Cheque tender date counts as TDS payment date when honoured, avoiding interest for delayed deposit.

For interest under section 201(1A), the date of payment of TDS by cheque is the date the cheque is tendered to the bank, not the date of debit or challan generation, where the cheque is subsequently honoured. The article applies the principle that payment by cheque is a conditional payment which, once honoured, relates back to the date of delivery. Supported by the CBDT circular and section 46 of the Negotiable Instruments Act, 1881, this treats timely cheque tender as timely deposit for TDS purposes and avoids interest for alleged delay.

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Issues: Whether, for levy of interest under section 201(1A), the date of payment of TDS paid by cheque is the date on which the cheque is tendered to the bank or the date on which the amount is debited and challan is generated.

Analysis: The due date for deposit had to be tested against the actual legal effect of payment by cheque. The bank certificate and surrounding records showed that the cheques were tendered within time, were ultimately honoured, and were not dishonoured. On this footing, the legal principle applied was that payment by cheque is a conditional payment and, when honoured, relates back to the date of delivery. The relevant CBDT circular and section 46 of the Negotiable Instruments Act, 1881 supported the view that tender of the cheque constitutes the date of payment for this purpose.

Conclusion: The date of tender of the cheque was treated as the date of payment, so no interest under section 201(1A) was leviable for default beyond the due date. The assessee succeeded and the Revenue failed.

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