Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, DELHI BENCHES : F : NEW DELHI
Before: SHRI R.S. SYAL & SMT BEENA PILLAI
Date of Hearing : 22.11.2017 Date of Pronouncement : 23.11.2017 ORDER PER R.S. SYAL, VP: These two appeals filed by the assessee are against the confirmation of levy of interest u/s 201(1A) of the Income-tax Act, 1961 (hereinafter also called `the Act’) in respect of two defaults relating to the assessment year 2013-14. Since common issue is raised in these appeals, we are, ergo proceeding to dispose them off by this consolidated order for the sake of convenience.
Briefly stated, the facts of this appeal are that the assessee deducted tax at source from certain employees, which was deposited late. The AO charged interest amounting to Rs.78,950 u/s 201(1A) of the Act. No relief was allowed in the first appeal. The assessee is aggrieved against such charging of interest.
We have heard both the sides and perused the relevant material on record. The ld. AR placed a chart on record and contended that tax was deducted at source from salary of some of its employees on 28.12.2012.
As against the due date for deposit of TDS on 07.01.2013, the amount of tax was, in fact, deposited on the next date on 08.01.2013. The contention of the ld. AR was that interest ought to have been charged u/s 201(1A) only for one month and not two months as has been done in the extant case. Relevant part of section 201, which is material for our purpose, reads as under:-
`(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) ….. (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, …..
A bare perusal of the provision indicates that where a person responsible does not deduct the whole or any part of tax or, after deducting, fails to pay the same as required under the Act, he shall be liable to pay simple interest at 1.5% ‘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 was actually paid’. Going by the chart placed before us, it is seen that the date of deduction in this case of all the employees is 28th December, 2012 and the actual date of payment is 08.01.2013 as against the due date of 07.01.2013. The Department has canvassed a view that since some days of December, 2012 are also involved along with certain days of January, 2013, therefore, interest should be charged for both the months. We are unable to concur with this view for the obvious reason that the interest is envisaged `for every month or part of month’ from the date of deduction of tax at source up to the date of actual payment. Thus, what is material for consideration is the date of deduction and the date of actual payment. If such a period is less than 30 days, then, interest should be charged for one month and, if the period of such default exceeds even by a single day from one month, the interest is chargeable for two months because this section provides for charging of interest for ‘every month or part of a month.’ The Hon'ble Gujarat High Court in CIT vs. Arvind Mills Ltd. (2011) 16 taxmann.com 291 (Guj), has held that for the purposes of section 244A, the term ‘month’ must be taken in ordinary sense of the term i.e. 30 days of period and not British calendar month.
Adverting to the facts of the instant case, we find that the period from the date of deduction till the date of payment, as projected in the chart, is only 11 days. As such, we are satisfied that the interest should have been charged only for one month and not for two months, of course, subject to the verification of details in the chart by the AO. The impugned order is set aside and the AO is directed to decide this issue afresh in consonance with the foregoing discussion.
We have heard both the sides and perused the relevant material on record. It is seen that the Assessing Officer charged interest for two months, which the ld. CIT(A) upheld. The ld. AR has placed on record a Chart for this appeal as well indicating date of deduction and date of deposit. It can be seen from this chart that all the deductions were made from the salary of employees during the month of December, 2012 and deposits were made on 8th of January, 2013. However, it is relevant to note that some of the deductions were made on 1st December, 3rd December, 6th December, 7th December, 17th December, 19th December, etc. In certain cases the default is obviously for more than 30 days which would require charging of interest for a period of two months.
We, therefore, set aside the impugned order and remit the matter to the 5 file of Assessing Officer for charging interest u/s 201(1A) of the Act for one month where default is for 30 days or less and for two months where such default is for more than 30 days.
In the result, both the appeals are allowed for statistical purposes.
Order pronounced in the open court on 23rd November, 2017.