DEUTSCHE BANK A.G, MUMBAI V. DDIT (IT) RG 1(2), MUMBAI

ITA 1668/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3821 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-04-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Assessee Lawyers: P J PARDIWALA
• Keywords: Retrospective amendment; Revised return
• Section: 143(3); 153A; 234B; 148; 90; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO.1668/MUM/2010 (ASSESSMENT YEAR: 2005-06) DEUTSCHE BANK A.G, FLOOR 3 NIRLON KNOWLEDGE PARK, BLOCK 1, WESTERN EXPRESS HIGHWAY, GOREGAON EAST, MUMBAI 400063 PAN: AAACD 1390 F VS. DY. DIRECTOR INCOME TAX (INTL. TAXATION)-1(2), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 400038 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P.J. PARDIWALA AND SHRI NISHANT THAKKAR DEPARTMENT BY: SHRI PRAVIN VARMA AND SHRI MOHIT JAIN, DR DATE OF HEARING: 03/04/2013 DATE OF PRONOUNCEMENT: 10/04/2013 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN APPEAL AGAINST THE ORDER OF THE CIT (A) DATED 24.12.2009 AGAINST THE ORDER U/S 154 PASSED BY AO. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME TAX (APEPALS) ERRED IN CONFIRMING THE ACTION OF THE DY. DIRECTOR OF INCOME TAX (INTL. TAXATION) (AO) OF PASSING AN ORDER UNDER SEC TION 154 NOTWITHSTANDING THAT THE ISSUE INVOLVED IS NOT A RECTIFICATION MATTER AS IT INVOLVES ELABORATE DISCU SSION, DEBATE AND IS A MATTER WHERE MORE THAN ONE OPINION MAY BE POSSIBLE. 2. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF AO OF RECOMPUTING INTEREST UNDER SECTION 234B AT ` .6,72,07,276 AS AGAINST ` .6,59,46,319 CHARGED PER ORDER DATED 28 TH MARCH, 2008 PASSED UNDER SECTION 143(3). ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 2 2. THE FACTS LEADING THE ABOVE RECTIFICATION, CONSEQUE NTLY CONFIRMED BY THE CIT (A) ARE AS UNDER. 2.1 AO VIDE ORDER DATED 28 TH MARCH, 2008 COMPLETED ASSESSMENT UNDER SECTION 143(3).HE CALCULATED TAX PAYABLE ALON G WITH INTEREST UNDER VARIOUS SECTIONS, CONSEQUENT TO ADDITIONS MAD E AND RAISED DEMAND. AO ISSUED NOTICE DATED 6.1.2009 UNDER SECTI ON 154 PROPOSING TO RECTIFY THE ORDER DATED 28.3.2008 UNDE R SECTION 143(3) BY ENHANCING THE INTEREST CHARGED UNDER SECTION 234 B TO ` .6,72,07,276 AS AGAINST ` .6,59,46,319 CHARGED PER ORDER UNDER SECTION 143(3). ASSESSEE VIDE LETTER DATED 12.1.200 9 REQUESTED AO TO PROVIDE THE MANNER IN WHICH INTEREST OF ` .6,72,07,276 UNDER SECTION 234B WAS COMPUTED SO AS TO ENABLE ASSESSEE TO PUT FORTH ITS SUBMISSIONS IN THE MATTER. AO PASSED THE ORDER UNDE R SECTION 154, DATED 28.1.09 WITHOUT GRANTING ANY OPPORTUNITY TO A SSESSEE. 2.2 AO COMPUTED INTEREST UNDER SECTION 234B ORIGINA LLY AS FOLLOWS: 1,36,75,48,656 LESS: TDS 1,13,687 1,36,74,34,968 LESS: ADVANCE TAX 1,82,20,00,000 18,54,34,968 INTEREST UNDER SECTION 234B 1. 