ITAT Mumbai rules on interest liability recalculation and vacates late fees demand for pre-2015, aligning with precedents.

The ITAT Mumbai allowed the assessee's appeal on two issues. First, it directed the Assessing Officer to re-calculate interest liability under Sec.201(1A) from the date of tax deduction to the date of tax payment by the deductee. Second, it vacated the demand for late fees under Sec.234E for periods before 01.06.2015, aligning with legal precedents.

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Issues:
1. Interest liability under Sec.201(1A)
2. Levy of fees under Sec.234E

Detailed Analysis:

Issue 1: Interest liability under Sec.201(1A)
The appeal filed by the assessee contested the order passed by the CIT(A) regarding the interest liability under Sec.201(1A) of the Income Tax Act. The contention was that the interest should be calculated from the date of tax deduction by the assessee until the date of payment by the deductee, not until the filing of the deductee's income tax return. The ITAT Mumbai, comprising Shri Shamim Yahya and Shri Ravish Sood, examined the legal provisions and referred to the judgments of the Hon'ble Supreme Court in the cases of Hindustan Coca Cola Beverages Pvt. Ltd. v. CIT and CIT v. Pranoy Roy. The tribunal agreed with the assessee's argument, stating that interest under Sec.201(1A) continues until the deductee pays the tax. Consequently, the tribunal directed the Assessing Officer to re-determine the interest liability in line with this interpretation, allowing the appeal on this ground.

Issue 2: Levy of fees under Sec.234E
The second issue revolved around the levy of late fees under Sec.234E of Rs. 21,200. The assessee argued that no late fees should be charged for the period before 01.06.2015 while filing the TDS statement under Sec.200A. The ITAT Mumbai referred to a similar case adjudicated by the ITAT Amritsar, where it was held that the levy of fees under Sec.234E prior to 01.06.2015 was not legally justified. The tribunal also cited judgments from the Hon'ble High Court of Karnataka and the ITAT, Chandigarh, supporting the view that such fees were not authorized by law for the relevant period. Consequently, the ITAT Mumbai set aside the CIT(A)'s decision and vacated the demand raised by the Assessing Officer for late fees under Sec.234E for all four quarters before 01.06.2015 in the assessment year 2015-16. The appeal on this ground was allowed, aligning with the precedent and legal provisions.

In conclusion, the ITAT Mumbai allowed the appeal of the assessee on both issues, directing the Assessing Officer to re-calculate the interest liability under Sec.201(1A) and vacating the demand for late fees under Sec.234E for the relevant period.

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