TDS remittance delay caused by bank processing does not trigger interest when payment was made on time.

Interest under section 201(1A) was held not leviable where TDS was remitted within the prescribed time by cheque or electronic transfer, but credit to the Government account was delayed only because of bank or clearing process. The decisive principle applied was that delay after valid remittance, when not attributable to the deductor and beyond its control, cannot be treated as default for interest purposes. The CBDT circular supporting relation-back on honoured cheques reinforced this approach. On the facts, the challans showed timely payment, so the assessee was not fastened with interest for the later credit entry.

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Issues: Whether interest under section 201(1A) of the Income-tax Act, 1961 was leviable where TDS was remitted before the due date by cheque or electronic transfer but credited to the Government account on a later date because of bank or clearing delays.

Analysis: The remittances were made before the stipulated date through electronic mode or by cheques that were honoured. The delay in credit to the Government account was not attributable to the assessee, and the assessee could not control the time taken by the bank or clearing mechanism. The CBDT circular relied upon supported the principle that, where a cheque is honoured, payment relates back to the date of presentation. On the facts, the challans showed timely remittance and the assessee could not be fastened with delay caused after payment was made.

Conclusion: Interest under section 201(1A) was not exigible for the alleged delay in crediting TDS remittances made in time; the issue was decided in favour of the assessee.

Ratio Decidendi: Where TDS is paid within the prescribed time by cheque or electronic transfer, the deductor is not liable for interest under section 201(1A) for delay caused solely by the bank or clearing process in crediting the amount to the Government account.

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