1.4.05 TO 21.1.08=34 MONTHS 6,30,47,889 18,54,34,968 X 1% 2. ON ` .14,49,21,488 I.E. ` .18,54,34,968 28,98,430 - ` .4,05,13,480 (S.A.TAX PAID ON 21.01.08) FROM 1.2.08 TO 27.3.08 =2 MONTHS = 14,49,21,968 X 2 X 1%= _______________ THEREFORE, INTEREST UNDER SECTION 234B 6,59,46 ,319 2.3 AO VIDE ORDER DATED 6.01.2009 PASSED UNDE R SECTION 154 HAS COMPUTED INTEREST UNDER SECTION 234B AS FOLLOWS : ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 3 TAXES PAYABLE 1,36,75,48,656 LESS: TDS 1,13,687 1,36,74,34,968 LESS: ADVANCE TAX 1,18,20,00,000 18,54,34,968 INTEREST UNDER SECTION 234B 1. 1.4.05 TO 21.1.08 = 34 MONTHS 6,30,47,889 18,54,34,968 X 34 X 1% = 2. ON ` .20,79,69,377 I.E. ` .18,54,34,968- ` .4,05,13,480(SA TAX PAID ON 21.01.08) + ` .6,30,47,889 (INTEREST UNDER SECTION 234B UPTO JANUARY 2008 ON ASSESSED TAX FROM 1.2.08 TO 27.3.08 = 2 MONTHS 41,59,387 = 20,79,69,377 X 2 X 1% = THEREFORE INTEREST UNDER SECTION 234B 6,72,07,276 3. IT WAS SUBMITTED BEFORE THE CIT (A) THAT FOR THE PURPOSE OF COMPUTING INTEREST UNDER SECTION 234B FOR THE PERIO D SUBSEQUENT TO THE PAYMENT OF SELF ASSESSMENT TAX ON 21 ST JANUARY, 2008, AO HAS ADDED THE ENTIRE INTEREST OF ` .6,30,47,889 CHARGEABLE UNDER SECTION 234B ON ASSESSED TAX UPTO JANUARY 2008 (BEING DATE OF PAYMENT OF SELF ASSESSMENT TAX) AND REDUCED THERE FROM, SELF A SSESSMENT TAX (SA TAX) OF ` .4,05,13,480 PAID ON 21 ST JANUARY, 2008. THIS HAS RESULTED IN CHARGING OF INTEREST UNDER SECTION 234B ON ` .20,79,69,377 I.E. ` .18,54,34,968 ` .4,05,13,480 (SA TAX PAID ON 21.01.2008) - ` .6,30,47,889 (INTEREST UNDER SECTION 234B UPTO JANUARY, 2008 ON ASSESSED TAX). 3.1 IT WAS FURTHER SUBMITTED THAT HAD ASSESSEE NOT PAID SA TAX IN JANUARY, 2008 INTEREST WOULD HAVE BEEN CHARGED BY A O ON ` .18,54,34,968. THEREFORE, ASSESSEE IS WORSE OFF BY PAYING S.A. TAX. 3.2 ASSESSEE SUBMITTED THAT AO OUGHT TO HAVE REDUCE D FROM SA TAX PAID, AN AMOUNT OF INTEREST PAID TOWARDS INTERE ST CHARGEABLE UNDER SECTION 234B AT THE POINT IN TIME OF PAYMENT OF S.A.TAX PER ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 4 RETURN OF INCOME WHICH IN ASSESSEES CASE IS NIL AS IS EVIDENT FROM THE REVISED RETURN OF INCOME FILED VIDE LETTER DATE D 25 TH MARCH, 2008. 4. THE LEARNED CIT (A) HOWEVER, DID NOT AGREE AND R EJECTED THE CONTENTIONS AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS AND PERUSED THE MA TERIAL ON RECORD. I FIND THAT THERE IS NO DISPUTE THAT THERE IS DEFAULT IN PAYMENT OF ADVANCE TAX. IN OTHER WORDS, THERE IS A SHORTFALL OF ADVANCE TAX BY THE STIPULATED PERCENTAGE AS PRESCRI BED BY SECTION 234B OF THE ACT. THE PROVISIONS OF SECTION 234B PROVIDES THAT THE PAYMENT OF INTEREST FOR DEFAULTS IN PAYMENT OF ADVANCE TAX. IN FACT THE PROVISION ITSELF FASTEN S LIABILITY TO PAY INTEREST ON THE BASIS OF LIABILITY TO PAY ADVAN CE TAX UNDER SECTION 208 OF