UTI MUTUAL FUND,MUMBAI vs. DCIT CENTRALISED PROCESSING CELL-TDS, TRACES, GHAZIABAD

आयकर अपीऱीय अधिकरण “F” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI C.N PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER आयकर अपीऱ सं./I.T.A. No.2295/Mum/2018 (नििाारण वर्ा / Assessment Year: 2014-15) बिाम/ UTI Mutual Fund, DCIT, Centralised GN Block, UTI Tower, Processing Cell-TDS, Bandra Complex, TRACES, v. Bandra (E), Aayakar Bhawan, Mumbai-400051 Sector-3, Vaishali, Ghaziabad, UP- 201010 स्थायी ऱेखा सं./ PAN: AAATU1088L (अपीऱाथी /Appellant) .. (प्रत्यथी / Respondent) Assessee by: Ms. Krupa Gandhi Revenue by: Shri. Rajeev Gubgotra (DR) सुनवाई की तारीख /Date of Hearing : 13.06.2019 घोषणा की तारीख /Date of Pronouncement : 01.07.2019 आदेश / O R D E R PER RAMIT KOCHAR, Accountant Member: This appeal, filed by assessee, being ITA No. 2295/Mum/2018, is directed against appellate order dated 17.01.2018, passed by learned Commissioner of Income Tax (Appeals)-59, Mumbai (hereinafter called “the CIT(A)”) in Appeal No. CIT(A)-59/IT-116 [IT-114(Apl.-60)]/2017-18, for assessment year 2014-15, which in turn has arisen from intimation issued by learned Deputy Commissioner of Income-tax, Income Tax Department , TDS CPC, Ghaziabad, UP, dated 30.03.2014 u/s. 200A of the 1961 Act 2. The grounds of appeal raised by assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-

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―GROUND NO. 1: LEVYING OF ADDITIONAL INTEREST U/S 201(1A) FOR LATE PAYMENT OF TAX DEDUCTED AT SOURCE ("TDS"): 1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the action of the Assessing Officer ("AO") of levying additional interest u/s 201(1A) amounting to Rs. 4,19,090/- on late payment of TDS. 2. The Appellant prays that the additional interest levied by the AO and affirmed by the CIT(A) amounting to Rs. 4,19,090 be deleted.‖

Date Of Date of Due Date Date of TDS amount Delay in DELAY PERIOD Rate of Interest REMARKS Payment Deduction Deposit days both IN MONTHS interest payable DATES PER per month inclusive S.201(1A) 7/10/2013 7/10/2013 7/11/2013 11/11/2013 5,131,710.00 35 2 1.50% 153,951.00 Period of delay is more than 30 days hence 2 months are

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considered 14/10/2013 14/10/2013 7/11/2013 11/11/2013 9,006,510.00 29 1 1.50% 135,098.00 Period of delay is less than 30 days hence 1 month is considered 21/10/2013 21/10/2013 7/11/2013 11/11/2013 9,330,686.00 22 1 1.50% 139,960.00 Period of delay is less than 30 days hence 1 month is considered 28/10/2013 28/10/2013 7/11/2013 11/11/2013 9,602,433.00 15 1 1.50% 144,037.00 Period of delay is less than 30 days hence 1 month is considered Total 573,046.00

3.2. The assessee while computing interest payable to the credit of Central Government for such delay in deposit of TDS computed voluntarily interest payable of Rs. 5,73,046/- as detailed in the above chart which was claimed to be duly paid by the assessee voluntarily suo motu while filing TDS return for Quarter 3 of financial year 2013- 14 in Form no. 26Q. But the Revenue was of the view that the total interest for late deposit of TDS to the credit of Central Government amounted to Rs. 9,92,136/- , which led to the issuance of additional demand payable by the assessee towards late deposit of TDS to the Credit of Central Government of Rs. 4,19,090/- , vide intimation dated 30.03.2014 issued by learned DCIT under Section 200A of the 1961 Act. The Revenue has counted month of deduction of TDS as one month as well subsequent month in which payment of TDS was paid by the assessee to the credit of Central Government was counted as second month for computing interest payable by the assessee on late deposit of TDS to the credit of Central Government, while on the other hand the assessee has taken 30/31 days as a month and if the period between deduction of TDS and payment thereof to the credit of Central Government is up-to 30/31 days, it was taken as one month but if the period of gap between the two dates is more than 30/31 days but up-to 61/62 days, it was taken as two months for computing interest payable on late deposit of TDS to the credit of Central Government. That is how differential interest payable by assessee is computed by Revenue to the tune of Rs. 4,19,090/-which arose on late deposit of

