GVR ASHOKA CHENNAI CORR LIMITED,CHENNAI V. ADIT, BENGALURU

ITA 2621/CHNY/2025

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The case revolves around the appellant, M/s GVR Ashoka Chennai Corr Limited, contesting the levy of interest under section 234A of the Income Tax Act for the month of March 2022, despite having paid their self-assessment tax liability in full before the due date. The primary legal contention was whether interest under section 234A could be levied when the tax was fully paid before the start of the month for which interest was charged. The CIT(A) had upheld the levy based on the Explanation to section 140A(1) and Rule 119A, which was contested by the appellant citing CBDT Circular No. 2/2015 and a Supreme Court judgment in Prannoy Roy & Anr. vs. CIT.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 791053 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2021-2022
• Appeal Filed On: 23-09-2025
• Other Referred Cases: Prannoy Roy & Anr. vs. CIT (309 ITR 231)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITHA
• Assessee Lawyers: DHARAN V. GANDHI
• Keywords: Set aside; TDS

Judgement Text

"आयकर अपील य अ धकरण, ’सी’ \u000eयायपीठ, चे\u000eनई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0001ी मनु क ुमार िग र, ाियक सद\u0010 एवं \u0001ी एस. आर. रघुनाथा, लेखा सद\u0010 क े सम\u001b BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2621/Chny/2025 \u0017नधा\u0018रण वष\u0018/Assessment Year: 2021-22 M/s GVR Ashoka Chennai Corr Limited No. 133, Administrative Block, 400 Feet Road, Near Toll Plaza, Chinnamullalvoyal, Chennai-600103 Tamil Nadu v. ACIT, Corp. Ward 2(3) New Building, Chennai, Chennai, [PAN: AAFCG 2747Q] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr. Dharan V. Gandhi, AR, Virtually यथ क ओर से /Respondent by : Ms. R Anitha, Addl. CIT सुनवाईक तार ख/Date of Hearing : 20.11.2025 घोषणाक तार ख /Date of Pronouncement : 10.12.2025 आदेश / O R D E R PER MANU KUMAR GIRI, JM: The captioned appeal by the assessee is arising out of the order of the Ld. Commissioner of Income Tax (Appeals) ADDL/JCIT(A) AGRA dated 31.07.2025 for AY 2021-22, wherein the Printed from counselvise.com ITA2621/CHNY/2025 (AY 2021-22) GVR ASHOKA CHNY CORR LTD VS ADIT :: 2 :: levy of interest under section 234A for the month of March 2022 has been upheld. The assessee contests only the levy of such interest despite having fully discharged its self-assessment tax liability prior to 01.03.2022. 2. Brief facts of the case are that the assessee filed its return of income on 09.03.2022, within the extended due date of 15.03.2022. Prior to filing the return, the assessee paid the entire self- assessment tax liability amounting to Rs.2,47,89,580/- on 26.02.2022. The return was processed by CPC under section 143(1). While the issue relating to short grant of TDS was subsequently rectified, CPC continued to levy interest under section 234A up to March 2022, which the assessee disputed. 3. The ld.CIT(A) upheld the levy on the basis of Explanation to section 140A(1) and Rule 119A, holding that payments must first be appropriated towards interest and thereafter to tax, and since the return was filed on 09.03.2022, interest up to that date was correctly charged. Printed from counselvise.com ITA2621/CHNY/2025 (AY 2021-22) GVR ASHOKA CHNY CORR LTD VS ADIT :: 3 :: 4. The ld.AR for the assessee contended that interest under section 234A being compensatory in nature cannot be levied for March 2022 when no tax remained unpaid as on 01.03.2022. He further submitted that CBDT Circular No. 2/2015 and the judgment of the Hon’ble Supreme Court in Prannoy Roy & Anr. vs. CIT (309 ITR 231) clearly hold that interest under section 234A cannot be levied on self-assessment tax paid before the due date of filing of return. Hence, levy beyond the actual period of default is contrary to the statutory scheme and settled judicial principles. Therefore, the ld.AR pleaded that interest under section 234A is chargeable only on the amount of tax payable. Once the entire tax was discharged on 26.02.2022, there was no outstanding liability, and therefore, no basis for levy of interest for any day in March 2022. The assessee once again reiterated and placed reliance on CBDT Circular No. 2/2015 dated 10.02.2015, which clarifies that interest under section 234A should not be levied on the self- assessment tax paid before the due date of filing the return. 5. Per contra, ld.DR for the revenue relied upon the impugned order and pleaded for the dismissal of the appeal. Printed from counselvise.com ITA2621/CHNY/2025 (AY 2021-22) GVR ASHOKA CHNY CORR LTD VS ADIT :: 4 :: 6. We have considered the rival submissions and perused the material on record. The undisputed fact is that the assessee discharged its entire self-assessment tax liability on 26.02.2022. Therefore, on 01.03.2022, the period for which the impugned levy has been made, there was no outstanding tax. Section 234A imposes compensatory interest only where tax is unpaid. It is well settled that once the tax has been fully paid before the due date or before the actual filing of the return, no interest is leviable for the period during which no default exists. CBDT Circular No. 2/2015 also expressly provides that interest under section 234A cannot be levied on self-assessment tax paid before the due date of filing. The circular is binding on the Department, and the lower authorities erred in ignoring the same. The Hon’ble Supreme Court in Prannoy Roy (309 ITR 231) has categorically held that interest under section 234A cannot be levied where the assessee has already discharged the tax liability before the stipulated date. Printed from counselvise.com ITA2621/CHNY/2025 (AY 2021-22) GVR ASHOKA CHNY CORR LTD VS ADIT :: 5 :: 7. The Department’s reliance on Explanation to section 140A(1) is misplaced. The said Explanation governs appropriation of payments where composite liabilities exist. In the present case, however, the assessee's tax liability itself stood fully discharged before even the month for which interest has been levied. Once no tax remained outstanding after 26.02.2022, the statutory provision for appropriation is rendered inapplicable for the period thereafter. In our considered view, levy of interest under section 234A for the month of March 2022 is not sustainable either in law or on facts. The default, if any, ceased on 26.02.2022, and computation of interest up to 28 February 2022 alone is permissible. 8. In light of the above discussion, we hold that the levy of interest under section 234A for the month of March 2022 is unsustainable. The impugned order of ld.CIT(A) is therefore set aside, and the Assessing Officer is directed to delete the interest levied under section 234A for March 2022. Printed from counselvise.com ITA2621/CHNY/2025 (AY 2021-22) GVR ASHOKA CHNY CORR LTD VS ADIT :: 6 :: 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 10th day of December, 2025 at Chennai. SD/- (एस. आर. रघुनाथा) (S.R.RAGHUNATHA) लेखा सद)य/ACCOUNTANT MEMBER SD/- (मनु क ुमार िग र) (MANU KUMAR GIRI) \u000eया\u0017यक सद)य/JUDICIAL MEMBER चे\u000eनई/Chennai, *दनांक/Dated: 10 December, 2025. SNDP आदेश क \u0017त+ल,प अ-े,षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकरआयु\u000f/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\bितिनिध/DR 5. गाड\u0018फाईल/GF Printed from counselvise.com "