeals, holding that having retained the amount which was supposed to be paid under s.115JC, s.234B was rightly invoked, and that no substantial question of law arose from the Tribunal's treatment of s.115JC on the same footing as s.115JA and s.115JB for the purpose of the advance-tax obligation under s.208.
• Nortel Networks India International Inc v DIT High CourtHelps taxpayer
  The Assessing Officer says my Indian subsidiary is my alter ego, so the whole turnkey contract is taxable here. Does an alter-ego finding by itself make offshore supply income taxable in India?
  No. The Delhi High Court held that even if the assessee were treated as an alter ego of the group, no part of the consideration for equipment manufactured and delivered outside India was chargeable in India. Clause (a) of Explanation 1 to section 9(1)(i) embodies a principle of apportionment, so only income reasonably attributable to operations carried out in India is taxable, and the equipment passed to the buyer abroad on FCA terms. There was no material that the Indian entity habitually concluded contracts for the assessee or held stock for delivery on its behalf, so the dependent agent Explanations were not satisfied. The appeals were allowed.
• DIT (International Taxation) v. GE Packaged Power Inc. — filing a NIL return at reassessment does not make a non-resident liable to s.234B interest for a pre-2012 year High CourtHelps taxpayer
  My non-resident client filed a NIL return after a s.148 notice, the Assessing Officer found a permanent establishment and charged s.234B interest for years before 2012. Does the fact that he denied taxability defeat the s.209(1)(d) argument?
  The Delhi High Court held that it does not. For assessment years before the Finance Act, 2012 proviso, s.209(1)(d) allowed the non-resident to reduce his advance tax by the tax that was deductible at source from the remittances, whether or not it was actually deducted, so no advance tax was payable and no s.234B interest could be charged — and the Court held that this remained so 'even though they filed returns declaring NIL income at the stage of reassessment'. It read the earlier decision in DIT v. Alcatel Lucent USA Inc. as turning on that assessee's initial denial of permanent establishment status followed by its volte face admitting it, not on the mere filing of a NIL return.
• CIT, Agra v M/s Oswal Exports High CourtHelps taxpayerNo later treatment found
  My assessment order just says 'interest will be charged as per rules'. It never names s.234A, s.234B or s.234C. Is that enough to levy the interest?
  The Allahabad High Court held it is not. The direction must be specific and clear, so that the assessee knows the Assessing Officer applied his mind and ordered interest under a particular section; a general direction to charge interest as per rules or as per law is not a specific order and no interest can be levied on it. The Court expressly considered the Supreme Court's order in Karanvir Singh Gossal and held that it does not displace this requirement.
• CIT-II v SAB Industries High CourtHelps taxpayerNo later treatment found
  A retrospective amendment has taken away the deduction I claimed, and the Assessing Officer has charged s.234B interest on the resulting tax. Must I pay the interest as well as the tax?
  The Punjab & Haryana High Court held not. Where the claim was made before the amendment and the amendment came into force later with retrospective effect, the assessee could not have been expected to know on the relevant date that the claim would be unavailable; he is liable for the tax by reason of the retrospective amendment, but he cannot be held liable for interest.
• DIT v Ericsson AB High CourtHelps taxpayer
  We import telecom equipment that comes with embedded software, and the department wants to tax the software portion as royalty — is that right?
  No. The Delhi High Court dismissed the Revenue's appeals on 23 December 2011, holding the consideration for the supply was not royalty. Property in the goods and the risk both passed outside India, so no taxable event occurred here, and the fact that the contract was signed in India was irrelevant. Hardware and software supplied as one piece of equipment could not be split for section 9(1)(vi). Since the payment was not royalty, the Explanation below section 9 inserted by the Finance Act 2010 had no application at all. Interest under section 234B was also deleted, tax being deductible at source on the income chargeable in India.
• Asia Satellite Telecommunications Co Ltd v DIT High CourtHelps taxpayerSuperseded by amendment
  We pay a foreign satellite operator for transponder capacity, and the satellite is nowhere near India — is that payment royalty taxable in India?