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TDS by assessee. There were some minor demand also raised against assessee of Rs. 360/- and Rs. 12/- for other defaults in the same intimation dated 30.03.2014 issued by learned DCIT u/s 200A , with which we are not presently concerned with. We will confine our discussions only to issue under dispute which concerns itself with interest payable by assessee on account of late deposit of TDS to the credit of Central Government to the tune of Rs.4,19,090/-. 4. The assessee being aggrieved by demand raised by Revenue vide intimation dated 30.03.2014 issued by learned DCIT vide intimation u/s 200A of the 1961 Act has filed first appeal with learned CIT(A). The learned CIT(A) was pleased to dismiss appeal of the assessee , vide appellate orders dated 17.01.2018 , by holding as under:- ― 2.1 The first ground of appeal agitates against the levy of interest on late payment amounting to Rs.4,19,090/- as reflected in column no.3(b) of the intimation under section 200A of the Act dated 30.03.2013 of the CPC-TDS. , 2.2 In the Statement of Facts, it was stated that TDS aggregating Rs.3,30,71,399/- in respect of some payees was deducted on various dates in the month of October, 2013. The amounts so deducted was deposited in the government account on 11.11.2013 as against the due date of 07.11.2013 for doing so. It was stated that since the tax deducted was deposited after the due date, the appellant suo moto paid interest of Rs.5,73,046/- for the delayed period in terms of section 201(1A) of the Act. However, the appellant received an additional demand of Rs.4,19,090/- as interest for late payment of TDS. To put it differently, the total interest on late deposit of tax deducted, was determined by CPC-TDS at Rs.9,92,135/- as against Rs.5,73,046/- computed by the appellant. It was stated that as per the relevant Justification Report, the aforesaid difference had arisen by taking the period of delay at two months, as per column (17) thereof, 2.3 The appellant protested that the period of delay of two months was incorrect since the CPC-TDS had taken the date of deduction of tax in a month as one complete calendar month and the date of deposit of tax in the subsequent month as one more complete calendar month. To put it in actual context, the delay was taken for the two

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months of October, 2013 and November, 2013. The appellant asserted that as per section 201(1A) of the Act, firstly, the difference between the date of deduction and date of tax (both inclusive) is to be calculated for arriving at the number of days of delay. Thereafter, if the total period of delay was less than one month, it was to be treated as delay of one month. On the other hand, if the period of delay was more than 30/31 days, it was to be treated as delay of 2 months for calculating interest payable. The appellant alleged that the Justification Report showed that the reverse had been done, which was bad in law. The appellant also stated that during the years when NSDL was handling the TDS matters, the computation of interest was as per the version canvassed by it. Without prejudice to its arguments, the appellant pointed out that when two views were possible, the interpretation which was more beneficial to the assessee was to be applied, Finally, reliance was placed on the decision of the Hon'ble Gujarat High Court, in the case of Commissioner of Income Tax Vs. Arvind Mills Limited (Tax Appeal No.2486 of 2009 dated 13.09.2011). Reliance was also placed on the decision of the Ld. Appellate Tribunal, Hyderabad, in Navayuga Quazigund Expressway vs. DCIT, Circle 15(1), Hyderabad [2015] reported in 64 Taxmann.com 212. It also relied on two orders (both dated 03.02.2016) of the Id. Appellate Tribunal, Ahmedabad, namely : (i) Suzlon Gujarat Wind Park Ltd. (SMC Bench) in ITA Nos.2931-2933/Ahd/2015. (ii) Suzlon Energy Ltd. (SMC Bench) in ITA No.2934/Ahd/2015 2.4 The matter has been considered. The dispute lies in a narrow compass and has already been set out, supra. In specific terms, the grievance of the appellant relates to late deposit interest levied vis-a-vis three tax deduction at source made by it on 14.10.2013, 21.10.2013 and 28.10.2013. Since these were in the month of October, 2013, their common due date for deposit in Central Government Account was November 07, 2013. However, there was a default as the three deductions were actually deposited in the government account on November 11, 2013. Resultantly, there was a delay of 29, 22 and 15 days as per the appellant, That is to say, there arose a delay period of one month only as per the appellant's reckoning since the aforementioned delay in none of the three defaults, exceeded a period of 30/31 days. On the other hand, the CPC-TDS took the same for full two months

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by recognizing the part periods in October and November, 2013 as full two months for this purpose. 2.5 The appellant's arguments are misconceived. Section 201(1A) of the Act is free from doubt. For ready reference, the section is extracted below (emphasis supplied): "Consequences of failure to deduct or pay 201 (1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,— (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200" 2.6 In the instant case, interest for late deposit of TDS will be calculated for the months of October, 2013 and November, 2013, since it was due for across both these part months. The governing section, ie , section 201(1A) of the Act is explicit that interest on late deposit of TDS is to be calculated from the date of deduction to the date of deposit at the rate of 1.5 percent per month or part of the month. The appellant deposited the tax it deducted after the applicable due date for doing so. That is to say, the due date for depositing the tax deducted by it had already expired on 07.11.2013, when it actually deposited the same on 11.11.2013. Accordingly, the appellant would be liable to pay interest for two months, viz. for October and November, 2013. Both the parts of the months involved will be reckoned and included as full months since "part of a month" is also considered as a full month as per the clear stipulation of section 201(1A) of the Act. When the said section itself mandates that any fraction of a month is to be deemed a full month, then there is little scope for reading it down or importing interpretational issues based on extraneous considerations such as equity or comparisons with other sections of the statute. For instance, there is no mention of the calculation of a "period" which has been specified in clause (a) and clause (b) of 6 | P a g e

