Law:

Section:

Where tax liability arose subsequently after filing of return and after expiry of assessment year on account of retrospective amendment of law, consequential levy of interest under section 234B is to be dealt with as a fit case for reduction or waiver of interest Section 234B of the Income-tax Act, 1961 - Advance tax - Interest for default in payment of - Assessment year 1989-90 - Assessee-company in its return for assessment year 1989-90 had claimed exemption of export cash assistance amount on ground of same being a capital receipt and it had paid advance tax and also interest under section 234B - During course of assessment proceeding, assessee in 1991 informed Assessing Officer that export cash assistance was made taxable with retrospective effect from 1-4-1967 and, therefore, export cash assistance amount earlier claimed in its return as capital receipt be treated as its income - Thereafter, Assessing Officer made addition of export cash assistance and also levied interest under section 234B on ground that advance tax paid by assessee under section 210 was less than 90 per cent of assessed tax - Whether since assessee's tax liability arose subsequently after filing of return and after expiry of assessment year on account of retrospective amendment of law, consequential levy of interest under section 234B was required to be dealt with as a fit case for reduction or waiver of interest - Held, yes Circulars and notification - Notification No. 400/234/95-IT(B), dated 23-5-1996 and Circular No. 783, dated 18-11-1999 FACTS The assessee in its return claimed exemption of export cash assistance amount on ground that it was a capital receipt. The assessee had paid advance tax and also interest under section 234B. The Assessing Officer commenced assessment proceedings under section 143(3). During the course of assessment proceedings, the assessee informed the Assessing Officer that export cash assistance was made taxable with retrospective effect from 1-4-1967 and, therefore, export cash assistance amount earlier claimed in its return as capital receipt be treated as income. Thereafter, the Assessing Officer passed an order making addition of export cash assistance.…

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