THE ACT AND FAILURE TO PAY SUCH TAX OR WHERE THE ADVANCE TAX PAID BY ASSESSEE UNDER THE PROVISIONS O F SECTION 210 IS LESS THAN THE PRESCRIBED PERCENTAGE OF THE A SSESSED TAX. SECTION 140A OF THE ACT PROVIDES FOR SELF ASSE SSMENT. THE SAID SECTION STIPULATES THAT WHERE ANY TAX IS PAYAB LE ON THE BASIS OF ANY RETURN REQUIRED TO BE FURNISHED, AFTER TAKING INTO ACCOUNT THE AMOUNT OF TAX, IF ANY, ALREADY PAID UND ER ANY PROVISION OF THE ACT, ASSESSEE SHALL BE LIABLE TO P AY SUCH TAX TOGETHER WITH INTEREST PAYABLE UNDER ANY PROVISION OF THE ACT FOR ANY DELAY IN FURNISHING RETURN, OR ANY DEFAULT OR DELAY IN PAYMENT OF ADVANCE TAX, BEFORE FURNISHING THE RETUR N AND THE RETURN SHALL BE ACCOMPANIED BY PROOF OF PAYMENT OF SUCH TAX AND INTEREST. THEREFORE, MERELY BECAUSE SOME AMOUNT IS PAID BEYOND THE FINANCIAL YEAR, BUT BEFORE THE RETURN IS FILED; ASSESSEE CANNOT TAKE CREDIT FOR SUCH PAYMENT MADE B EYOND THE FINANCIAL YEAR FOR THE PURPOSE OF COMPUTING INT EREST UNDER SECTION 284B OF THE ACT FOR THE DEFAULT IN PAYMENTS OF ADVANCE TAX. THUS THE PERIOD FOR WHICH THE LIABILITY TO PAY INTEREST ARISES HAS TO BE COMPUTED IN ACCORDANCE WITH THE TE RM FIXED BY EACH OF THE PROVISIONS VIZ SECTION 234B OF THE A CT. 2.3.1 THE CONTENTION OF THE APPELLANT HAD THE APPEL LANTS NOT PAID S.A.TAX IN JANUARY, 2008, INTEREST WOULD HAVE BEEN CHARGED BY AO ON ` .18,54,34,968. THEREFORE, THE APPELLANTS ARE WORSE OFF BY PAYING S.A.TAX IS NOT ACCEPTABLE. IF THE STATUTORY PROVISION RESULTS IN AN ABSURDITY OR MISC HIEF NOT INTENDED BY LEGISLATURE, THE COURT SHOULD IMPORT WO RDS SO AS TO MAKE SENSE OUT OF THE PROVISIONS ALSO DOES NOT M ERIT ACCEPTANCE CONSIDERING THE FACT THAT ON A PLAIN REA DING OF THE PROVISIONS THE LEGISLATIVE INTENT WHICH IS DISCERNI BLE CANNOT BE SAID TO RESULT IN AN ABSURDITY. AS NOTICED THAT THE EXPLANATION UNDER SECTION 1OF SECTION 140A OF THE ACT SPECIFICA LLY PROVIDES THAT WHERE THE AMOUNT PAID BY ASSESSEE UNDER THE SA ID SUB ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 5 SECTION FALLS SHORT OF THE AGGREGATE OF THE TAX AND INTEREST PAYABLE UNDER SUB SECTION (1), THE AMOUNT SO PAID S HALL FIRST BE ADJUSTED TOWARDS THE INTEREST PAYABLE AS AFORESA ID AND THE BALANCE, IF ANY, SHALL BE ADJUSTED TOWARDS THE TAX PAYABLE. 2.3.2 IN LIGHT OF THIS SPECIFIC PROVISION UNDER THE ACT, I DO NOT FIND ANY INFIRMITY IN COMPUTATION OF INTEREST CHARG EABLE UNDER SECTION 234B OF THE ACT. RELIANCE IS PLACED ON THE DECISION OF SEA PEARL ENTERPRISES V. DCIT (2007) 294 ITR 374 (K ER) HELD THAT INTEREST UNDER SECTION 234A AND SECTION 234B I S CHARGED ON ASSESSED INCOME AND NOT ON INCOME RETURNED BY AS SESSEE AND AMENDMENT MADE TO EXPLANATION TO SECTION 234A A ND 234B BY FINANCE ACT, 2001 WITH RETROSPECTIVE EFFECT FROM 1.4.1989 IS MERELY CLARIFICATORY IN NATURE AND EVEN PRIOR