The case of Deputy Commissioner of Income Tax (DCIT), Central Circle-30, New Delhi, versus M/s. Prakash Industries Ltd., Haryana, revolves around the levy of interest under Sections 234B and 234C of the Income Tax Act for the assessment year 2006-07.
Prakash Industries Ltd., located at 15 Km Stone, Delhi Road, Hissar, Haryana, filed its return of income for the assessment year 2006-07 declaring a ‘Nil’ income. The company revised its return and declared an income of Rs. 86,20,27,361 under Section 115JB (Minimum Alternate Tax – MAT) of the Income Tax Act.
The Assessing Officer (AO) completed the assessment under Section 143(3) on 31.12.2008, determining the income under the normal provisions as ‘Nil’ (after setting off brought forward losses) and the income under special provisions as Rs. 86,20,27,361. The AO levied interest under Section 234B but did not charge interest under Section 234C.
The DCIT and Prakash Industries both filed appeals against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) upheld the levy of interest under Section 234B but deleted the interest charged under Section 234C. Both parties contested the order before the Income Tax Appellate Tribunal (ITAT), leading to the current proceedings.
The tribunal discussed several key issues:
The tribunal concluded that the rectification order passed by the AO to levy interest under Sections 234B and 234C was beyond the permissible time frame and therefore barred by limitation. The appeals of Prakash Industries Ltd. were allowed, and the appeals of the revenue were dismissed.
Order pronounced in the open court on 2nd December, 2022.
C. N. Prasad
Judicial Member
Dr. B. R. R. Kumar
Accountant Member
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