2016 (6) TMI 1398 - AT - Income Tax

Levy of processing fees u/s 234E - intimation u/s 200A - HELD THAT - As decided in Sibia Healthcare Private Limited vs. DCIT 2015 (6) TMI 437 - ITAT AMRITSAR issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E - Decided in favour of assessee.

Summary

Issues:
- Grievance against levy under section 234E in processing of TDS returns and intimation under section 200A of the Income Tax Act, 1961.

Analysis:
1. The appeals involved a common issue of the assessee's grievance against the levy under section 234E and intimation under section 200A of the Income Tax Act, 1961. The Tribunal disposed of the appeals by a consolidated order due to the commonality of the issue.

2. The key issue in all appeals was the assessee's challenge against the levy under section 234E during the processing of TDS returns and intimation under section 200A. The representatives agreed that this issue had been previously addressed in a Division Bench decision, which favored the assessee. The Tribunal referred to the legal provisions of section 234E and section 200A to provide context to the issue at hand.

3. The Tribunal highlighted the amendment made in section 200A by the Finance Act 2015, effective from 1st June 2015, which introduced the computation of fees in accordance with section 234E during the processing of TDS statements. Prior to this amendment, there was no provision for raising a demand related to fees under section 234E during the intimation under section 200A.

4. The Tribunal analyzed the scope of permissible adjustments under section 200A before the 2015 amendment. It concluded that the adjustment for the levy of fees under section 234E was beyond the permissible adjustments allowed under the law at that time. The Tribunal emphasized that the intimation under section 200A was appealable, and the levy of fees under section 234E was unsustainable in law in the absence of enabling provisions.

5. Referring to a judicial precedent where the issue was decided in favor of the assessee, the Tribunal held that the learned CIT(A) erred in upholding the levy of processing fees under section 234E through the intimation under section 200A. Consequently, the Tribunal quashed the impugned demands, providing relief to the assessee by allowing all the appeals.

In conclusion, the Tribunal's detailed analysis of the legal provisions, precedents, and amendments led to the decision in favor of the assessee, highlighting the incorrect levy of fees under section 234E during the processing of TDS returns and intimation under section 200A.