  No, on the reasoning of this judgment. The Delhi High Court held on 31 January 2011 that a customer buying transponder capacity uses neither equipment nor a process belonging to the satellite operator. A transponder cannot function apart from the satellite — it depends on the satellite's power, antennae, positioning, temperature control and tracking — so it is not equipment capable of being handed over, and control never leaves the operator. The labels lease, lessor and rental in the agreement are not determinative; the substance is that the customer is given access to bandwidth while the operator performs the process. There was accordingly no use of a process by the TV channels.
• Utkal Galvanizers P. Ltd. v ACIT High CourtHelps taxpayer
  The Assessing Officer has issued a section 154 notice on an item my CIT(A) appeal already dealt with. Can he do that?
  No. The Orissa High Court held that the scope of s.154(1A) is limited to mistakes apparent from the record and does not include a power to revise, review or reappraise the officer's own order, and that letting him rectify a matter already carried in appeal would let him override the appellate order. If the Revenue was dissatisfied with the CIT(A) it had to file a second appeal to the Tribunal.
• CIT v Smt. Premlata Jalani High CourtHelps taxpayer
  My capital gain arose after 15 March, so I could not have paid advance tax on it in any instalment. The Assessing Officer has charged s.234C interest from the first instalment date. Can he?
  No. The Rajasthan High Court held that the liability to pay advance tax on a capital gain arises only once the gain has accrued, so interest under s.234C on the shortfall attributable to that gain can run only from the date the advance tax on it became payable, and not from any earlier instalment date. Where the gain arose after 15 March, the proviso required only that the tax be paid by 31 March, and interest ran for that period alone.
• Dr. Prannoy Roy v CIT High CourtHelps taxpayer
  I paid the whole tax before the due date but filed the return eleven months late. The Assessing Officer has still charged interest under s.234A. Can he?
  No, not on tax already in the Revenue's hands before the due date. The Delhi High Court held that s.234A creates a compensatory levy, not a penalty, so where the tax was deposited before the due date of filing the return the Revenue has suffered no loss and no interest under s.234A is payable; interest runs only on tax not deposited before that date.
• Pascal Postel v DDIT (Inv.) ITATHelps taxpayerNo later treatment found
  The officer has charged interest under s.40 of the Black Money Act on top of the tax. Is there any machinery for it, and can I still fight the quantum in the appeal against the rectification order?
  Interest under s.40(2) was held unworkable, because the advance-tax machinery on which ss.234B and 234C of the Income-tax Act operate is absent from the Black Money Act, so there is no statutory liability to pay advance tax on which the interest can bite. Interest under s.40(1) was held not to arise where the foreign source itself was disclosed, the expression 'not disclosed' meaning complete suppression of the source and not a difference in the quantum assessed. On the procedural point, where an assessment order under s.10 is altered by a rectification order under s.12, the two are read together as one composite order, so the appeal against the rectified order carries the underlying quantum with it.
• Saguna Rural Foundation v Exemption Ward 2(3), Mumbai ITATHelps taxpayerNo later treatment found
  CPC denied my s.11(2) accumulation because Form 10 was filed after the s.139(1) due date, and the CIT(A) said s.13(9) settles it. Can the Tribunal still help me?
  Yes. Following the jurisdictional High Court in CIT v Sakal Relief Fund, the Mumbai Tribunal held that filing Form No. 10 before completion of assessment satisfies s.11(2), so a s.143(1) denial founded only on the s.139(1) due date cannot stand. The matter was restored to the Assessing Officer for the limited purpose of checking that the stated purpose of accumulation matches the objects and is backed by a trustees' resolution, with an express direction not to deny exemption on merely technical grounds.
• CDO Jain Education Society v ACIT (CPC) ITATHelps taxpayerNo later treatment found
  My institution filed its audit report on time but in Form 10B when Form 10BB was the right form, and the CPC has denied the exemption and raised a demand on the gross receipts. Is filing the wrong audit form fatal?
  No. Where the accounts were in fact audited by a chartered accountant and an audit report was uploaded within time, the choice of the wrong form is a procedural lapse and not a failure of the substantive condition, and exemption cannot be denied on that ground alone. The Tribunal set aside the appellate order and directed the Assessing Officer to verify substantive compliance and, if satisfied, to condone the procedural lapse, allow the exemption and reduce the demand to nil.
