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TMI Blog2020 (1) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... -13. 2. The common issue that needs to be decided in these appeals is as to whether the Revenue authorities were justified in levying interest under section 201(1A) of the Income Tax Act, 1961 ('the Act') for delaying in remitting tax deducted at source to the credit of the Central Government. The admitted factual position is that the assessee deducted tax at source and deposited the same to the credit of the Government of India. It is not disputed that the tax deducted for a month were remitted on the 7th day of the next month which is the prescribed due date for remittance of tax deducted at source. The assessee remitted tax in the Online Tax Accounting System (OLTAS). In the OLTAS, the date of remittance was shown as 8th / 9th of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. In the case of the assessee, however the payments have not been made by cheques but online and the credit is instant. 5. We have heard the rival submissions. The learned DR reliled on the order of the CIT(A). The learned counsel for the Assessee drew our attention to Circular No.261 dated 08.08.21979 wherein it has been directed that even in the case of cheques, the date of payment is regarded as the date on which the cheque is handed over to the government bankers if the cheque is ultimately honoured. Our attention was also drawn to the decision of the ITAT Bench in the case of P L Haulwel Trailers Ltd., Vs. DCIT [2006] 100 ITD 485 (Chennai) wherein the identical issue in the context of the Treasury Rules referred to by the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to be due payment if the cheque is subsequently encashed in the ordinary course. Therefore, the Parliament, in its wisdom, enacted the Negotiable Instruments Act to regulate and manage the transactions through cheques. Further, section 138 of the said Act was amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 by inserting Chapter XVII comprising of sections 138 to 142 with effect from 1-4- 1989. This Chapter was introduced in the Negotiable Instruments Act, 1881 with a view to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of the funds in the account or for the reason th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directorate of Service Tax clearly expresses the intention of the Government in treating the payments made by the individual assessees by cheque or bank draft. Central Government Account (Receipts and Payments) Rules, 1983 was framed by the executive authorities in exercise of their power under article 283(1) of the Constitution of India. Rule 20(1) of said Rules says that when the payment was made by cheque or draft, the payment shall be deemed to have been made on the date on which it was cleared and entered in the receipt scroll. Whereas under the Negotiable Instruments Act, 1881, as interpreted by the Supreme Court in the case of K. Saraswathy (supra), it is obvious that the date of payment relates back to the date of presentation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts and Payments) Rules, 1983 do not apply to payments online but are applicable to payments made by cheques and the date of payment when payments are made by Cheques. Even in such cases, the rule is that if the cheques are ultimately honored the date of handing over the cheque to the Government should be regarded as the date of payment. Therefore the aforesaid decision of ITAT Chennai Bench in the case of P L Haulwel Trailers Ltd. (supra)supports the plea of the assessee that the levy of interest under section 201(1A) of the Act to the facts and circumstances of the present case cannot be justified. We, therefore, direct that the order under section 201(1A) of the Act be cancelled. The appeals of the assessee are accordingly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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