Section 234B — Interest for Defaults in Payment of Advance Tax

Section 234B of the Income-tax Act, 1961, deals with the levy of interest for defaults in the payment of advance tax. This section applies when an assessee, liable to pay advance tax, fails to pay such tax or pays less than 90% of the assessed tax. The interest is calculated at the rate of 1% per month or part of a month on the shortfall from the due date of payment of advance tax to the date of determination of total income under Section 143(1) or regular assessment. The significance of this section lies in its role as a deterrent against non-compliance with advance tax obligations, ensuring timely tax payments and reducing the burden of tax collection at the end of the financial year. The burden of proof lies with the assessee to demonstrate compliance with advance tax requirements.

Common Litigation Flashpoints

1. Incorrect calculation of interest period
2. Dispute over the applicability of advance tax liability
3. Errors in determining the assessed tax amount
4. Challenges in the computation of shortfall in advance tax

Judgments on Section 234B — Interest for Defaults in Payment of Advance Tax

• Kishinchand Chellaram vs The Commr. of Income-Tax Bombay City II, Bombay — SC,
  The burden of proof lies on the Revenue to show that the remittance was made by the assessee and constituted its undisclosed income.
• AT & T Global Network Services India Private Limited vs Assistant Commissioner of Income Tax — ITAT,
  Inadvertent errors in reporting should not preclude the allowance of legitimate deductions if the factual basis is verified.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.
• Interglobe Technology Quotient Private Limited vs ACIT — ITAT, 2024
  CSR contributions can be eligible for deduction under section 80G if they meet the necessary conditions.
• Procter & Gamble Hygiene and Health Care Limited vs Assessment Unit, National Faceless Assessment Centre, Delhi — ITAT,
  Expenses incurred for ESOP and ISOP are allowable as revenue expenditure under section 37(1) as they are real, substantiated, and business-centric.