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rule 119A of the Income-tax Rules, 1962, wherein it has been stated that where interest is to be calculated for every month or a part of the month comprised in a "period", any fraction of a month shall be deemed to be a full month. Section 201(1A) of the Act has to be taken as a self- contained procedure where the modalities for calculation of interest payable for TDS default has been laid out. 2.7 The decision rendered in the case of CIT vs Arvind Mills Limited (supra) was in the context of section 244A and not in the context of 201(1A) of the Act which applies to the case under consideration. It deserves consideration that section 244A(1) refers to month or part of the month 'comprised in a the period' for all refund scenarios covered by sub-clauses (a), (aa) and (b) thereof. This corresponds to reference to the determination of a 'period' in rule 119A of the Income-tax Rules, 1962, as discussed above. On the other hand, there is no reference to the computation of 'period' in section 201(1A) of the Act. The decision of the Ld. Appellate Tribunal, Hyderabad, in Navayuga Quazigund Expressway vs DCIT, Circle 15(1), Hyderabad (supra) though on the computation of interest under section 201(1A) of the Act, is completely based on the aforecited decision of the Hon'ble Gujarat High Court. No decision of a binding jurisdictional authority was cited by the appellant. Similar is the position with respect to the two decisions dated 03.02.2016 of the ld. Appellate Tribunal, Ahmedabad (SMC Bench, supra) relied upon by the appellant. 2.8 The other argument regarding the manner in which the computation of interest was earlier made by NSDL in its case, even if correct, is not an argument that compels a position to be taken contrary to the provision of the Act against which there cannot be an estoppels. Another submission put forth that a position beneficial to the assessee is to be taken when two views are possible, is valid only when two equally possible views on a particular aspect subsist simultaneously. This is not what obtains in the appeal at hand given the clear words of the statute as enshrined in section 201(1A) of the Act. It may also be worthwhile to mention that interest levied need not wholly be compensatory in nature in all cases. Such a levy may also be penal-deterrent in nature, which is best exemplified by the differential rates of interest provided for in section 201(1A)(i) and section 201(1A)(ii) of the Act. It also perhaps deserves consideration that there was no bar on the statute itself in providing for a period in 'days' rather than 'month'. For example, the words 'thirty days'

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and 'sixty days' appear in section 249(2) and section 153 of the Act. 2.9 In view of the discussion as foregoing, no infirmity is found in the levying of interest in the impugned intimation of the CPC-TDS. The same requires no interference and is upheld. Consequently, the ground of appeal fails and is, therefore, dismissed.‖ 5. Being still aggrieved by appellate order passed by learned CIT(A), the assessee has come in appeal before the tribunal and learned counsel for assessee at the outset submitted that the issue of computing interest payable for delay in deposit of TDS is governed by the provisions of Section 201(1A)(ii) of the 1961 Act read with Rule 119A(b) of the Income-tax Rules,1962. it is submitted by Ld. Counsel for the assessee that the Hon‟ble Courts/tribunal has consistently held that the month has to be considered as a period of 30 days, but since the TDS amount was deducted in the month of October 2013 on various dates while paid to the credit of Central Government on 11.11.2013 , the Revenue has charged interest @ 1.5% per month for the period of two months. The assessee relied upon following judgements to support its contentions :- a) CIT v. Arvind Mills Ltd , (2011) 16 Taxmann.com 291 (Gujarat) b) CIT v. Laxmi Rattan Cotton Mills Co. Ltd , (1974) 97 ITR 285 (Allahabad) c)E.I.DuPont India Private Ltd v. Dy. CIT. CPC - TDS , ITA No. 386 & 387/ Del 2016) (Delhi Tribunal) d)Oil & Natural Gas Commission v. ACIT (TDS) (ITA No. 1955 to 1965 Ahd/2015) (Ahmedabad SMC Bench) e)Navayuga Quazigund Expressway (P) Ltd., v. DCIT (ITA no. 1651/Hyd/14) (Hyderabad) f) Bank of Baroda v. DCIT, CPC, TDS [(2017) 88 taxmann.com 103) (Ahmedabad) g) DCIT, TDS Circle v. M/s Suzlon Gujarat Wind Park Ltd (ITA. 2931 to 2933/Ahd/2015)

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Date Of Date of Due Date Date of TDS amount Delay in DELAY PERIOD Rate of Interest REMARKS Payment Deduction Deposit days both IN MONTHS interest payable DATES PER per month inclusive S.201(1A)

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7/10/2013 7/10/2013 7/11/2013 11/11/2013 5,131,710.00 35 2 1.50% 153,951.00 Period of delay is more than 30 days hence 2 months are considered 14/10/2013 14/10/2013 7/11/2013 11/11/2013 9,006,510.00 29 1 1.50% 135,098.00 Period of delay is less than 30 days hence 1 month is considered 21/10/2013 21/10/2013 7/11/2013 11/11/2013 9,330,686.00 22 1 1.50% 139,960.00 Period of delay is less than 30 days hence 1 month is considered 28/10/2013 28/10/2013 7/11/2013 11/11/2013 9,602,433.00 15 1 1.50% 144,037.00 Period of delay is less than 30 days hence 1 month is considered Total 573,046.00