TO SUCH AMENDMENT INTEREST WAS BEING CHARGED UNDER SEC TION 234A AND 234B ON ASSESSED INCOME AND NOT ON INCOME RETURNED BY ASSESSEE. SIMILARLY IN CASE OF ROSHANLA L S. JAIN & ORS (AOP) V DCIT (2008) 309 ITR 109 (GUJ.) HELD AMO UNT PAID BEYOND THE FINANCIAL YEAR BEFORE FILING OF RETURN O F INCOME CANNOT BE DEDUCTED FROM THE TAX ON TOTAL INCOME AS DETERMINED ON REGULAR ASSESSMENT FOR COMPUTING INTE REST UNDER SECTION 234A AND 234B. ACCORDINGLY THIS GROUN D OF APPEAL IS DISMISSED . 5. REFERRING TO THE ABOVE ORDER, THE LEARNED C OUNSEL SUBMITTED THAT THE CIT (A) HAS WRONGLY CONSIDERED THE ISSUE. HE REFERRED TO THE PROVISIONS OF SECTION 234B AND SECTION 140A. HE ALS O PLACED ON RECORD THE DECISION OF THE COORDINATE BENCH IN THE CASE OF ACIT VS. M/S C.C. CHOKSHI & CO IN ITA NO.7791 & 9213/MUM/200 4 AND 7450, 8267/MUM/2004 AND 523/MUM/2007 DATED 21.05.20 10. 6. THE LEARNED DR HOWEVER, RELIED ON THE ORDERS OF THE AO AND CIT (A). 7. WE HAVE CONSIDERED THE ISSUE. THE PROVISIONS OF SECTION 234B ARE AS UNDER: (2) WHERE, BEFORE THE DATE OF DETERMINATION OF TOT AL INCOME UNDER SUB-SECTION (1) OF SECTION 143 OR COMPLETION OF A REGULAR ASSESSMENT, TAX IS PAID BY THE ASSESSEE UNDER SECTION 140A OR OTHERWISE, ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 6 (I) INTEREST SHALL BE CALCULATED IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS SECTION UP TO THE DATE ON WHICH THE TAX IS SO PAID, AND REDUCED BY THE INTERE ST, IF ANY, PAID UNDER SECTION 140A TOWARDS THE INTEREST CHARGEABLE UNDER THIS SECTION; (II) THEREAFTER, INTEREST SHALL BE CALCULATED AT TH E RATE AFORESAID ON THE AMOUNT BY WHICH THE TAX SO PAID TOGETHER WITH THE ADVANCE TAX PAID FALLS SHORT OF T HE ASSESSED TAX. 7.2 PROVISIONS OF SECTION 140A ARE AS UNDER: 140A. (1) WHERE ANY TAX IS PAYABLE ON THE BASIS OF ANY RETURN REQUIRED TO BE FURNISHED UNDER [SECTION 115W D OR SECTION 115WH OR] SECTION 139 OR SECTION 142 [OR SE CTION 148 OR [SECTION 153A OR], AS THE CASE MAY BE, SECTI ON 158BC]], AFTER TAKING INTO ACCOUNT, (I) THE AMOUNT OF TAX, IF ANY, ALREADY PAID UNDER A NY PROVISION OF THIS ACT; (II) ANY TAX DEDUCTED OR COLLECTED AT SOURCE; (III) ANY RELIEF OF TAX OR DEDUCTION OF TAX CLAIMED UNDER SECTION 90 OR SECTION 91 ON ACCOUNT OF TAX PAID IN A COUNTRY OUTSIDE INDIA; (IV) ANY RELIEF OF TAX CLAIMED UNDER SECTION 90A ON ACCOUNT OF TAX PAID IN ANY SPECIFIED TERRITORY OUTS IDE INDIA REFERRED TO IN THAT SECTION; AND (V) ANY TAX CREDIT CLAIMED TO BE SET OFF IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 115JAA THE ASSESSEE SHALL BE LIABLE TO PAY SUCH TAX TOGETHER WITH INTEREST PAYABLE UNDER ANY PROVISION OF THIS ACT FO R ANY DELAY IN FURNISHING THE RETURN OR ANY DEFAULT OR DE LAY IN PAYMENT OF ADVANCE TAX, BEFORE FURNISHING THE RETUR N AND THE RETURN SHALL BE ACCOMPANIED BY PROOF OF PAYMENT OF SUCH TAX AND INTEREST . EXPLANATION.WHERE THE AMOUNT PAID BY THE ASSESSEE UNDER THIS SUB-SECTION FALLS SHORT OF THE AGGREGATE OF THE TAX AND INTEREST AS AFORESAID, THE AMOUNT SO PAID S HALL FIRST BE ADJUSTED TOWARDS THE INTEREST PAYABLE AS AFORESAID AND THE BALANCE, IF ANY, SHALL BE ADJUSTE D TOWARDS THE TAX PAYABLE.] ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 7 (1A) FOR THE PURPOSES OF SUB-SECTION (1), INTEREST PAYABLE, (I) UNDER SECTION 234A SHALL BE COMPUTED ... (II) UNDER SECTION 115WK SHALL BE COMPUTED (1B) FOR THE PURPOSES OF SUB-SECTION (1), INTEREST PAYABLE UNDER SECTION 234B SHALL BE COMPUTED ON AN AMOUNT EQUAL TO THE ASSESSED TAX OR, AS THE CASE MAY BE, ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, ' ASSESSED TAX' MEANS THE TAX ON THE TOTAL INCOME AS DECLARED IN THE RETURN AS REDUCED BY THE AMOUNT OF, (I) TAX DEDUCTED OR COLLECTED AT SOURCE, IN ACCORDA NCE WITH THE PROVISIONS OF CHAPTER XVII, ON ANY INCOME WHICH IS SUBJECT TO SUCH DEDUCTION OR COLLECTION AN D WHICH IS TAKEN INTO ACCOUNT IN COMPUTING SUCH TOTAL INCOME; (II) ANY RELIEF OF TAX OR DEDUCTION OF TAX CLAIMED UNDER SECTION 90 OR SECTION 91 ON ACCOUNT OF TAX PAID IN A COUNTRY OUTSIDE INDIA; (III) ANY RELIEF OF TAX CLAIMED UNDER SECTION 90A ON ACCOUNT OF TAX PAID IN ANY SPECIFIED TERRITORY OUTS IDE INDIA REFERRED TO IN THAT SECTION; AND (IV) ANY TAX CREDIT CLAIMED TO BE SET OFF IN ACCORD ANCE WITH THE PROVISIONS OF SECTION 115JAA . 7.3 IN VIEW OF THE PROVISIONS OF SECTION 140A R.W.S. 234 B, THE INTEREST THAT COULD HAVE BEEN CHARGED/ ADJUSTED AS PART OF INTEREST UNDER SECTION 234B WILL HAVE TO BE CALCULATED ON TH E RETURNED INCOME BUT NOT ON THE BASIS OF ASSESSED INCOME. AO, WHO ORIGINALLY COMPLETED THE ASSESSMENT, HAS CORRECTLY CALCULATED AS PER THE PROVISIONS OF SECTION, WHEREAS THE PRESENT AO WRONG LY INTERPRETED THE PROVISIONS IN THE ORDER UNDER SECTION 154. 7.4 THIS ISSUE WAS ELABORATELY DISCUSSED IN THE ORDER OF ITAT IN THE CASE OF ACIT VS. M/S C.C. CHOKSHI & CO (SUPR A) AS UNDER: ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 8 3.6 THE NEXT DISPUTE WHICH IS RELEVANT TO ONLY A.Y 2000-01 AND 2001-02 IS REGARDING COMPUTATION OF INTEREST CH ARGEABLE UNDER SECTION 234B OF THE ACT. IN THIS CASE, REGULA R ASSESSMENTS HAD BEEN MADE BY THE AO UNDER SECTION 1 43(3) AND IN SUCH CASES, IN CASE, THE ADVANCE TAX PAID BY THE ASSESSEE IS LESS THAN 90% OF THE ASSESSED TAX THE A SSESSEE IS REQUIRED TO PAY INTEREST AT THE PRESCRIBED RATE FRO M FIRST DAY OF NEXT FINANCIAL YEAR TILL THE DATE OF REGULAR ASSESS MENT ON THE AMOUNT BY WHICH ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. THE ASSESSED TAX HAS BEEN DEFINED IN THE EXPLA NATION1 TO SECTION 234B AS TAX PAYABLE ON THE TOTAL INCOME DET ERMINED IN THE REGULAR ASSESSMENT AS REDUCED BY THE AMOUNT