THE ASSISTANT DIRECTOR(AH) VETERINARY HOSPITAL,,JAGGAMPETA vs. THE INCOME TAX OFFICER, TDS, WARD-1,, RAJAHMUNDRY

PER V. DURGA RAO, JUDICIAL MEMBER

This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Vijayawada, dated 03/07/2018 for the Assessment Year 2015-16. 2. The assessee has raised the following grounds of appeal:- “1. That under the facts and circumstances of the case the late fee levied under the provisions of sec. 234E of the I.T. Act by the Assessing Officer (in short „AO') and upheld by the learned Commissioner of Income Tax (A) (in short “CIT(A)” are against the facts of the case and provisions of law.

2 ITA No.519/VIZ/2016 (The Asst. Director (AH) Veterinary Hospital) 2. The ld. CIT(A) erred in confirming the late fee levied u/s 234E of the I.T. Act considering the facts of the case and the provisions of law. 3. For these and other reasons that are to be urged at the time of hearing of the case the appellant prays that the orders passed by the ld. CIT(A) are against the provisions of law and facts of the case and the same are to be quashed in the interest of justice.” 3. Facts of the case, in brief, are that assessee is a Director in Veterinary Hospital, filed its regular TDS quarterly statement in Form No. 24Q of quarter-4 for the Financial Year 2014-15 on 22/04/2017, which is due to be filed by 15/05/2015 (The dates for filing of TDS return for Q4 for F.Y. 2014-15). Thus, there was delay in filing TDS quarterly statement. The same was processed and intimation under section 200A was raised by the DCIT, CPC- TDS on 26/04/2017 raising demand which comprised the late fee under section 234E of the Act of Rs. 44,650/-. 4. On appeal, ld. CIT(A) by following the decision of the Hon'ble Gujarat Court in the case of Rajesh Kourani vs. Union of India [(2017) 83 taxmann.com 137 (Guj.)] confirmed the order of the Assessing Officer. 5. On being aggrieved, assessee carried the matter in appeal before the Tribunal. 6. Ld. counsel for the assessee has submitted that the issue involved in this appeal has been considered by the Hon'ble

3 ITA No.519/VIZ/2016 (The Asst. Director (AH) Veterinary Hospital) Karnataka High Court in the case of Fatheraj Singhvi & Ors. Vs. Union of India & Ors. [(2016) 289 CTR 602 (Kar.)] wherein it has been categorically held that “the demand under section 200A for computation and intimation for the payment of fee under section 234E could not be made in purported exercise of power under section 200A by the respondent for the period of the respective Assessment Year prior to 01/06/2015”. Further, he also relied on the decision of the coordinate bench of the Visakhapatnam tribunal in the case of Sri Sai Durga Housing Estates Vs. ACIT, CPC (TDS) in ITA Nos. 2 & 3/VIZ/2018, dated 26/04/2018. 7. On the other hand, ld. Departmental Representative strongly supported the orders of the authorities below. 8. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. 9. The only issue involved in this appeal is whether levy of late fee under section 234E can be charged prior to 01/06/2015 or not. According to the Assessing Officer and the ld. CIT(A), section 200A(1)(c) is a clarificatory in nature, therefore, it applies even the period prior to 01/06/2015 by following the decision of the Hon'ble Karnataka High Court in the case of Rajesh Kourani (supra). The coordinate bench of the Visakhapatnam tribunal in

4 ITA No.519/VIZ/2016 (The Asst. Director (AH) Veterinary Hospital) the case of Sri Sai Durga Housing Estates Vs. ACIT, CPC (TDS) in ITA Nos. 2 & 3/VIZ/2018, dated 26/04/2018 wherein by considering the judgments of the Hon'ble Gujarat & Karnataka High Courts and also the Judgment of the Hon'ble Apex Court in the case of CIT Vs. M/s. Vegetables Products Ltd. (88 ITR 192) has observed that the decision of the Hon'ble Karnataka High Court is most favourable to the assessee, required to be adopted. 10. The Hon'ble Karnataka High Court has considered the same issue in the case of Sree Ayyappa Educational Charitable Trust vs. DCIT [(2018) 301 CTR 150 (Kar.)] by considering the judgment of the same High Court in the case of Fatheraj Singhvi & Ors. (supra) and held that “when the amendment made under section 200A of the Act, which has come into effect on 01/06/2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under section 234E could be made for the TDS deducted for the respective assessment year prior to 01/06/2015. Hence, the demand notices under section 200A by the respondent authority for intimation for payment of fee under section 234E can be said as without any authority of law and the same are quashed and set aside to that extent.” 11. The Hon'ble Karnataka High Court in the case of Fatheraj Singhvi & Ors. (supra) has held as under:-

5 ITA No.519/VIZ/2016 (The Asst. Director (AH) Veterinary Hospital) “22. It is hardly required to be stated that, as per the well established principles of interpretation of statute, unless it is expressly provided or impliedly demonstrated, any provision of statute is to be read as having prospective effect and not retrospective effect. Under the circumstances, we find that substitution made by clause (c) to (f) of sub-section (1) of Section 200A can be read as having prospective effect and not having retroactive character or effect. Resultantly, the demand under Section 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. However, we make it clear that, if any deductor has already paid the fee after intimation received under Section 200A, the aforesaid view will not permit the deductor to reopen the said question unless he has made payment under protest. 23. In view of the aforesaid observation and discussion, since the impugned intimation given by the respondent-Department against all the appellants under Section 200A are so far as they are for the period prior to 1.6.2015 can be said as without any authority under law. Hence, the same can be said as illegal and invalid. 24. If the facts of the present cases are examined in light of the aforesaid observation and discussion, it appears that in all matters, the intimation given in purported exercise of power under Section 200A are in respect of fees under Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act. In view of the reasons recorded by us hereinabove, when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent-authority for intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent.

6 ITA No.519/VIZ/2016 (The Asst. Director (AH) Veterinary Hospital) cases of Fatheraj Singhvi & Sree Ayyapa Educational Charitable Trust (supra), the late fee levied by the Assessing Officer is cancelled. Thus, the appeal filed by the assessee is allowed. 13. In the result, the appeal filed by the assessee is allowed. Order Pronounced in open Court on this 01st day of Feb., 2019. Sd/- sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated: 01st Feb., 2019. vr/- Copy to: 1. The Assessee – The Asst. Director (AH) Veterinary Hospital, D.No. 7-63, Gokavaram Road, Jaggampeta, East Godavari District. 2. The Revenue- ITO(TDS), Ward-1, Rajahmundry. 3. The CIT (TDS), Vijayawada. 4. The CIT(A), Vijayawada. 5. The D.R., Visakhapatnam. 6. Guard file. By order

(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.