• Ashokkumar Gokulchand Sananda v ACIT, Akola Circle ITATHelps taxpayerNo later treatment found
  The CBDT cancelled my donee's s.35(1)(ii) approval with retrospective effect two years after I donated, and the reassessment has taken away my 175 per cent weighted deduction and added a notional commission. Does the deduction survive?
  Yes, on these facts. The Explanation in s.35(1) says in terms that the deduction shall not be denied merely because the approval granted to the institution has been withdrawn after the payment, so a retrospective cancellation is by itself no ground for disallowance. A general Investigation Wing report about the donee, never furnished to the donor and never linked to his particular transaction, will not carry the disallowance either, and the consequential s.69C commission addition falls with it.
• Sophos Technologies Pvt Ltd v DCIT ITATHelps taxpayerNo later treatment found
  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.
• Ravi Ramakrishnan v ITO (International Taxation) — the section 56(2)(vii)(b) addition must be added back as cost under section 49(4), even though it was never claimed in the return ITATHelps taxpayerNo later treatment found
  The DRP has refused my client's alternative plea for the section 49(4) cost step-up because it was not made in the return, citing Goetze. Is that the end of it?
  No. The Tribunal directed the Assessing Officer to recompute the capital gain in accordance with section 49(4), notwithstanding that the DRP had rejected the same plea on the footing that additional cost of acquisition could only be claimed through the return of income. Where the officer has taken a particular value into account for the section 56(2)(vii)(b) addition, that value is the deemed cost of acquisition and the capital gain must be recomputed on it.
• Sarvajanik Seva Trust v DCIT ITATHelps taxpayer
  The CPC has processed my trust's return at the maximum marginal rate, saying s.115TD applies. But the trust gave up its registration back in March 2015. Can s.115TD reach it at all?
  Not on those facts. Section 115TD was inserted by the Finance Act 2016; the order records it as taking effect from 1 June 2016 in one place and from assessment year 2016-17 in another. On either date, where the trust's registration had already ceased with effect from 20 March 2015 there was no registered trust for the section to bite on, and the total income had to be charged at the slab rates and not at the maximum marginal rate.
• Investcorp Real Estate Yield Fund v ITO — an AIF assessed as a representative assessee under s.160(1)(iv) read with s.164(1) gets credit for advance tax and TDS paid under its beneficiaries' PANs ITATCuts both waysNo later treatment found
  Our fund is a SEBI-registered AIF trust that offers the whole of its income as a representative assessee. Part of the year's advance tax and TDS went in under the beneficiaries' PANs and part under the fund's own. The CPC has refused the beneficiary-PAN credits. Can the fund claim them?
  Yes, on these facts. The Mumbai Tribunal upheld the appellate finding that because the corresponding income had been offered by the trust in its capacity as representative assessee within the meaning of section 160(1)(iv) read with section 164(1), the trust deserved the credit for the advance tax and the tax deducted at source as claimed in its return, including the advance tax of Rs.2,84,60,753 paid under the beneficiaries' permanent account numbers and the TDS of Rs.65,57,000 that had been disallowed. The Assessing Officer was directed, while allowing those credits, to ensure that no similar credit was availed by the beneficiaries. The assessee's appeal — which was against that anti-duplication direction and against the interest under sections 234B and 234C — was dismissed.
• Computer Modelling Group Ltd. v. ACIT — for a year after 1 April 2012, the proviso to s.209(1)(d) is not attracted where tax was in fact deducted at source ITATHelps taxpayerNo later treatment found
  My non-resident client's Indian customers did deduct tax at source, but the Assessing Officer has still charged s.234B interest for an assessment year after 2012-13, saying the Finance Act, 2012 proviso removes the s.209(1)(d) credit. Is that right?
  No. The Delhi Tribunal held that the proviso inserted in s.209(1)(d) by the Finance Act, 2012 with effect from 1 April 2012 'would apply only in a scenario where person responsible for deducting tax has paid or credited such income without deduction of tax', and that where the income was received by the assessee after deduction of tax at source the proviso is not applicable. Reading s.209(1)(d) with its proviso, it held that where in the case of a non-resident company the tax deductible at source has been paid, it is not permissible for the Revenue to charge interest under s.234B for an alleged failure to pay advance tax, and it allowed the ground for both assessment year 2012-13 and assessment year 2019-20.
