30 May 2009
Hello everyone I want to ask query about section 140A which i did not find in the book. If self assessment tax falls short of tax and interest first it would be adjusted towards interest u/s 234ABC but if self assessment tax falls short of even interest amount then what will be the basis for apportioning it towards 234ABC and under what section?
Interest u/s 234A and 234C are payable in relation to returned income and therefore these interest are frozen once the return has been filed. To the contrary, interest u/s 234B is dependant upon assessed income which may keep on changing.
Therefore, though nothing is provided in the Act in this regard, logic demands that amount paid u/s 140A should first be adjusted against interest amount which has become final ie u/s 234A and 234C.
However, how does it matter if the amount is appropriates against any of the interest. The legislative intent is to recover interest first and keep the charge alive on principal tax demand. The interest u/s 220(2) is payable on demand and not Tax amount or interest per se.