⁶⁷[Interest for defaults in payment of advance tax.

234B. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall ⁶⁸ be liable to pay simple interest at the rate of  ⁶⁹[one] per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year  ⁷⁰[to the date of determination of total income under sub-section (1) of section 143  ⁷¹[and where a regular assessment is made, to the date of such regular assessment, on an amount]] equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax.

 ⁷²[Explanation 1.—In this section, “assessed tax” means the tax on the total income determined under sub-section (1) of section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount of,—

           (i)  any tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income;

          (ii)  any relief of tax allowed under section 90 on account of tax paid in a country outside India;

         (iii)  any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section;

         (iv)  any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and

          (v)  any tax credit allowed to be set off in accordance with the provisions of section 115JAA.]

Explanation 2.—Where, in relation to an assessment year, an assessment is made for the first time under section 147  ⁷³[or section 153A], the assessment so made shall be regarded as a regular assessment for the purposes of this section.

 ⁷⁴[Explanation 3.—In Explanation 1 and in sub-section (3) “tax on the total income determined under sub-section (1) of section 143” shall not include the additional income-tax, if any, payable under section 143.]

(2) Where, before the date of  ⁷⁵[determination of total income under sub-section (1) of section 143 or] completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,—

           (i)  interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section;

          (ii)  thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax.

(3) Where, as a result of an order of reassessment or recomputation under section 147  ⁷⁶[or section 153A], the amount on which interest was payable under sub-section (1) is increased, the assessee shall be liable to pay simple interest at the rate of  ⁷⁷[one] per cent for every month or part of a month comprised in the period commencing on the day following  ⁷⁸[the date of determination of total income under sub-section (1) of section 143  ⁷⁹[and where a regular assessment is made as is referred to in sub-section (1) following the date of such regular assessment]] and ending on the date of the reassessment or recomputation under section 147  ⁸⁰[or section 153A], on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined  ⁸¹[under sub-section (1) of section 143 or] on the basis of the regular assessment aforesaid.

Explanation.— ⁸²[* * *]

(4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and—

           (i)  in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly;

          (ii)  in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.

(5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.]