Interest under Section 201(1A) chargeable from deduction to return filing date upheld by Tribunal

The Tribunal upheld the Ld.CIT(A)'s decision regarding interest u/s. 201(1A), affirming that interest is chargeable from the date of deductibility to the payee's return filing date. Previous judgments cited by the assessee were deemed inapplicable due to the retrospective clarification of the interest calculation period by the Finance Act, 2012. Consequently, the appeals of the assessee against orders for Assessment Years 2008-09, 2009-10, and 2011-12 were dismissed, with the order pronounced on 31st May 2019.

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Issues:
Appeals against orders of Ld.CIT(A) for Assessment Years 2008-09, 2009-10, and 2011-12 regarding interest u/s. 201(1A) for delayed TDS payment.

Analysis:
1. Nature of Payments and TDS Deduction:
The assessee, a Public Charitable Hospital, made payments to various parties deducting TDS @2% u/s. 194C. The Assessing Officer contended these were professional charges requiring TDS u/s. 194J. Assessee argued payments were for services on a contractual basis, not professional services. Assessing Officer held the assessee in default for short deduction of TDS.

2. Rectification Petition and Deletion of Demand:
Assessee filed a rectification petition demonstrating that payees paid taxes on received amounts. DCIT (TDS) accepted this, deleting the demand u/s. 201(1). Subsequently, interest u/s. 201(1A) was charged for delayed TDS payment.

3. Interest Calculation Period and Liability:
Assessee contended no interest if no tax liability for the deductee. Ld.CIT(A) held interest u/s. 201(1A) chargeable from the date of deductibility to the filing date of the return by the deductee. Assessee cited Supreme Court and High Court decisions to support their case.

4. Judicial Interpretations and Provisions:
Supreme Court rulings emphasized the mandatory nature of interest u/s. 201(1A) as a compensatory measure for withholding tax. The interest period is from the date of deductibility to the return filing date by the payee. The insertion of provisos by the Finance Act, 2012 clarified the interest calculation period retrospectively.

5. Decision and Conclusion:
The Tribunal upheld Ld.CIT(A)'s decision, stating interest calculation from the date of deductibility to the payee's return filing date. Previous judgments cited by the assessee were deemed inapplicable due to the insertion of provisos. Therefore, the appeals of the assessee were dismissed, and the order was pronounced on 31st May 2019.

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