May 2011
127 ITD 257 (Mum.) Torrential Investments (P.) Ltd. v. ITO, Ward-2(3)(3), Mumbai A.Y.: 1996-97. Dated: 11-8-2009
By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi Chartered Accountants
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Section 234C — Proviso to section 234C(1) as amended by Finance Act (No. 2), 1996 is retrospective in nature, since it was proposed to remove hardship faced by the assessee as the entire tax on capital gains had to be paid at short notice or even before the sale proceeds were received.
Facts:
The assessee had income from long-term capital gains of Rs.25,47,670 during the year which accrued to the assessee in the months of May, 1995 and July, 1995. The assessee paid advance tax instalments as per section 234C (as amended by Finance Act, 1996). However, the Assessing Officer charged interest u/s. 234C from the first instalment consequently holding that the amendment u/s. 234C is prospective.
Held:
(1) The amendment (by the Finance Act, 1996) was enacted to remove the hardship to the assessee as the entire tax had to be paid at short notice as per the original provision even before the sale proceeds were received.
(2) The amendment to proviso to section 234C is clarificatory in nature and has to be applied retrospectively.
(3) The assessee had paid taxes as a part of the instalments due after the date of sale of the asset and hence, was not in default as stipulated u/s. 234C. Thus, no interest was chargeable from it u/s. 234C.
