2025 (3) TMI 79 - AT - Income Tax

Computation of interest demand u/s 201(1A) - Validity of order u/s 201(1A) charging interest for the delayed payment - HELD THAT - On perusal of the findings of the Ld. CIT(A) it is observed that the Ld. CIT(A) directed the Assessing Officer to look into and ensure that the calculation of interest as charged by the Assessing Officer u/s 201(1A) is as per law. It is also observed that the Ld. CIT(Appeals) held that the dispute in appeal is only with regard to charging of interest u/s 201(1A) which was rightly made by the Assessing Officer for the delayed deposit of TDS. We do not see any infirmity in the order of the Ld. CIT(A). Assessee contends that interest u/s 201(1A) was incorrectly charged. Therefore we direct the AO to look into the contention of the assessee with regard to incorrect levy of interest u/s 201(1A) of the Act and pass order afresh in accordance with law after providing adequate opportunity of being heard. Ground no.7 of grounds of appeal is allowed for statistical purpose.

Summary

The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) for the AY 2008-09, which sustained the action of the Assessing Officer in charging interest under section 201(1A) of the Income Tax Act. The delay in filing the appeal was condoned by the Appellate Tribunal due to reasonable cause.The main issue raised by the assessee was that TDS was mistakenly deducted under section 194J instead of section 194C of the Act on the payments made. The assessee argued that since the payments did not fall under professional or technical services, TDS under section 194J was not applicable, but only section 194C was relevant. Additionally, the assessee contended that the computation of interest demand under section 201(1A) was incorrect, as the rate of TDS under section 194J had changed over time.The Assessing Officer did not dispute the deductibility of TDS but charged interest under section 201(1A) for delayed payment. The Ld. CIT(A) observed that the appellant had voluntarily admitted the liability for TDS under section 194J, and since tax had been deducted and deposited accordingly, no order under section 201 was passed. However, interest under section 201(1A) was charged for delayed payment due to the admitted short deduction of tax.The Ld. CIT(A) upheld the charging of interest under section 201(1A) by the Assessing Officer, stating that it was in accordance with the law. The Appellate Tribunal found no issue with the Ld. CIT(A)'s decision but directed the Assessing Officer to review the contention raised by the assessee regarding the incorrect levy of interest under section 201(1A) and to pass a fresh order in accordance with the law.Ultimately, the appeal of the assessee was partly allowed for statistical purposes, specifically regarding the incorrect levy of interest under section 201(1A). The Tribunal emphasized that since the dispute was solely related to the levy of interest, other grounds raised by the assessee concerning the deductibility of TDS under sections 194J/194C were not relevant to the appeal.In conclusion, the Appellate Tribunal upheld the charging of interest under section 201(1A) by the Assessing Officer but directed a reassessment of the interest calculation in response to the assessee's contention. The appeal was partly allowed for statistical purposes, focusing solely on the issue of interest levy under section 201(1A).