7.2 The assessee while computing interest payable to Central Government for such delay in deposit of TDS computed voluntarily interest payable of Rs. 5,73,046/- by taking period of delay in deposit of TDS in number of days wherein if the delay in deposit of TDS is upto 30/31 days, it was taken as one month delay but where it exceeded 30/31 days but up-to 61/62 days, the same was taken as 2 months delays while Revenue has taken rollover of month as basis for computing interest payable by the assessee for late deposit of TDS, as where the TDS is deducted in the month of October 2013 but paid in November 2013, the interest is computed by taking delay for 2 months and hence the differential demand for interest payable raised by Revenue to the tune of Rs.4,19,060/- ,vide intimation dated 30.03.2014 issued by learned DCIT under Section 200A of the 1961 Act. We have observed that this issue had been subject matter of quite a controversy between the tax-payers and Revenue before the Hon‟ble Courts/tribunals and consistent view has been taken by Hon‟ble Courts and the tribunal that period of month in such cases is to be taken as period of 30/31 days as contemplated by the assessee in the instant case before us and not as by rollover of month viz. British Calendar Month as contemplated by Revenue . Reference is drawn to the decision of Hon‟ble Gujarat High Court in CIT v. Arvind Mills Limited reported in (2011)16 taxmann.com 291(Guj), wherein Hon‟ble

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Gujarat High Court held in context of provisions of Section 244A of the 1961 Act, as under:- ― 21. Before dealing with the rival contentions it would be useful to take note of statutory provisions applicable. Since the adjustment of the tax previously paid occurred during the period of March, 1997 to November, 2000, we would be taking note of statutory provisions as applicable during the said period. 22. Relevant provisions of Section 244A(1)(a) of the Act at the relevant point of time read as under: "244A. (1) [Where refund of any amount becomes due to the assessee under this Act], he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely :- (a) where the refund is out of any tax [paid under section 115WJ or] [collected at source under section 206C or] paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of [one-half per cent] for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted. Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined [under [sub-section (1) of section 115WE or] sub-section (1) of section 143 or] on regular assessment;" 23. Section 245 of the Act pertains to set off of refund against tax remaining payable and provides inter alia that when a refund is found due to any person the officers mentioned in the said section may in lieu of payment of refund set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.

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the period from the date of payment of the tax to the date on which refund is granted. 27. Rule 119(A) of the said Rules further clarifies that in calculating the interest payable by the Government to the assessee under any provision of the act where interest is to be calculated for every month or part of a month comprised in a period, every fraction of month shall be deemed to be full month and the interest so calculated. 28. By reading of Section (1) of Section 244A of the Act with Rule 119(A) of the said Rules would bring about situation when an assessee who has paid the tax and such tax is to be refunded, the assessee is to be paid interest at the prescribed rate for every month or part of a month comprising the period from the date of payment of the tax to the date on which the refund is granted. If such period is a fraction of a month, the same shall be deemed to be a full month and the interest shall be calculated for the entire month accordingly. In other words while calculating the period for grant of interest, if there is any fraction of a month, such fraction shall be ignored and instead, the assessee shall be paid interest for the full month. 29. So much is clearly emerging from the plain language used in the statutory provisions noticed by us. The case of the assessee however is that the word 'month' should be considered as per British Calender as defined in Section 3(35) of the General Clauses Act and accordingly if there is a fraction of a month on either side of the events i.e. payment of tax or refund thereof, both fractions should be considered as full months and for both months the assessee must be held entitled to receive interest. 30. First and foremost it is not in dispute that term month has not been defined in the Act. Ordinarily, therefore, the definition of term month contained in General Clause Act would be a useful guide in the present case also. However, Section 3 of the General Clauses Act which is a definition section itself starts with rider i.e. "In this Act, in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context ......." Therefore if there is anything repugnant in Section 244A of the Act, the definition contained in Section 3(35) of the General Clauses Act would not be useful. We may also note that the decisions sought to be relied on by learned counsel for the respondents with respect to applicability or otherwise of the definition of the term

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'month' contained in Section 3(35) of the General Clause Act was examined in the background of the provisions contained in Section 271(1)(a) of the Act. 31. Word 'month' is described in Webster's Third New International Dictionary (unabridged) as a measure of time corresponding or nearly corresponding to the period of time moon's revolution or as one of the twelve portions into which the year is divided in the Gregorian calender as also a period of time about the length of a lunar month but not necessarily coinciding with a calender month. The same dictionary also explains term 'calender month' as one of the months as named in the 'calender' or the period from a day of one month to the corresponding day of the next month if such exists or if not to the last day of the next month. 32. In 'Judicial Officer's Law Lexicon' by Justice C.K.Thakker term calender month is explained as under: "A period of time consisting of 30 days in April, June, September and November; of 31 days in the remainder of the months, except February, which consists of 28 days, except in leap-year, when the intercalary day is added, making 29 days. 33. In Judicial Dictionary by Aiyar's, the term 'calender month' is described as a legal and technical term in computation the time by calender months, the time must be reckoned by looking at calender and by not computing test. 34. Black' s Law Dictionary describes the term 'month' as one of the twelve periods of time in which the calender is divided, any time period approximating 30 days. 35. In Law. Lexicon by T.P.Mukherjee [5th Edition], it is stated "the word 'month' would in its ordinary acceptance, mean a 'calender month' and not a 'lunar month'. 36. What is to be ascertained in the present case is as to which definition of term 'month' shall have to be adopted for Section 244A(1) of the Act. In other words the question is, should the definition of term "month" be adopted from General Clauses Act, or not. This exercise shall have to be done on the basis of relevant statutory provisions and the intention of the legislature to provide interest to the assessee whose tax paid is found refundable at a later date.

