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TMI Blog2016 (5) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... ot as per sub sec. (1) of sec. 192 of the Act. Therefore, we are of the opinion that, interest u/s 201(1A) is payable from the 1st day of April of subsequent year. - Decided against the revenue. - I.T.A.Nos.155&156/Vizag/2014, C.O. Nos.36&37/Vizag/2014 - - - Dated:- 31-3-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Smt. D. Komali Krishna, DR For The Respondent : Shri G.V.N. Hari, AR ORDER PER BENCH: These appeals filed by the Revenue and Cross objection filed by the assessee are directed against the separate, but identical orders of Commissioner of Income-tax (Appeals), Visakhapatnam for the Asst. Year 2010-11 and 2011-12. Since, the facts are identical and issues are common, they are clubbed, heard together and disposed off, by way of this common order for the sake of convenience. 2. The brief facts of the case are that the assessee, Andhra University is established under an act of state legislature. A survey operation under sec. 133A of the Income Tax Act, 1961 was conducted on 19-11-2011 to examine the assessee s compliance to TDS provisions. During the course of survey, it was noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be from the month when the pension payments exceed the basic exemption limit. It was further submitted that while calculating interest under sec. 201(1A), the procedure laid down in rule 119A(c) was not followed and tax and interest in not rounded off to nearest ₹ 100/-. 4. The CIT(A) after considering the submission of assessee held that interest is leviable, even in the cases where the deductee has paid the taxes and filed return of income. While doing so, the CIT(A) relied upon the judgment of Hon ble Supreme Court, in the case of Hindustan Coca Cola Beverages (P) Ltd vs CIT, 293 ITR 226 and Board Circular No. 275/201/95-IT(B) dt. 29-1-1997. As regards period of computation of interest under sec. 201(1A), the CIT(A) held that the liability to deduct TDS arises only when there was tax liability for the deductee. Thus, the liability would arise only when the amount of income exceeds the taxable limit. Therefore, interest liability under sec. 201(1A) shall be computed from the month in which the income of the deductee exceeds the basic exemption limit. With these observations, the A.O. has been directed to re-compute the interest under sec. 201(1A). Aggrieved by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the date of payment of taxes by the deductee. In respect of others, the A.O. levied interest up to the date of order under sec. 201(1) of the Act. The A.O. has levied the interest under sec. 201(1A) by dividing the TDS liability by 12 and distributed evenly for over a period of 12 months and computed the interest. It was the contention of the assessee that in respect of pensioner s who had paid taxes, interest under sec. 201(1A) is not leviable, in view of Explanation to sec. 191 of the Act, as the assessee cannot be treated as assessee in default. 8. The first question before us is, whether assessee is an assessee in default referred to in section 201(1) of the Act, consequently liable for interest under sec. 201(1A) of the Act. Before, we go in to the facts of the case, let us understand the provisions of law enumerated by sec. 201(1) and 201(1A) of the Act, which reads as follows. Section 201(1): Where any person, including the principal officer of a company,-- (a) Who is required to deduct any sum in accordance with the provisions of this Act; or (b) Referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision rendered by Hon ble Supreme Court, in the case of Hindustan Coca Cola Beverages (P) Ltd vs. CIT 293 ITR 226(SC) and further supported by Board circular No. 275/201/95-IT(B) dt 29-1- 1997, wherein it was clarified that no demand visualized under sec. 201(1) of the Act, should be enforced after the tax detector has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under sec. 201(1A) of the Act. Therefore, we are of the opinion that the assessee is liable to pay interest under sec. 201(1A) of the Act. 9. Having said that, let us examine the period of computation of interest. The A.O. held that the assessee is liable to pay interest on every month for failure to deduct and pay TDS. According to A.O. the assessee has to deduct TDS under sec. 192(1) on equally on every month, therefore, divided the TDS amount by 12 and distributed evenly for 12 months and computed the interest. It was the contention of A.O. that in view of sec. 192(3), interest can be levied only from 1st day of April of assessment year. Before, we go into the facts of the case, let us understand releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the financial year. Therefore, sub sec. (3) abundantly makes it clear that if failure to deduct tax, the same can be deducted by way of adjustment during the financial year. Similarly, section 201(1A) provides for computation of income from the date it was deductible to the date of such deduction or payment as the case may be. A conjoint reading of sec. 192(1) and 192(3) along with section 201(1A) makes it clear that liability to interest arises only, when such tax was deductible as per sub sec. (3) of section 192 and not as per sub sec. (1) of sec. 192 of the Act. Therefore, we are of the opinion that, interest u/s 201(1A) is payable from the 1st day of April of assessment year. 11. Now it is pertinent to discuss the case laws relied upon by the assessee. The assessee relied upon Hon ble High Court of Uttarakhand decision, in the case of CIT vs. Enron Expat Services (2011) 330 ITR 496, wherein the Hon ble High Court, held that short fall in deduction of TDS and failure to deduct TDS can be deducted by way of adjustment during the financial year. The relevant portion is reproduced hereunder. It is true that sub-s. (1) of s. 192 contemplates deduction of income-tax at th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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