OF ANY TAX DEDUCTED/COLLECTED AT SOURCE ETC. SECTION 234B (2) FURTHER PROVIDES THAT, IN CASE, BEFORE COMPLETION OF REGULA R ASSESSMENT, ANY TAX HAS BEEN PAID BY THE ASSESSEE A S SELF ASSESSMENT TAX UNDER SECTION 140A OR OTHERWISE, THE INTEREST UPTO THE DATE OF TAX SO PAID HAS TO BE CALCULATED A S PRESCRIBED UNDER SECTION 234B(1) AND THEREAFTER INTEREST IF AN Y PAID UNDER SECTION 140A WILL BE REDUCED FROM THE TAX PAI D , AND INTEREST THEREAFTER SHALL BE CALCULATED ON THE AMOU NT BY WHICH TAX PAID UNDER SECTION 140A TOGETHER WITH ADVANCE T AX FALLS SHORT OF THE ASSESSED TAX. IT MAY ALSO BE NOTED THA T UNDER SECTION 140A THE ASSESSEE IS LIABLE TO PAY TAX ON T HE RETURNED INCOME TOGETHER WITH INTEREST PAYABLE UNDER THE PRO VISIONS OF SECTION 234A, 234B & 234C OF THE ACT. FURTHER THE EXPLANATION TO SECTION 140A PROVIDES THAT INCASE TA X PAID UNDER SECTION 140A FALLS SHORT OF THE TAX PAYABLE I NCLUDING THE INTEREST, THEN THE TAX PAID SHALL BE FIRST ADJUSTED TOWARDS INTEREST PAYABLE UNDER SECTION 234A, 234B & 234C. S ECTION 140(1B) ALSO PROVIDES THAT INTEREST UNDER SECTION 2 34B FOR THE PURPOSE OF SECTION 140A SHALL BE COMPUTED ON THE AM OUNT BY WHICH ADVANCE TAX PAID FALLS SHORT OF ASSESSED TAX AND FOR THIS PURPOSE THE ASSESSED TAX HAS BEEN DEFINED TO M EAN THE TAX ON TOTAL INCOME AS DECLARED IN THE RETURN AS RE DUCED BY TAX DEDUCTED/COLLECTED AT SOURCE ETC. THUS INCASE T HE PAYMENT MADE UNDER SECTION 140A FALLS SHORT OF TAX PAYABLE U/S. 140A INCLUDING INTEREST, THEN TAX PAID IS TO BE FIRST AD JUSTED TOWARDS INTEREST PAYABLE UNDER SECTION 234B. 3.6.1 THE LIMITED ISSUE RAISED IN THIS APPEAL IS WH ETHER THE INTEREST PAYABLE UNDER SECTION 234B HAS FOR THE PUR POSE OF SECTION 140A IS TO BE COMPUTED WITH RESPECT TO THE TAX PAYABLE ON THE RETURNED INCOME OR THE INCOME DETERMINED IN THE REGULAR ASSESSMENT. THE A.O. CALCULATED THE INTERES T UNDER SECTION 234B ON THE BASIS OF TOTAL INCOME DETERMINE D IN THE REGULAR ASSESSMENT AND ADJUSTED THE SAME AGAINST TH E TAX PAID UNDER SECTION 140A AND THE BALANCE AMOUNT OF P AYMENT U/S. 140A WAS CONSIDERED AS TAX PAID AND THE INTERE ST FROM THE DATE ON WHICH TAX WAS PAID UNDER SECTION 140A W AS ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 9 CALCULATED ON THE OUTSTANDING TAX AFTER ADJUSTING T HE ADVANCE PAID AND THE TAX PAID UNDER SECTION 140A. THE ASSES SEE ON THE OTHER HAND CONTENDED THAT THE INTEREST UNDER SE CTION 234B AGAINST WHICH THE TAX PAID UNDER SECTION 140A HAS T O BE ADJUSTED FIRST IS REQUIRED TO BE COMPUTED WITH RESP ECT TO THE RETURNED INCOME AS THE ASSESSED TAX FOR THE PURPOSE OF SECTION 140A HAS BEEN DEFINED TO MEAN TAX ON THE TOTAL INCO ME DECLARED IN THE RETURN AS REDUCED BY AN AMOUNT OF T AX DEDUCTED/COLLECTED AT SOURCE ETC. THE CIT(A) HAS CO NFIRMED THE APPROACH ADOPTED BY THE AO AGAINST WHICH THE PRESEN T APPEAL HAS BEEN FILED BY THE ASSESSEE BEFORE THE TR IBUNAL. 