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TMI Blog2001 (7) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding TDS from the salary of the employees. The matter was discussed by him with the representative of the assessee. The AO found that the assessee had reimbursed car operating expenses, leave travel allowance and business attire reimbursement. The AO took a view that 20 per cent of the reimbursement expenses pertained to the personal element. No proof or actual expenses have been shown by the assessee. Under the circumstances, he held that 20 per cent of such reimbursement should be considered for the purpose of TDS as under: 2.1. Regarding leave travel allowance, the assessee is to grant LTA based on the declaration by the assessee. No actual proof of journey is asked for from the employees by the assessee. Under the circumstances, the AO held that 20 per cent of such payments might not have been actually utilised by the employees for LTA. 2.2. Regarding business attire reimbursement, the AO felt that there was no uniform as such for the employees. Under the circumstances, such payments should be considered as taxable and tax should be deducted at source. 2.3. Considering these aspects, the AO estimated the short-deduction of tax for all the years under consideration, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01(1A) are not attracted. 4. The learned CIT(A) while considering and accepting the plea as raised by the assessee s representative has concluded in para 6, 7, 8 and 9 of his order and cancelled the interest charged for all the years under consideration. His findings are reproduced as under: "6. I have considered the submissions. I find that the employer had done TDS under s. 192 based on the estimated salaries paid. However, did not consider certain items on the ground that those were either deductible or exempt from taxation. The AO has brought only estimated portion of the payments of leave travel allowance and reimbursement on account of car operating expenses and business attire reimbursement. Under the circumstances, it is only a difference of opinion on which the TDS had been demanded. 7. Considering these aspects, I hold that the appellant is not required to pay interest under s. 201(1A), particularly in view of the Madhya Pradesh High Court decision cited supra. 8. Even though the appellant has considered and paid the additional tax on account of short deduction, that alone is not sufficient reason to charge interest under s. 201(1A), because I hold that the estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the decision of Delhi Bench A of the Tribunal in the case of Nestle India Ltd. vs. Asstt. CIT (1997) 61 ITD 444 (Del), decision of Ahmedabad Bench C of the Tribunal in the case of Gujarat Narmada Valley Fertilisers Co. Ltd. vs. ITO (2000) 66 TTJ (Ahd) 121 : (1999) 71 ITD 66 (Ahd) and decision of Ahmedabad Bench A of the Tribunal in the case of Oil Natural Gas Corpn. Ltd. vs. ITO (1998) 60 TTJ (Ahd) 408, it was pleaded for confirmation of the impugned order as those decisions are directly applicable to the facts of the assessee s case. Moreover, the assessee was under bona fide impression that the TDS is not to be made from its employees on the above-mentioned items. Therefore, interest is not chargeable. It was urged for confirmation of the order of the learned CIT(A). 8. We have heard both the sides, gone through the orders of the authorities below, relevant provisions of law and the precedents as referred to. After careful consideration of arguments of both the sides, looking into the provisions of law relating to charging of interest under s. 201(1A) we find that the interest in this case has been charged for short-deduction of tax at source for the period for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on the amount which ought to have been deducted and deposited and has not been done. 10. On various occasions, Courts have considered such interpretation and observed that the use of the word "shall" raised a presumption that the particular provision is imperative. But this prima facie inference may be regarded by other consideration such as the object and scope of the enactment and consequences flowing from such construction. It was observed by the apex Court in the case of Sainik Motors vs. State of Rajasthan AIR 1961 SC 1480 that the word shall is ordinarily mandatory, but it sometimes not so, if the context or intention otherwise demands. When a statute uses the word shall prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the real scope of statute. In considering whether a statute is imperative, a balance may be struck between the inconvenience of sometimes rigidly adhering to it and the convenience of sometimes departing from its terms. For ascertaining the real intention of the legislature, the Court may consider, inter alia, the nature and design of the statute and the consequences which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g machinery for recovery of tax which is compensatory in nature. Liability to pay interest arises by operation of law, being automatic. Looking at the nature of levy, it is clear that it is compensatory in character and not in the nature of penalty. There are several provisions where the legislature has made a distinction between interest payable and penalty imposable. The ultimate liability for tax being not there does not dilute the requirements for the non-compliance of which interest is levied under s. 201(1A). Similar situation arose before the Hon ble Supreme Court in the case of Ganesh Dass Shreeram vs. ITO Ors. (1987) 66 CTR (SC) 135 : (1988) 169 ITR 221 (SC) where interest on late filing of the return in the case of registered firm to be treated as unregistered firm was under consideration and it has been held that interest charged for late filing of the return is levied by way of compensation and not by way of penalty. The Hon ble Supreme Court has further held as under: "Where the advance tax duly paid covers the entire amount of tax assessed, there is no question of charging the registered firm with interest even though the return is filed by it beyond the time allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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