2018 (12) TMI 1818 - HC - Income Tax

Amendments to Sections 200A and 234E Applied Prospectively

The Court held that the amendments to Sections 200A and 234E were prospective, setting aside the demand notices for late filing fees. The judgment ... Late filing fee u/s 234E - intimation u/s 200A - HELD THAT:- Interpreting Section 200A and Section 234E, the Karnataka High Court has held in Fatheraj [2016 (9) TMI 964 - KARNATAKA HIGH COURT] that when the statute confers no express power under section 200A before 01.06.2015 on the authority either to compute and collect any fee under section 234E, the demand for the period before 01.06.2015 could not be sustained. Circular No.19 of 2015 has clearly emphasized that these amendments would take effect only from 1st June 2015. Under those circumstances,hold that the amendment is prospective and the demand under Exts.P1 to P6 demand notices cannot be sustained. - Decided in favour of assessee. Issues:1. Interpretation of Section 200A and Section 234E regarding the levy of late fee for late filing of TDS returns.2. Examination of the retrospective or prospective application of the amendments made to the relevant provisions.3. Dispute over the authority to compute and collect fees under Section 234E before and after specific amendments.Analysis:1. The petitioner, a partnership firm operating a hospital, deducted tax from staff remuneration as required by Section 184(J) of the Income Tax Act, 1961. The hospital filed quarterly returns for the assessment years 2012-2013 and 2013-2014, as mandated by Section 200(3) and Rule 31A. Subsequently, late filing fees were demanded under Section 234E based on the processing of returns under Section 200A.2. The petitioner challenged the demand through a writ petition, questioning the retrospective application of the amendments. The petitioner argued that prior to June 1, 2015, Section 200A did not authorize the computation of fees under Section 234E. The petitioner relied on a Karnataka High Court judgment and a circular to support the contention that the amendment was prospective, affecting demands post-June 1, 2015.3. The Respondent, however, contended that Section 200A empowered the levy under Section 234E, which was inserted with effect from July 1, 2012. Citing a Gujarat High Court judgment, the Respondent argued that Section 200A was a machinery provision and did not create a charge, unlike Section 234E. The Respondent emphasized the retrospective nature of procedural amendments and opposed the petitioner's stand on the prospective application of the amendments.4. The Court examined the statutory provisions and conflicting judicial opinions. While the Karnataka High Court held that demands pre-June 1, 2015, were not sustainable due to lack of authority under Section 200A, the Gujarat High Court viewed Section 200A as a machinery provision and upheld the retrospective application of the amendments. The Court also considered a circular clarifying the amendment's prospective nature from June 1, 2015.5. Ultimately, the Court held that the amendments were prospective and set aside the demand notices, concluding that demands based on Exts.P1 to P6 notices could not be sustained. The judgment highlighted the importance of considering circulars and legislative intent in interpreting the retrospective or prospective application of statutory amendments.