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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI JOGINDER SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Per Manoj Kumar Aggarwal (Accountant Member) 1. These are cross appeals for Assessment Year [AY] 2010-11 arising out of order of Ld. Commissioner of Income Tax (Appeals)-59 [CIT(A)], Mumbai dated 06/01/2015. The only issue involved in the appeal is quantum of interest u/s 201(1A) on account of late deposit of TDS by the assessee. The registry has noted that the appeal of the revenue has been filed with a delay of 23 days. However, Ld. Departmental Representative [DR] has drawn our attention to the fact that the date of communication of impugned order was wrongly written in Form 36 and the appeal was within time considering the correct date. The Ld. AR raised no objection against the same. Therefore, finding the same in order, we proceed further to decide the same on merits. 2. Briefly stated, the assessee trust, holding TAN-MUMM16747D filed TDS return for Quarter-1 of the impugned AY which was processed by TDS CPC vide communication reference No. TDS/0910/26Q/D/100004861194 dated 26/12/2013 and accordingly, intimation u/s 154 was sent to the assessee, raising a demand of Rs.45,24,980/- which included an amount of Rs.33,50,041/- under ‘Sl.
& 1840/M/2015 Mumbai Metropolitan Region Development Authority Assessment Year-2010-11 No. 3(c)-Additional late payment interest against the processing of latest correction’. This amount of interest has been reduced to Rs.33,38,668/- since the assessee filed correction statement on 28/10/2014 vide acknowledgement No. 148069600015455 where the aggregate demand has been reduced to Rs.37,39,300/-. This additional interest represent interest u/s 201(1A) for late payment of TDS and the same is the subject matter of this appeal.
Aggrieved by imposition of interest, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 06/01/2015. It was contended that as per justification report received by the assessee, interest for 2 months have been charged as against delay of mere one day and hence, the same was not justified. The Ld.CIT(A) granted partial relief to the assessee by making following observations:- 5. I have considered the facts of the case and submission of the appellant. The appellant’s AR has stated that entire demand is due to incorrect computation of interest by the system u/s. 201(1A). From the details filed it is observed that tax payments was due on 07.07.2009 and it has been paid on 08.07.2009. Thus, there is only one day delay in payment of taxes. As per provisions of section 201(1A) interest is to be charged for only one month whereas system has computed it for three months. The AO is directed to compute the interest for one month. Issue revised DN and challans. Ground is allowed in part.
Aggrieved, the assessee as well as revenue is in appeal before us. The assessee is aggrieved by imposition of interest for one month whereas revenue is aggrieved by relief provided to the assessee by Ld. CIT(A).
The Ld. Representative for assessee [AR] while drawing our attention to the documents placed in the paper book, explained that the due date for deposit of TDS was 07/07/2009 and the assessee deposited four cheques all dated 06/07/2009 vide pay-in-slip dated 07/07/2009. However, the amount was debited from the account of the & 1840/M/2015 Mumbai Metropolitan Region Development Authority Assessment Year-2010-11 assessee on 08/07/2009 and hence the challans were generated on the said date. Nevertheless, the deemed date of payment was 07/07/2009 when the cheques were deposited by the assessee with the bank and therefore, the imposition of interest was not justified. Reliance has been placed on several judicial pronouncements. The banker’s certificate to support the said contention has been placed on record. Per contra, Ld. DR drew our attention to the statutory provisions and contended that actual date of payment was 08/07/2009 since challans was generated on that date and the system has rightly computed interest for two months since the default period is to be counted from the date of deduction and part of month has to be rounded off to one month.
Heard the rival contentions and perused relevant material on record. From the perusal of record, first of all, it is noted that the corresponding payment against which TDS was deposited pertained to the month of June, 2009 only and the due date for deposit of TDS against the same was 07/07/2009. The perusal of justification report reveals that interest has been charged for two months i.e. June & July, 2009 since date of payment pertained to the month of June, 2009 and challans were generated on 08/07/2009 i.e. beyond due date and accordingly, system has taken part of June and July, 2009 as full month and computed the interest. Therefore, the Ld. CIT(A) erred in noting that the system has charged interest for three months.
Proceeding further, assessee has deposited 4 cheques towards deposit of TDS i.e. Cheque Nos. 812011, 812012, 812013 & 812025 which are all dated 06/07/2009 and the same cheques are reflected in the justification report. All these cheques are deposited vide separate & 1840/M/2015 Mumbai Metropolitan Region Development Authority Assessment Year-2010-11 pay-in-slips which are all dated 07/07/2009, however, the same do not bear any stamp from the bank. In support, the assessee has furnished one certificate No.AP-7/I TAX/MMRDA/2016-17 dated 18/11/2016 from his banker Bank of Maharashtra which states that the said cheques were received by the Bank on 07/07/2009 late and the same could not be punched in tax software and accordingly, the same was debited to the account on 08/07/2009 & tax receipt were generated by the system bearing date 08/07/2009.
