VD SWAMI AND COMPANY PRIVATE LIMITED,CHENNAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), , CHENNAI

ITA 4145/CHNY/2026Status: DisposedITAT Chennai06 October 2026AY 2014-1511 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the levy of fee under Section 234E was not sustainable for TDS statements pertaining to periods prior to June 1, 2015. The Tribunal noted that while Section 234E provides for the levy of fee, the controversy lies in the existence of a statutory machinery under Section 200A to compute and levy such fee. Section 200A(1) was amended by the Finance Act, 2015, with effect from June 1, 2015, to specifically empower the computation of fee under Section 234E. The Tribunal followed the jurisdictional High Court of Madras decision in True Blue Voice India Pvt. Ltd. v. Chief Commissioner of Income-tax (TDS), which held that the machinery provision under Section 200A for computing Section 234E fees became effective only from June 1, 2015. Consequently, the levy of fee for periods prior to this date through processing under Section 200A was deemed unsustainable. The Tribunal also deleted the consequential interest charged under Section 220(2) as it arose from the unsustainable levy of Section 234E fee. Grounds 2 to 6 were allowed.

What were the facts?

The assessee, VD Swami and Company Private Limited, filed four appeals before the Income Tax Appellate Tribunal (ITAT), Chennai, for Assessment Year 2014-15. The appeals challenged orders of the Commissioner of Income Tax (Appeals) that upheld the levy of fee under Section 234E and consequential interest under Section 220(2) of the Income Tax Act, 1961. The assessee had filed a TDS statement for the fourth quarter of FY 2013-14, which was processed by CPC-TDS on September 10, 2018. This processing resulted in a demand of Rs. 34,600/- for late filing fee under Section 234E and Rs. 32,292/- for interest under Section 220(2). The assessee contended that Section 200A, as it stood prior to June 1, 2015, did not empower CPC-TDS to compute and levy Section 234E fees for periods before that date.

What were the issues?

1. Whether the levy of fee under Section 234E of the Income Tax Act, 1961, is sustainable when the TDS statement pertains to a period prior to June 1, 2015, and the amendment to Section 200A(1) empowering such computation came into effect only from June 1, 2015? 2. Whether the consequential interest charged under Section 220(2) of the Act can survive if the underlying demand for fee under Section 234E is held to be without jurisdiction? Assessee's contentions: - Prior to the insertion of clause (c) to Section 200A(1) by the Finance Act, 2015, effective June 1, 2015, there was no statutory machinery empowering the Assessing Officer/CPC-TDS to compute and levy fee under Section 234E while processing TDS statements. - The amendment to Section 200A is prospective, and fee under Section 234E could not be levied through processing under Section 200A for periods prior to June 1, 2015. - Reliance was placed on Fatehraj Singhvi & Ors. v. Union of India & Ors. (Karnataka High Court), Sree Sankaracharya University of Sanskrit v. Assistant Commissioner of Income Tax (Kerala High Court), and Rajesh Kourani v. Union of India (Gujarat High Court). Revenue's contentions: - The revenue relied on the decision of the Hon'ble Madras High Court in Conceria International (P.) Ltd., arguing that Section 234E created the liability and the amendment to Section 200A provided the mechanism.

Which sections of the Income-tax Act were involved?

Section 234E,Section 200A,Section 220(2),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: GAGAN GOYAL & SHRI MANU KUMAR GIRI

Hearing: 16.09.2026

PER BENCH:

These appeals filed by the assessee are directed against four orders of the Commissioner of Income Tax (Appeals), Chennai-18, all dated 23.01.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called 'the Act'). The relevant Assessment Year (AY) is 2014-15. 2. The Registry has noted a delay of 60 days in filing the present appeal. We have considered the condonation petition and affida

The order continues below.

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