• Prashant Vijay Kale v CPC, Bengaluru ITATHelps taxpayerNo later treatment found
  I filed my return on time and then revised it. CPC has ignored the original, treated the revised return as my first return, and charged s.234F fee and s.234A interest. Can that be undone?
  Yes. The Mumbai Bench found that the original return had been filed within the s.139(1) due date and that CPC and the CIT(A) had simply ignored it, and deleted both the Rs 5,000 fee under s.234F and the interest under s.234A charged on the footing that the revised return's date was the date of filing. Revising a return does not make a timely return late.
• Technopolis Premises Co-operative Society Ltd v Pr. CIT — s.80P is expressly carved out of the AMT add-back ITATHelps taxpayerNo later treatment found
  The Commissioner has revised my co-operative society's assessment under s.263 because AMT on adjusted total income came out higher than the normal tax. The department's working grossed up my total income by the s.80P deduction. Is that right?
  It is not. Clause (i) of s.115JC(2) requires total income to be increased by deductions claimed under any section "other than section 80P" included in Chapter VI-A under heading C. The Assessing Officer's internal working had added back the s.80P deduction of Rs.56,16,242, producing an adjusted total income of Rs.1,13,55,916 instead of the correct Rs.57,39,674; on the correct figure the AMT was lower than the normal tax, so there was no prejudice to the Revenue and no ground for revision.
• Swayam Prabha Jain v ACIT ITATHelps taxpayerSuperseded by amendment
  My tenant deposited the disputed rent in court and the TDS was deducted then, but the money only reached me two years later when the suit was settled. The officer has taxed it in the earlier year. Which year is it taxable in, and what happens to the TDS credit?
  The rent is taxable in the year it is actually received, not the year it was deposited in court, and the addition made in the earlier year was deleted. The TDS, however, does not simply follow the money: under Rule 37BA(3)(ii) the credit is allowed across the years in the same proportion in which the income is assessable, so the officer was directed to give proportionate credit in both years.
• ITO v Karanvir Singh Gossal (on remand from the Supreme Court) ITATHelps departmentNo later treatment found
  My assessment order under s.143(3) says nothing at all about interest, but Form ITNS 150 issued the same day charges s.234B and s.234C interest. Is the levy good?
  On these facts the Tribunal upheld it. Following the Supreme Court's own order in the assessee's case (Civil Appeal No. 1937 of 2007, judgment dated 6 September 2012), it held that where interest is leviable under s.234B or s.234C the levy is mandatory and compensatory in nature, and that the assessee's remedy is not to resist the charge but to apply to the Chief Commissioner for waiver or reduction under the Board's circular.
• Vinitkumar Raghavjibhai Bhalodia v ITO — a gift by an HUF to its member is a gift from 'relatives', and is in any event exempt under section 10(2) ITATHelps taxpayer
  My client received Rs 60 lakh from his own HUF. The Assessing Officer says an HUF is not a 'relative' in the Explanation, so it is taxable. What is the answer?
  There are two answers and the Rajkot Bench gave both. First, an HUF is not a body of individuals but 'a group of relatives' — every person who composes it falls within the Explanation's list — so a gift from the HUF to a member is a gift from relatives and is outside the charge. Second and independently, a sum received by a member out of the income of the family is exempt under section 10(2), which requires only that he is a member and that the sum came out of the income of the family.
• Statutory position — ss.207(1) and 208: who has to pay advance tax at all, and the ten thousand rupee threshold CBDT Circulars & InstructionsCuts both ways
  The notice charges me interest under s.234B for not paying advance tax. Before I argue about the computation, was I even liable to pay advance tax in the first place?
  Two conditions have to be satisfied before any advance tax liability arises. Section 207(1) makes tax payable in advance during a financial year, in accordance with ss.208 to 219, in respect of the total income of the assessee which would be chargeable for the assessment year immediately following that financial year — that income being called the "current income"; and s.208 then says advance tax shall be payable during a financial year only in every case where the amount of such tax payable by the assessee during that year, computed in accordance with Chapter XVII-C, is ten thousand rupees or more.