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General Clauses Act. The Courts were of the opinion that there is nothing repugnant in Section 271(1)(a) of the Act so as to reject the applicability thereof. In the present case, however, we find that there are inbuilt indications why the term month must not be understood as British calender month. Any other interpretation as already observed would lead to anomalous situation. 40. Before closing we may also notice the decision of the Bombay High Court in the case of Asian Paints Ltd. (supra) which was arising in the background of controversy whether the tax calculated by an authorized agent of the Central Government would be sufficient to complete the tax payment or whether any delay on the part of such authorized agent to credit such amount to the account of Central Government would be relevant factor for calculating interest under Section 244A of the Act. It was the case wherein the assessee deposited a cheque for the amount of tax demanded with authorized agent of Central Government on 29th December, 2003 and account of assessee was debited to that extent on 30th December, 2003 but credited to the Central Government account only on 1st January, 2004. The question was can the tax be said to have been paid on 30th December or on 1st January. Of course after holding that the tax was paid on 31st December 2003, the High Court further went out to observe that as per the Rule 119(A)(b) of the said Rules, upon refund, the assessee had to be granted interest for the entire period of December, 2003. We cannot, however, read such observation as the ratio of the decision of the Court. What was the controversy and what was decided by the Court was the actual date of payment of the tax i.e. 30th December, 2003 when the assessee's account was debited and not 1st January, 2004 when such amount was credited to the account of the Central Government. Any further observation regarding the eligibility of the assessee to receive interest for full month of December, 2003 must, therefore, be understood as passing remarks. This issue was not be debated before the Bench and the observations made hereinabove cannot be understood as ratio of the decision. 41. In the result we are of the opinion that Tribunal committed error in holding that the assessee would be entitled to interest for both the months in entirety irrespective of dates when the tax was paid and refunded /adjusted. We answer the question in favour of the Revenue and against assessee. The judgment of the Tribunal is set aside.‖

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7.3 The above decision in the case of Arvind Mills Limited(supra) was rendered in the context of provisions of Section 244A of the 1961 Act. We have also noted that Hon‟ble Allahabad High Court in the case of CIT v. Laxmi Rattan Cotton Mills Co. Ltd., reported in (1974) 97 ITR 285 (All. HC) has also interpreted „month‟ in context of Section 271(1)(a) of the 1961 Act, by holding as under:- “The Income-tax Appellate Tribunal, Allahabad, has under section 256(1) of the Income-tax Act, 1961, referred the following two questions for our opinion: "1.Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the word 'month' occurring in section 271(1)(a)(i) referred to English calendar month? 2.*** ― The assessee did not file his return for the assessment year 1958-59 by November 15, 1958, up to which date the Income-tax Officer had allowed time. The return was filed on February 18, 1959 after about three months of the expiry of that date. After the assessment had been completed on April 1, 1962, the Income-tax Officer initiated penalty proceedings under section 271(1)(a) of the Income- tax Act, 1961, and after giving an opportunity to the assessee, imposed a penalty of Rs. 1,00,348. *** In respect of two questions which have been referred to us, it was urged by the assessee that inasmuch as the word "month" had not been defined in the Act, the meaning given to that word in section 3(35) of the General Clauses Act should be adopted, and the word "month" should be taken to be the English calendar month, and as such the period of default committed by the assessee would be of only two months, inasmuch as a part of November and a part of February in which default occurred was not for the whole calendar month, and had as such to be excluded. As regards the amount of penalty that could be imposed for the default, it was contended that while computing "the tax payable" on which the penalty had to be imposed, the

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advance tax and the taxes paid as per provisional assessment had to be deducted, and the penalty had to be worked out on the basis of this reduced amount. The Tribunal held that the word "month" occurring in section 271(1)(a)( i) of the Act meant a full calendar month, and inasmuch as the assessee was in default for only two full calendar months, i.e., December and January, the penalty could be levied only in respect of two months' default. It also held that inasmuch as the penalty is imposable under section 271(1)(a) of the Act, on the basis "of tax, if any, payable" and not on the total amount of tax, the penalty that was imposable on the assessee was to be calculated with reference to tax found due on the date of the completion of the assessment, subject to its final computation by the appellate authorities. Inasmuch as the answer to the question referred depends on the interpretation to be put on section 271(1)(a)( i) of the Act, we are extracting that section:— "In the cases referred to in clause (a), in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the tax." **** Coming now to the first question, section 271(1)(a)( i) of the Act is a penal provision, and in the event of the default contemplated by this section, an assessee becomes liable to payment of penalty at the rate of 2% of the tax for "every month during which the default continued". The word "month" has not been defined in the Act. The Tribunal has, however, taken this word to mean "a calendar month" by referring to section 3(35) of the General Clauses Act, which defines "a month" as meaning a month reckoned according to the English calendar month. This definition, however, in view of the opening part of section 3 of the General Clauses Act, can be read into a statute provided there is nothing repugnant in the subject or context of the statute. It as such has to be seen whether the meaning given in the General Clauses Act to the word "month" is repugnant to the context. It is settled that the word "month" is normally understood to mean "a lunar month", i.e., a period of thirty days. (See Simpson v. Margitson [1847] 11 QB 23, 31, Ryalls v. R. [1848] 11 QB 781, 798, Rogers v. Kingston- upon-Hull Dock Co. [1864] 4 New Rep. 494, 496, Schiller v. Peterson & Co. Ltd. [1924] 1 Ch. 394, 420, 421 (CA), Phips

