2019 (6) TMI 1482 - AT - Income Tax

Interest liability u/s 201(1A) - interest on short deduction of TDS u/s 201(1A) - HELD THAT - On a perusal of Sec.201(1A), it can safely be gathered that in case of short deduction of tax at source, the levy of interest under the said statutory provision is to be reckoned from the date on which such tax was deducted, till the date on which such tax is actually paid. Apart there from, we find that the aforesaid issue is no more res-integra in light of the judgment of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd. Vs. CIT 2007 (8) TMI 12 - SUPREME COURT as observed that liability to charge interest under Sec.201(1A) continues till the date of payment of taxes by the deductee. Accordingly, on the basis of our aforesaid observations, we are of the considered view that the levy of interest under Sec.201(1A) by the A.O in the case before us is to be reckoned till the date of the payment of such tax by the deductee, and not up to the date of filing of the return of income by the latter. The matter is restored to the file of the A.O, with a direction to re-determine the interest liability of the assessee under Sec.201(1A) of the Act in terms of our aforesaid observations. The Ground of appeal No. 1 raised by the assessee is allowed. Levy of fees under Sec.234E - case of the assessee before us, that as the TDS statement is for the period prior to 01.06.2015, hence no late fees could have been charged for the said period while furnishing the statement under Sec.200A - HELD THAT - In the case of M/s GNA Udyog Ltd. Vs. ACIT 2019 (1) TMI 1757 - ITAT AMRITSAR considering the judgment of Fatheraj Singhavi Vs. Union of India 2016 (9) TMI 964 - KARNATAKA HIGH COURT had concluded, that levy of fees under Sec.234E could not be made in purported exercise of power under Sec.200A by the revenue, for the period of the assessment year prior to 01.06.2015. Apart there from, we find that a similar view had also been taken by the ITAT, Agra Bench, Agra in the case of M/s Yasoda Grah Nirman Sahkari Sanstha Maryadit 2018 (5) TMI 1643 - ITAT AGRA Accordingly, in terms of our aforesaid observations, we are of the considered view that the CIT(A) had erred in upholding the levy of fees under Sec.234E in the case of the present assessee. The Ground of appeal No. 2 raised by the assessee is allowed.

Summary

Issues:
1. Interest liability under Sec.201(1A)
2. Levy of fees under Sec.234E

Detailed Analysis:

Issue 1: Interest liability under Sec.201(1A)
The appeal filed by the assessee contested the order passed by the CIT(A) regarding the interest liability under Sec.201(1A) of the Income Tax Act. The contention was that the interest should be calculated from the date of tax deduction by the assessee until the date of payment by the deductee, not until the filing of the deductee's income tax return. The ITAT Mumbai, comprising Shri Shamim Yahya and Shri Ravish Sood, examined the legal provisions and referred to the judgments of the Hon'ble Supreme Court in the cases of Hindustan Coca Cola Beverages Pvt. Ltd. v. CIT and CIT v. Pranoy Roy. The tribunal agreed with the assessee's argument, stating that interest under Sec.201(1A) continues until the deductee pays the tax. Consequently, the tribunal directed the Assessing Officer to re-determine the interest liability in line with this interpretation, allowing the appeal on this ground.

Issue 2: Levy of fees under Sec.234E
The second issue revolved around the levy of late fees under Sec.234E of ?21,200. The assessee argued that no late fees should be charged for the period before 01.06.2015 while filing the TDS statement under Sec.200A. The ITAT Mumbai referred to a similar case adjudicated by the ITAT Amritsar, where it was held that the levy of fees under Sec.234E prior to 01.06.2015 was not legally justified. The tribunal also cited judgments from the Hon'ble High Court of Karnataka and the ITAT, Chandigarh, supporting the view that such fees were not authorized by law for the relevant period. Consequently, the ITAT Mumbai set aside the CIT(A)'s decision and vacated the demand raised by the Assessing Officer for late fees under Sec.234E for all four quarters before 01.06.2015 in the assessment year 2015-16. The appeal on this ground was allowed, aligning with the precedent and legal provisions.

In conclusion, the ITAT Mumbai allowed the appeal of the assessee on both issues, directing the Assessing Officer to re-calculate the interest liability under Sec.201(1A) and vacating the demand for late fees under Sec.234E for the relevant period.