3.6.2 WE HAVE HEARD BOTH PARTIES PERUSED THE RECORD S AND CONSIDERED THE MATTER CAREFULLY. THE FACTUAL AND LE GAL BACKGROUND RELATING TO THE ISSUE HAS ALREADY BEEN D ISCUSSED IN THE PRECEDING PARAS. THE SECTION 140A PROVIDES T HAT IN CASE PAYMENT MADE UNDER THE SAID SECTION FALLS SHORT OF THE TAX PAYABLE INCLUDING INTEREST UNDER THE SAID SECTION T HEN THE TAX SO PAID SHALL BE FIRST ATTRIBUTED TOWARDS THE INTER EST AND THE BALANCE AMOUNT SHALL BE ADJUSTED AGAINST THE TAX PA YABLE. IN THIS CASE, THE TAX PAYABLE UNDER SECTION 140A ALSO INCLUDED INTEREST PAYABLE UNDER SECTION 234B. THE ISSUE IS W HETHER THE INTEREST PAYABLE UNDER SECTION 234B WHICH HAS TO BE FIRST ADJUSTED AGAINST THE PAYMENT MADE UNDER SECTION 140 A HAS TO BE CALCULATED WITH RESPECT TO TOTAL INCOME AS DE CLARED IN THE RETURN OR TOTAL INCOME DETERMINED IN THE REGULAR AS SESSMENT. WE FIND THAT THE SECTION 140(1B) PROVIDES THAT INTE REST PAYABLE UNDER SECTION 234B, HAS TO BE COMPUTED ON T HE AMOUNT BY WHICH THE ADVANCE PAID FALLS SHORT OF ASS ESSED TAX AND THE ASSESSED TAX FOR THE PURPOSE OF THIS SUB-SE CTION HAS BEEN DEFINED IN THE EXPLANATION TO MEAN THE TAX ON TOTAL INCOME AS DECLARED IN THE RETURN AS REDUCED BY TAX DEDUCTED/COLLECTED AT SOURCE ETC. THEREFORE, WE AGR EE WITH THE SUBMISSION MADE BY LD. A.R THAT THE INTEREST PAYABL E UNDER SECTION 234B FOR THE PURPOSE OF ADJUSTMENT AGAINST THE TAX PAID UNDER SECTION 140A HAS TO BE COMPUTED WITH RES PECT TO ASSESSED TAX DETERMINED ON THE BASIS OF TOTAL INCOM E DECLARED IN THE RETURN. BUT THIS IS ONLY FOR THE LIMITED PUR POSE OF ADJUSTMENT OF PAYMENT MADE U/S. 140A AGAINST INTERE ST PAYABLE UNDER SECTION 234B WHILE MAKING COMPUTATION OF INTEREST PAYABLE BY THE ASSESSEE UNDER SECTION 234B ,WHICH HAS TO BE COMPUTED WITH RESPECT TO THE TOTAL INCOME DETERMINED IN REGULAR ASSESSMENT AS PER THE DEFINIT ION OF ASSESSED TAX GIVEN IN SECTION 234B. THE ASSESSEE HA S ALSO FOLLOWED THE SAME PROCEDURE WITH WHICH WE AGREE. TH E ORDER OF CIT(A) CONFIRMING THE METHOD FOLLOWED BY THE AO IS THEREFORE SET ASIDE AND THE CLAIM OF THE ASSESSEE I S ALLOWED. ITA NO.1668 OF 2010 OF DEUTSCHE BANK AG MUMBAI 10 7.5 RESPECTFULLY FOLLOWING THE SAME, WE HOLD TH AT THE ORDERS OF AO UNDER SECTION 154 AND THE CIT (A) ARE BAD IN LAW . THE ORDER UNDER SECTION 143(3) ORIGINALLY PASSED BY AO HAS CO RRECTLY WORKED OUT THE INTEREST UNDER SECTION 234B WHICH HAS TO BE UPHELD. THEREFORE WE CANCEL THE ORDER U/S 154 PASSED BY AO AND THE ORDER OF CIT(A) ON THE ISSUE. ASSESSEES GROUNDS ARE ALLO WED. 8. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2013 SD/- SD/- (DR. S.T.M. PAVALAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 10 TH APRIL, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI