The ITAT has determined that interest under Section 264(C) should apply to return income rather than assessed income, providing clarity for taxpayers regarding the calculation of interest.
Interest Under Section 264(C) Levied on Return Income, Not Assessed Income
The Income Tax Appellate Tribunal (ITAT) ruled that interest payable under Section 264(C) should be calculated on the return income rather than the assessed income. This decision was made in light of the arguments presented concerning political contributions made under Section 80GGC.
The court assessed the implications of incorrectly applying interest calculations and clarified that the focus should remain on the taxpayer's return income. This approach is intended to ensure fairness in taxing and interest assessment procedures.
Tax practitioners must pay close attention to this ruling as it establishes a significant point regarding interest calculations, preventing potential misapplications that could adversely affect taxpayers. This may also prompt a reassessment of prior cases where this distinction was not considered.
Citations
- Interest Under Section 264(C) Case (2026) ITAT 2