With a view to settle the controversy regarding deemed date of payment, we are inclined to reproduce the relevant extract from the judgment of Hon’ble Apex Court rendered in DIT(E) Vs. Raunaq Education Foundation [350 ITR 420] which in turn, relies upon the judgment of the same court rendered in CIT Vs. Ogale Glass Works Ltd. [25 ITR 529]:- 14) The submission made on behalf of the respondent-assessee is supported by this court in the case of M/s Ogale Glass Works Ltd. (supra). Relying upon other authorities, this court observed as under in the aforesaid case : “…When it is said that a payment by negotiable instrument is a conditional payment what is meant is that such payment is subject to a condition subsequent that if the negotiable instrument is dishonoured on presentation the creditor may consider it as waste paper and resort to his original demand : Stedman v. Gooch (1793) 1 Esp.5. It is said in Benjamin on Sale, 8th Edition, page 788 :- “The payment takes effect from the delivery of the bill, but is defeated by the happening of the condition, i.e., non-payment at maturity.” In Byles on Bills, 20th Edition, page 23, the position is summarised pithily as follows : “A cheque, unless dishonoured, is payment.” To the same effect are the passages to be found in Hart on Banking, 4th Edition, Volume I, page 342. In Felix Hadley & Co. v. Hadley (L.R. (1898) 2 Ch.D.680, Byrne J. expressed the same idea in the following passage in his judgment at page 682 : “In this case I think what took place amounted to a conditional payment of the debt; the condition being that the cheque or bill should be duly met or honoured at the proper date. If that be the true view, then I think the position is exactly as if an agreement had been expressly made that the bill or cheque should operate as payment unless defeated by dishonour or by not being met; and I think that that agreement is implied from giving and taking the cheques and bills in question.” The following observations of Lord Maugham in Rhokana Corporation v. Inland Reveue Commissioners (L.R. [1938] AC 380 at p.399) are also apposite: & 1840/M/2015 Mumbai Metropolitan Region Development Authority Assessment Year-2010-11 “Apart from the express terms of Section 33, sub-section 1, a similar conclusion might be founded on the well known common law rules as to the effect of the sending of a cheque in payment of a debt, and in the fact that though the payment is subject to the condition subsequent that the cheque must be met on presentation, the date of payment, if the cheque is duly met, is the date when the cheque was posted.” In the case before us none of the cheques has been dishonoured on presentation and payment cannot, therefore, be said to have been defeated by the happening of the condition subsequent, namely dishonour by non-payment and that being so there can be no question, therefore, that the assessee did not receive payment by the receipt of the cheques. The position, therefore, is that in one view of the matter there was, in the circumstances of this case, an implied agreement under which the cheques were accepted unconditionally as payment and on another view, even if the cheques were taken conditionally, the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques.” 15) Looking into the aforestated undisputed facts, and the view expressed by this court in the case of M/s Ogale Glass Works Ltd. (supra), we are of the view that no irregularity had been committed by the assessee trust and there was no violation of the provisions of Sections 13(2)(b) or 13(2)(h) of the Act. The fact that most of the trustees of the assessee trust and the directors of M/s Apollo Tyres Ltd. are related is absolutely irrelevant.
Further, we are inclined to reproduce relevant portion of CBDT circular No. 261 dated 08/08/1979 which reads as follows:-
Circular: No. 261 [F. No. 385/61/79-IT(B)], dated 8-8-1979. Recording date of tender of cheque and date of its realisation on challans for payment of direct taxes is to be done by branch of authorised public sector bank where it is tendered for payment 1. In terms of rule 80 of the Compilation of the Treasury Rules, if a cheque or draft tendered in payment of Government dues and accepted under the provisions of rule 79 is honoured on presentation, the payment is deemed to have been made on the date on which it was handed over to the Government bankers. The need to indicate on the challan the date of tender of the cheque/draft with the authorised public sector bank, was duly taken notice of by the Central Board of Direct Taxes and at the request of the Board, the Reserve Bank issued instructions to all the authorised public sector banks in November 1977 stipulating that the receiving branch should brand either an inward stamp of receipt as soon as the challan is tendered over the counter, or a date stamped with provision for two dates, i.e., the date of tender and the date of the realisation of the cheque. The specimen of the date stamp is as under: "Date of tender.............................. Received payment Rs. ........................... Rupees....................................... Date of realisation.......................... For.................................Bank Authorised Signatory" ………………….” & 1840/M/2015 Mumbai Metropolitan Region Development Authority Assessment Year-2010-11 9. Further, in terms of Section 46 of the Negotiable Instruments Act, 1881 the making, acceptance or endorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or construction.
The ratio of aforesaid judgments, CBDT circular, statutory provisions of Negotiable Instruments Act, 1881 lead us to inevitable conclusion that date of tender of cheque is deemed to be the date of payment and the payment by cheque relates back to the date of delivery of cheques provided the same are not dishonored upon presentation.
Applying the same principle to the facts of the present case, we find that the banker of the assessee has certified that the cheques were deposited on 07/07/2009 and the circumstantial evidences viz. date of cheque, pay-in-slip also supports the same. Undisputedly, the cheques, upon presentation, were realized and not dishonored and therefore, we conclude that the revenue was not justified in imposing interest on the assessee u/s 201(1A) since the assessee fulfilled his part of obligation well within due date i.e. 07/07/2009.
Resultantly, by deleting the impugned interest, we allow assessee’s appeal whereas revenue’s appeal stands dismissed.
Order pronounced in the open court on 04th October, 2017.