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Income Tax Appellate Tribunal, “F” BENCH,
Before: SHRI D.T. GARASIA, JM & SHRI RAJESH KUMAR,
O R D E R PER D. T. GARASIA, JM: These appeals have been filed by the Revenue and the Assessee against the order of CIT(A)-14 dated 03-11-2014 for Assessment Year 2013-14 which in turn have arisen out of order of the Assessing Officer u/s 200A of the Income Tax Act, 1961.
The grounds of appeals have been raised by the Revenue which reads as under:- (i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to compute interest for delay in deposit of tax deducted at source u/s.201(1A) of the I.T. Act from due date, without appreciating that as per clause (i) & (ii) to section 201(1A) of the I. T. Act, interest for delay should be calculated from the date on which such tax was deducted/deductible to the date on which the tax is actually paid.
On the facts and circumstances of the case and in law, (ii) the Ld. CIT(A) has erred in directing the AO to levy interest for two months instead of three months for delay in deposit of tax deducted at source, without appreciating the legal provisions of clause (ii) of Section 201(1A), which clearly states that any person, principal officer or company, as referred to in that sub-section; who after deducting tax fails to pay the whole or any part of the tax as required by or under the Act, is liable to pay simple interest at one and one-half percent 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.
3 Vantage International & 670/Mum/2015 On the facts and circumstances of the case and in law, (iii) the Ld. CIT(A) has erred in not appreciating that while processing TDS statement filed by the assessee u/s.200A, the interest is rightly charged as per the provisions of section 201(1A) of the I. T. Act.
The assessee is an international offshore drilling contractor who operates and manages a fleet of modern, high specification drilling rigs on a worldwide basis. The Assessing Officer has held that the assessee is in default u/s 201(1A) of the Income Tax Act on the ground that the assessee has delayed the deposit of taxes deducted at source with regards to salary payments and applied the rate of interest at 1.5% per month instead of applying 1% per month while calculating the interest u/s 201(1A) of the Income Tax Act. The matter carried to CIT(A) and CIT(A) has decided this appeal by observing as under: “5.1. I have considered the facts of the case and the submission of the appellant. This is a system generated appeal. On the interest computation I found the submission of the appellant is in the order. The interest for the delay in month for deposit in tax deducted has to be computed from due date. The AO is directed to levy the interest for two months instead of three months. Ground is allowed in part. In the event appeal is partly allowed”.
The Revenue is in appeal against direction of CIT(A) that interest for delay should be calculated from the date on which the tax was deducted or deductible to the date on which the tax actually paid and the department 4 Vantage International & 670/Mum/2015 is also in appeal against the direction to take the interest for two months instead of three months.
The assessee is in appeal for computing the rate of interest at the rate of 1.5% per month instead of 1% per month. 6. During the course of hearing, the Ld. DR submitted that tax should be calculated from the date of deposit and not from the due date. 7. Having heard both the parties. We find that the CIT(A) has verified that the assessee has deducted tax at source on the salary paid to his employees. However, there has been delay in depositing in Government Treasury. If the assessee fails to deposit the tax in Government then the assessee is liable to pay the interest for the delay in depositing the tax in the Government. The Madras Income Tax Tribunal in Shriram Industrial Holdings (P) Ltd. vs. DCIT (2003) 78 TTJ225(Madras) wherein it is held that the levy of interest on default starts only after the period available under the Act to make payment of tax make deducted is over. The interest has to be counted from due date of making the payment. The CIT(A) is justified in holding that interest for delay has to computed from due date for making the payment. We are of the view that the CIT(A) is justified in his action and our interference in not required. In the result, Departmental appeal is dismissed. 8. In the assessee’s appeal, the assessee has taken the ground that the assessee is in default u/s 201(1A) of the Income Tax Act, but the interest rate applied should be 1% per month and not 1.5% per month. 9. We find that during the course of hearing. The Ld. AR submitted that the issue relating to the rate of interest has been raised before CIT(A) but the issue has not been decided by CIT(A). We have also 5 Vantage International ITA No. 609 & 670/Mum/2015 verified that this issue is taken before CIT(A) and the CIT(A) has not decided this issue. Therefore, we restore this issue back to the file of Commissioner to decide this issue as per law. The Commissioner is directed to give heard the assessee before deciding this issue. 10. In the result, the assessee’s appeal is allowed for statistical purposes. In the result, whereas the Departmental appeal is dismissed, that of assessee is allowed for statistical purposes. Judgement Pronounced in the open court on 29th March 2017. sd/- sd/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 29th March, 2017 *Rahul Sharma* Copy to: 1) The Appellant 2) The Respondent 3) The CIT(A) concerned 4) The CIT concerned 5) The D.R, “F” Bench, Mumbai 6) Guard file