TDS payment debited on due date defeats interest under section 201(1A) when banking settlement credits government account next day.

Interest under section 201(1A) was not leviable where TDS was electronically instructed for payment on the due date, the assessee's bank account was debited that day, and the Government account was credited the next day through the banking process. The operative principle was that once funds had left the assessee's account on the due date, any one-day delay in inter-bank settlement could not be attributed to the assessee as a default under Chapter XVII-B read with rule 30. The addition was directed to be deleted.

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Issues: Whether interest under section 201(1A) of the Income-tax Act, 1961 was leviable for alleged delay in deposit of TDS when the assessee's bank account was debited on the due date and the amount was credited to the Government account on the following day.

Analysis: The TDS was required to be deposited under Chapter XVII-B of the Income-tax Act, 1961 read with rule 30 of the Income-tax Rules, 1962. The bank statement showed that the assessee instructed electronic payment and the amount was debited from its account on 07.07.2020, which was the due date. The subsequent credit to the Government account on 08.07.2020 was attributable to the banking process and not to any lapse on the part of the assessee. Once the payment had been made electronically on the due date and the funds had left the assessee's bank account, the assessee could not be treated as having committed a default warranting interest.

Conclusion: Interest under section 201(1A) was not leviable and the addition was directed to be deleted.

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