• Statutory position — ss.215, 216 and 217: the advance tax interest scheme that ran before s.234B and s.234C, and the s.215(4) waiver power CBDT Circulars & InstructionsCuts both waysNo later treatment found
  I am defending an old assessment year, or a reassessment for one, and the order charges interest under s.215 or s.217 rather than s.234B. What do those sections actually require, and can the interest be waived?
  Sections 215, 216 and 217 are the interest provisions that preceded s.234B and s.234C, and they are all keyed to estimates under s.209A or s.212 — both of which were omitted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1 April 1988, while s.234C(2) provides that s.234C applies to assessments for the assessment year commencing on 1 April 1989 and subsequent years. Section 215(1) charges simple interest at fifteen per cent per annum where advance tax paid on the assessee's own estimate is less than seventy-five per cent of the assessed tax (eighty-three and one-third per cent for a company), from 1 April following the financial year to the date of the regular assessment; s.216 charges interest at the same rate where the assessee under-estimated and thereby reduced either of the first two instalments, or wrongly deferred payment under s.213; and s.217 charges it where no statement or estimate was sent at all. Section 215(4) — applied to s.217 by s.217(2) — gives the Assessing Officer power to 'reduce or waive the interest payable by the assessee under this section' in such cases and circumstances as may be prescribed.
• Section 84 of the Black Money Act - the Income-tax Act provisions applied CBDT Circulars & InstructionsCuts both waysNo later treatment found
  Which provisions of the Income-tax Act apply to the Black Money Act, and can the officer borrow one that is not on the list?
  Section 84 applies a closed list: clauses (c) and (d) of s.90(1), clauses (c) and (d) of s.90A(1), ss.119, 133, 134, 135 and 138, the whole of Chapter XV, and ss.237, 240, 245, 280, 280A, 280B, 280D, 281, 281B and 284 of the Income-tax Act, with necessary modifications, as if they referred to undisclosed foreign income and asset instead of to income-tax. The list is expressed as an enumeration and the decided points located in this area turn on what is left out of it. Sections 234A, 234B and 234C are not on it, which is why the Chennai Bench in Pascal Postel held that the interest charge in s.40(2) has no advance-tax machinery to operate on; s.230 is not on it either, which is the omission on which Preetha Krishna (Madras High Court) is understood to turn, though no copy of that judgment was opened for this note.
• Statutory position — s.207(2): a resident individual of sixty or more with no business income is outside advance tax altogether CBDT Circulars & InstructionsCuts both ways
  My client is 71, resident, retired, and lives on pension, interest and capital gains. The CPC intimation charges her interest under s.234B and s.234C. Is she liable to advance tax at all?
  No. Section 207(2) says in terms that the provisions of sub-section (1) shall not apply to an individual resident in India who (a) does not have any income chargeable under the head 'Profits and gains of business or profession' and (b) is of the age of sixty years or more at any time during the previous year. Once s.207(1) does not apply, there is no advance tax liability to default on, and s.234B and s.234C — which both operate on an assessee liable to pay advance tax under s.208 — have nothing to attach to.
• Statutory position — s.209(1)(d) and its proviso: credit against advance tax for tax deductible but not actually deducted CBDT Circulars & InstructionsCuts both ways
  My client is a payee whose income should have suffered TDS but the payer deducted nothing. Can he still reduce his advance tax by that tax when computing his liability, and does it matter which year it is?
  It depends entirely on which side of 1 April 2012 the financial year falls. Clause (d) of s.209(1) reduces the income-tax computed under clause (a), (b) or (c) by 'the amount of income-tax which would be deductible or collectible at source during the said financial year' on income taken into account in the computation — words wide enough to cover tax that was deductible but never deducted; but the proviso inserted in clause (d) by s.83 of the Finance Act, 2012 removes that reduction where 'the person responsible for deducting tax has paid or credited such income without deduction of tax', so from the financial year 2012-13 onwards a payee who was in fact paid gross cannot use the deductible-but-not-deducted amount to wipe out his advance tax.