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( P.) & Co. (Northampton and Towcester Breweries) Ltd. v. Rogers [1925] 1 KB 14, 26, 27 (CA) and South British Fire and Marine Insurance Co. v. Brojo Nath Shaha [1909] ILR 36 Cal. 516 [FB]. Although these cases do not deal with the interpretation to be put on the word "month" as occurring in a statute, and relate to cases relating to contract, they throw light on the meaning of the word as commonly understood. This court in the case of Misri Lal v. Jwala Prasad [1962] ILR 1 All. 761 has, however, taken the view that, in some cases, the word "month", as occuring in a statute, may be taken to mean a period of thirty days. On an examination of the scheme and purpose of this section, we are of the view that the word "month" as occurring in this sub-section must be taken to mean a period of thirty days. This provision was enacted for the purpose of imposing a penalty on an assessee who had not filed his return during the prescribed time, and was enacted to serve as a deterrent for such lapses. The penalty is imposable for every month during which the default continues. If the meaning ascribed to this word in the General Clauses Act is adopted, it may in some cases lead to a defaulting assessee escaping penalty altogether, in spite of default. To take an illustration: Let us assume that time is given to an assessee up to the 30th of January in a particular year for filing a return and he defaults. He, thereafter, files his return on the 27th February. If the word "month" occurring in the section is taken to mean a full calendar month, the assessee in such a case would not be liable for any amount of penalty. Such a result is not contemplated by the language of the sub-section, for the sub-section in clear and unambiguous terms makes every assessee liable for penalty during the period of default. In the circumstances, it is not appropriate to import the meaning of the word "month" given in the General Clauses Act in the sub-section, for it does not fit in with the context and scheme of the section, and results in some cases in setting at naught the purpose of the enactment. We are thus of the view that the Tribunal was not right in holding that the word "month" occurring in this sub-section refers to the English calendar month. We, therefore, answer the first question in the negative and in favour of the Commissioner,.....bear their own costs‖

7.4 . We have also noted that Delhi Tribunal in the case of E.I DuPont India Private Ltd. v. DCIT in ITA no. 386 & 387/Del/2016 vide

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order dated 24.01.2019 in context of section 201(1A) has interpreted month as period of 30 days and not a British calendar month by relying upon aforesaid decision of Hon‟ble Gujarat High Court in the case of Arvind Mills Limited(supra) , by holding as under:- ―7. We have gone through the record. There is no dispute that in so far as the tax deducted at source for salary is concerned, the AO calculated the interest on late payment at Rs.9,80,607/- whereas the assessee calculated the same at Rs.9,48,970/-, and the difference being Rs.31,637/-. According to the assessee, the calculation of interest for three months by the ld. AO is incorrect. For the sake of clarity, we tabulate the interest calculation by the AO and the assessee as under:

Admitted Facts: Date of deduction 31.3.2013 Due date of 30.04.2013 remittance Actual date of 01.05.2013 remittance Calculation made by the AO 31.3.2013 to One month 31.3.2013 1.4.2013 to One month 30.4.2013 01.05.2013 to One month 2.5.2013 Total Three month Calculation made by the Assessee 31.3.2013 to One month 30.04.2013 01.05.2013 to One month part 2.5.2013 of month considered as full month as per Rule 119A Total Two months 8. It is, therefore, clear that the ld. AO had taken the month to be the British calendar month as defined in Section 3(35) of the General Clauses Act and it is only on that premise, he calculated one day in March and two 20 | P a g e

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days in May as two full months and calculated interest for three months including the month of April also. 9. In CIT vs. Arvind Mills Ltd. (supra), in the context of interest on refunds u/s 244A of the Act, the Hon‘ble Gujarat High Court held that the term ‗month‘ must be given the ordinary sense of the term i.e. 30 days of period and not the British calendar month as defined u/s 3(35) of the General Clauses Act and such a definition under the General Clauses Act cannot be adopted for the purposes of Section 244A of the Act inasmuch as such importation of definition would lead to anomalous situation. In the case of Navayuga Quazigund Expressway P. Ltd. (supra) , the Hyderabad Bench of this Tribunal, while respectfully following the decision of the Gujarat High Court in the case of Arvind Textile Mills, considered the definition of month in the context of Section 201(1A) of the Act and held that Section 244A(1) is analogous to provisions of Section 201(1A)(ii) read with Rule 119A of the Act and a month must be given ordinary meaning of the term by taking period of 30 days and not British calendar month as defined u/s 3(35) of the General Clauses Act. In the case of ONGC (supra), the Ahmadabad Bench of the Tribunal again considered this question in the context of Section 201(1A) of the Act and reached a similar conclusion. 10. In view of this established position of law, we are unable to endorse the view of the ld. AO and accept the calculation of month reckoned by him. However, in view of the fact that the assessee did not furnish the requisite information as observed by the learned CIT(A) in para 2.3 of his order, we deem it just and necessary, while setting aside the impugned order, to remand the matter to the file of the learned CIT(A) to enable the assessee to submit the actual calculation showing the discrepancies in the calculation of interest by the AO and the assessee respectively. Learned CIT(A), after considering the same, would decide the matter in the light of our above observations that the month as occurred in Section 201(1A) shall mean a period of 30 days and not a British calendar month. We order so accordingly. 11. In the results, appeals of the assessee are allowed for statistical purposes.‖ 7.5 Further , we have noted that Ahmadabad-tribunal in SMC Bench in ITA no. 1955 to 1965/Ahd/2015 vide common order dated 15th September 2015 in context of section 201(1A) of the 1961 Act has

