1982 (12) TMI 61 - AT - Income Tax

Tribunal rules on interest calculation for delayed tax payments, emphasizes timing of tax deductions

The Tribunal upheld the mandatory interest levy under section 201(1A) of the Income-tax Act, 1961, for delayed tax payments but allowed the appellant's ... Appellate Authority, Tax At Source Issues:- Appeal against levy of interest under section 201(1A) of the Income-tax Act, 1961.- Justiciability of causes for delayed payment of taxes.- Applicability of interest levy from the date of actual salary payment.- Interpretation of sections 192 and 194A regarding tax deduction timing.- Mandatory nature of interest levy under section 201(1A).- Tribunal's authority to review reasonableness of causes for delay.Analysis:The appellant, a private limited company, contested the interest levy under section 201(1A) of the Income-tax Act, 1961, for delayed tax payments deducted from employee salaries. The Commissioner (Appeals) upheld the levy, stating the causes for delay were not justiciable. The appellant argued the order under section 201(1A) is appealable and justification for payment delays should be considered. The Tribunal noted the mandatory nature of interest levy under section 201(1A) and rejected the appellant's appeal on this ground, citing a previous decision. However, the Tribunal agreed with the appellant's alternative plea regarding interest calculation from actual salary payment dates.The Tribunal emphasized that tax deduction under section 192 occurs at the time of actual salary payment, contrasting it with section 194A's provisions. The Tribunal highlighted that the language of section 192 focuses on 'payment,' indicating tax deduction obligation upon salary payment. The Tribunal dismissed arguments about crediting salary amounts, emphasizing the distinction between accounting methods and tax deduction timing. Additionally, the Tribunal referenced a Calcutta Bench decision, supporting the interpretation of 'payment' in tax deduction provisions.Consequently, the Tribunal directed the matter back to the ITO for interest recomputation from actual salary payment dates to tax payment dates. The appeals were partially allowed, affirming the appellant's entitlement to interest calculation based on salary payment dates.