• Statutory position — s.234D: interest on a refund granted under s.143(1) that regular assessment shows should not have been granted — the rate, the period, the reduction under sub-section (2), and Explanation 2 for assessment years commencing before 1 June 2003 CBDT Circulars & InstructionsCuts both ways
  We were given a refund when the return was processed under s.143(1). On scrutiny the Assessing Officer has now raised a demand and has also charged interest under s.234D on the refund. Is that right, for how long does the interest run, and can he do it for an assessment year that is older than the section itself?
  Yes, on the conditions in sub-section (1). Section 234D charges simple interest where a refund is granted to the assessee under s.143(1) and either (a) no refund is due on regular assessment, or (b) the amount refunded under s.143(1) exceeds the amount refundable on regular assessment. The rate is one-half per cent, on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. The section was inserted by the Finance Act, 2003 with effect from 1 June 2003, and the words "one-half per cent" were substituted for "two-third" by the Taxation Laws (Amendment) Act, 2003 with effect from 8 September 2003 — both recorded in footnotes printed against the section. Sub-section (2) provides that where, as a result of an order under s.154, s.155, s.250, s.254, s.260, s.262, s.263 or s.264, or an order of the Settlement Commission under s.245D(4), the refund granted under s.143(1) is held to be correctly allowed either in whole or in part, the interest chargeable under sub-section (1) shall be reduced accordingly. Explanation 1 makes a first-time assessment under s.147 or s.153A a regular assessment for the purposes of the section. Explanation 2, which the later editions of the section print and the earlier ones do not, reads: "For the removal of doubts, it is hereby declared that the provisions of this section shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date." Which amending Act inserted Explanation 2, and from what date, is not established here — the editions of the section that print it carry no footnotes, and the editions that carry footnotes do not print it.
• CBDT Circular No. 9/2001 dated 9 July 2001 — on a regular assessment under section 172(7) the non-resident is liable to interest under sections 234B and 234C and entitled to interest under section 244A; Circular No. 730 withdrawn CBDT Circulars & InstructionsCuts both ways
  Our foreign shipping client elected under section 172(7) for a regular assessment and is now getting a refund. The Department says no interest is payable on it because of an old Board circular. Is that circular still good?
  It is not. Circular No. 9/2001 dated 9 July 2001 withdrew Circular No. 730 dated 14 December 1995 as "no longer legally tenable" in the light of the Supreme Court's decision in A.S. Glittre D/5 I/S Garonne v. CIT, and clarified that on a regular assessment under s.172(7) the non-resident assessee is liable to pay interest under sections 234B and 234C and is also entitled to receive interest under s.244A, as the case may be. Circular No. 730 had said the opposite: that an assessee exercising the s.172(7) option was neither liable to interest under ss.234B and 234C nor entitled to interest under s.244A.
• DIT (International Taxation) v. Alcatel Lucent USA Inc. — the 'volte face' ground for charging s.234B interest on a non-resident, and its reversal by the Supreme Court High CourtHelps departmentOverruled
  The Assessing Officer is relying on the Delhi High Court's Alcatel Lucent judgment to charge my non-resident client s.234B interest because it first denied a permanent establishment and then accepted the assessment. Is that judgment still good?
  It is not. The Delhi High Court did hold, on 7 November 2013, that where a non-resident first denies that it has a permanent establishment and then accepts its tax liability at the first appellate stage, it must take responsibility for its volte face and cannot shift the blame for non-deduction to the Indian payers, so s.234B interest was payable; it answered the question of law in favour of the Revenue and allowed the appeals. But the assessees' special leave petitions were entertained, and in the Supreme Court's judgment of 17 September 2021 in the Mitsubishi Corporation batch the Court, having set out the Alcatel Lucent history at paragraph 23, recorded at paragraph 25: 'Accordingly, these Civil Appeals are allowed.'
• Ranchi Club Ltd v CIT (Patna) High CourtHelps taxpayerOverruled
  I filed my return on time and paid the self-assessment tax; the officer then added a disputed item in a best-judgment assessment and charged s.234A interest because I did not comply with a s.142(1) notice. Is that right?
  The Patna High Court said no. Where the return was filed within time with proof of payment, the mere issue of a s.142(1) notice calling for accounts or information does not attract s.234A, because the s.142(1) notice that s.234A speaks of is the notice to FURNISH A RETURN issued to a person who has not filed one — not the notice under clauses (ii) and (iii) calling for accounts or particulars.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.