2021 (10) TMI 267 - AT - Income Tax

Interest u/s 201 as payable by the Assessee on delayed payment of TDS - Order u/s 153 issued by the CPC (TDS) charging interest on late payment of the TDS u/s 201(1A) - HELD THAT - Assessee deposited cheque on 30.04.2012 which has been cleared and the amount has been debited on 30.04.2012 itself from the account of the assessee whereas the challan generated by the bank reflected date of deposit as on 01.05.2012 which spinned off the charging of interest by the CPC. Assessee has produced certificate from the Indian Overseas Bank, Secunderabad Branch confirming that the assessee has deposited the amounts through Internet Banking facility (IBF) of the bank on 30.04.2012 and amounts have been debited on the same date. A technical error on the part of the bank to reflect the amount on 01.05.2012 instead of 30.04.2012 for which we hold that the assessee cannot be held to be responsible. We are also guided by the circular of CBDT No. 1197 with regard to the Section 211, advance tax where in in case of bank holiday, the amounts were allowed to be paid on the next day of the due date without interest. In the instant case, the matter pertaining to Section 201, the assessee has rightly deposited the TDS amount on 30.04.2012. Hence, we hold that the assessee is not liable to pay any interest u/s 201(1A). Appeal of the assessee is allowed.

Issues:
1. Upholding demand of interest on delayed TDS payment
2. Calculation of interest under Section 201(1)/201(1A)
3. Date of deposit vs. date of challan
4. Charging interest for alleged delay in TDS deposit
5. Interpretation of "every month or part thereof" in Section 201(1A)
6. Definition of "month" according to British Calendar
7. Charging of interest under Section 220(2)
8. Delay in payment processing by recovery bank
9. Correctness of CIT(A) order based on facts and legal position

Analysis:
1. The appeal was filed against the CIT(A)'s order upholding the demand of interest on delayed TDS payment. The assessee argued that the interest calculated under Section 201(1)/201(1A) was illegal and bad in law. The Tribunal found that the assessee deposited the TDS amount on 30.04.2012, but a technical error by the bank reflected the date as 01.05.2012 in the challan. Citing a CBDT circular regarding bank holidays, the Tribunal held the assessee not liable for interest under Section 201(1A) due to the timely deposit.

2. The Tribunal addressed the issue of charging interest for alleged delay in TDS deposit. It was established that the amount was debited from the assessee's account on the same day it was deposited, despite the challan showing a different date. Relying on the CBDT circular and the technical error by the bank, the Tribunal concluded that the assessee should not be held responsible for the discrepancy and therefore, was not liable to pay interest under Section 201(1A).

3. The interpretation of "every month or part thereof" in Section 201(1A) was also discussed. The Tribunal analyzed the connotation of this phrase and emphasized that in the given context, it referred to a period of one month or part thereof, rather than strictly adhering to the calendar month interpretation. This interpretation played a crucial role in determining the liability for interest on delayed TDS payment.

4. The Tribunal further delved into the definition of "month" according to the British Calendar. It differentiated between a calendar month and a period of time qualifying as a month. By highlighting this distinction, the Tribunal clarified the application of the term "month" in the context of the case and its relevance to the legal provisions governing interest calculations.

5. The Tribunal examined the charging of interest under Section 220(2) and its calculation methodology. It assessed the correctness of the interest charged and the manner in which it was worked out, ensuring compliance with the legal provisions and the specific circumstances of the case.

6. Lastly, the Tribunal considered the issue of delay in payment processing by the recovery bank. The assessee contended that there was no delay in payment as the amount was deposited on time, and any processing delay by the bank should not be attributed to the appellant. This argument was evaluated in conjunction with the factual and legal aspects of the case to determine the validity of the delay claim.

Overall, the Tribunal allowed the appeal of the assessee, emphasizing the technical error by the bank in reflecting the deposit date and the timely submission of the TDS amount as key factors absolving the assessee from the interest liability under Section 201(1A). The judgment provided detailed insights into the legal interpretations and factual considerations governing the case, leading to a favorable outcome for the assessee.

← Previous Next →