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interpreted the „month‟ as period of 30 days , wherein Hon‟ble tribunal held the said provision to be compensatory in nature , by holding as under:- ―4. I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 5. Section 201(1A), for ready reference, is reproduced below: (1A) Without prejudice to the provisions of sub- section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,— (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200: Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident 6. The provision is quite simple and unambiguous inasmuch as interest is to be charged for ―every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted‖. The context in which the expression 22 | P a g e

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―month‖ is used here is a measurement of period for which time value of money is to be compensated. If a person ought to have deducted the tax on, say, 21st of October and he actually does so on 3rd of November, the period for which the Government is deprived of its legitimate taxes is less than a month. However, if we go by the interpretation canvassed by the Assessing Officer, which has the approval of the CIT(A) as well, this will be a period of two months – i.e. a part of October as also a part of November. Such a result is clearly incongruous. As for the alternate contention of the revenue, i.e. the period of a month could at best be taken as thirty days and, therefore, the period of 7th November 2010 to 14th December 2012 should be constructed as 26 months, it is also devoid of any merits. If that is the principle to be followed, when a person required to deduct tax at source on 21st March, actually deducts the tax at source on 18th March in the subsequent year, the period of delay will have to be taken as 13 months (i.e. 12X30= 360 days plus 2 days as part of the month). This approach also, thus, leads to incongruous, and, if I may say so, somewhat absurd results. Clearly, therefore, approach followed by the authorities below does not merit my approval 7. There is no dispute that the expression ‗month‘ is not defined for the purpose of Section 201 (1A) nor there is any direct judicial authority in the context of Section 201. Section 3(35) of the General Clauses Act defines ―month‖ as, unless there is anything repugnant in the subject or the context, ―a month reckoned according to the British calendar‖. The expression ‗reckoned‘, in plain English, refers to ‗count, compute or calculate‖. In substance thus, the mandate of Section 3(35) is to count, compute or calculate according to, or as per, the British calendar. It is also important to note that even this definition is not in absolute terms inasmuch as when ―there is anything repugnant in the subject or the context‖, this definition can be discarded. It is the context in which the matter is being examined that must be treated as decisive factor. The levy of interest under section 201(1A) is compensatory in nature and it represents the time vale of money attributable to delay in deduction of tax at source. What is to be thus seen is the gap of time between the point of time when tax ought to have been deducted at source vis-à-vis the point of time when the tax was actually deducted, and it is in this context that connotation of expression ‗month‘ is to be examined. Now, if one has to compute the months as per the British calendar, the period from 21st October to 3rd November, as taken in the first example, is less than a

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month because it is only when the same date comes in the next month, the period of one month can be said to have elapsed. Similarly, the period of 21st March to 18th March of the subsequent year, as per the British calendar, is less than 12 months since the period of twelve months has not elapsed in between these two dates. Coming to the case in hand, the period of time gap between 16th November 2010 to 14th December 2012 is less than 25 months because, on 14th December 2012, the period of 25 months has not elapsed from 16th November, 2010. The period which is elapsed between these two dates is 24 months and 28 days. Going by the provisions of the General Clauses Act, therefore, the period of time between 16th November 2010 to 14th December 2012 is less than 25 months, and, accordingly, interest under section 201(1A) could not have been levied for a period of more than 25 months. 8. During the course of arguments before me, the connotations of ‗calendar month‘ were argued at length but these discussions proceeded on the fallacious assumption that the expression ‗month‘, appearing in Section 201(1A), is either required to be interpreted as a calendar month or a period of thirty days. As a matter of fact, as evident from the discussions above, the expression ‗month‘ refers to ―a month reckoned according to the British calendar‖. ―A month as per the British calendar‖ and ―a month reckoned (emphasis supplied by me) as per British calendar‖ are not the same thing and cannot be used interchangeably. While former refers to a calendar month by itself, the latter refers to a period of time which qualified to be treated as a ‗month‘. The subtle distinction between the scope of these two expressions cannot be ignored. 9. As I have decided the matter on the first principles and in the light of the plain meanings of the statutory provisions in the given context, and as learned Departmental Representative has not invited my attention to any judicial precedent holding to the contrary in this context, it is not really necessary to deal with judicial precedents in somewhat similar situations or to draw strength from those judicial precedents. I leave it at that. 10. In view of the above discussions, as also bearing in mind entirety of the case, I uphold the grievance of the assessee that, on the facts of this case, interest under section 201(1A) could not have been charged for more than 25 months. The Assessing Officer is, accordingly, directed to recompute the interest under section 201(1A) in the light of my observations above.

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7.6 Further , we have noted that Hyderabad-tribunal in Navayuga Quazigund Expressway Private Ltd. v. DCIT in ITA No. 1651/Hyd/14 vide order dated 13.03.2015 has held that „month‟ is to be interpreted as period of 30 days and not British Calendar Month in context of Section 201(1A) of the 1961 Act, by holding as under:-

“ 5. We have heard the arguments of both the sides and also perused the relevant material on record. The issue involved in this appeal relates to the computation of interest payable by the assessee under S.201(1A), the provisions of which read as under- ―201.(1)…… (1A) Without prejudice to the provisions of subsection (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deduction fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest, - (i) At one percent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) At one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid; and such interest shall be paid before furnishing the statement in accordance with the provisions of subsection (3) of section 200; Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident:‖ The procedure to be followed for calculating the interest payable by the assessee or by the Central Government is given in Rule 119A of Income-tax Rules, 1962 as under-

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―119A. In calculating the interest payable by the assessee or the interest payable by the Central Government to the assessee under any provisions of the Act- (a) where interest is to be calculated on annual basis, the period for which such interest is to be calculated shall be rounded off to a whole month or months and for this purpose any fraction of a month shall be ignored; and the period so rounded off shall be deemed to be the period in respect of which the interest is to be calculated; (b) where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be a full month and the interest shall be so calculated; (c) the amount of tax, penalty or other sum in respect of which such interest is to be calculated shall be rounded off to the nearest multiple of one hundred rupees and for this purpose any fraction of one hundred rupees shall be ignored and the amount so rounded off shall be deemed to be the amount in respect of which the interest is to be calculated.‖ 6. In the present case, clause (ii) of S.201(1A) read with Clause (b) of Rule 119A is applicable and it provides that where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be a full month, and the interest shall be so calculated. The dispute in this context as involved in the present case is whether the month for such calculation of interest is to be taken as a British calendar month or a period of 30 days. It is observed that similar controversy had arisen in the case of CIT V/s. Arvind Mills Limited (2011)16 Taxman.com.291 (Guj), wherein the assessee claimed interest under S.244A on the basis of British calendar month. The claim of the assessee, although was not allowed by the Assessing Officer as well as the learned CIT(A), the Tribunal allowed the same. When the matter was carried before the Hon‘ble Gujarat High Court in an appeal filed by the Revenue, Their Lordships held that a reading of sub-section (1) of S.244A, the relevant provisions of which are analogous to the provisions of clause (ii) of S.201(1A) read with Rule 119A, would make it clear that the term ‗month‘ must be given the ordinary meaning of the term of 30 days period and not the British calendar month as defined in S.3(35) of the General Clauses Act. It was held that the definition given in General Clauses Act cannot be adopted for the purposes of subsection (1) of S.244A as such importation of the definition would lead to anomalous situation. In our opinion, the ratio of the decision of the Hon‘ble Gujarat High Court in the case or CIT V/s. Arvind Mills Limited (supra) is squarely applicable in the present case, and there being no decision cited by the learned

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Departmental Representative of any High Court taking a contrary view, we respectfully follow the decision of the Hon‘ble Gujarat High Court in the case of Arvind Mills Limited (supra) and direct the Assessing Officer to recompute the interest payable under S.201(1A) by taking a period of 30 days as a month instead of British calendar month.‖ 7.7 The learned DR could not controvert the above position and no contrary decision is brought on record. As could be seen from above, the Hon‟ble High Court as well tribunal has taken a consistent view that „month‟ is to be interpreted as period of 30 days and not British calendar . There are other judgments also relied upon by assessee wherein similar view has been taken. Thus , Respectfully following the ratio of aforesaid decision‟s, we allow the appeal of the assessee, by holding that for purpose of computation of interest payable u/s. 201(1A)(ii) of the 1961 Act read with Rule 119A(b) of the 1962 Rules, month is to be interpreted as period of 30 days and not British Calendar Month. However, now for the purpose of computation of interest payable by the assessee in accordance with our decision in this order, we are restoring the mater back to the file of AO for limited purpose of computing the interest payable by assessee u/s 201(1A)(ii) of the 1961 Act. The AO is directed to compute interest payable by the assessee u/s 201(1A) of the 1961 Act in accordance with our decision in this order. We order accordingly. 8. In the result, appeal of the assessee in ITA no. 2295/Mum/2018 for AY 2014-15 is allowed as indicated above. Order pronounced in the open court on 01.07.2019. आदेश की घोषणा खुऱे न्यायाऱय में ददनांकः 01.07.2019 को की गई Sd/- Sd/- (C.N PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, dated: 01.07.2019

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Nishant Verma Sr. Private Secretary

copy to… 1. The appellant 2. The Respondent 3. The CIT(A) – Concerned, Mumbai 4. The CIT- Concerned, Mumbai 5. The DR Bench, 6. Master File // Tue copy// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI

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