2019 (7) TMI 73

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....ng interest u/s. 201(1A) for the delayed payment of TDS into Government account. 2. Briefly stated the facts are that, assessee Public Charitable Hospital providing medical treatment and medical facilities to the patients and is registered under Public Charitable Trust under the Bombay Public Trust Act, 1950. During the A.Ys. 2008-09, 2009-10 and 2011-12 assessee made certain payments to M/s. Bombay MRI Pvt. Ltd., M/s. Metropolis Health Services (I) Pvt. Ltd., and M/s. SRL Ranbaxy Ltd. towards laboratory expenses. The assessee deducted TDS @2% u/s. 194C of the Act on the payments to these parties. However, the Assessing Officer was of the view that these payments are in the nature of professional charges and the assessee was required to de....

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....is no liability to pay tax by the deductee there cannot be any interest chargeable u/s. 201(1A) of the Act. It was also contended that in any case the liability to pay interest shall be for the period starting from the date of deductibility of the tax till the date of payment of tax by the deductee and not till the date of filing of return by the deductee. Not convinced with the submissions of the assessee, the Ld.CIT(A) held that interest u/s.201(1A) of the Act is to be charged and the period of calculation will be reckoned from the date on which tax was first deductible by the deductee to the date of filing of relevant return by the recipient-deductee. 6. Ld. Counsel for the assessee reiterated the submissions made before the lower autho....

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....ion 201(1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under section 271C of the Income-tax Act." 10. The Hon'ble Supreme Court in the case of CIT v. Eli Lilly & Co. (India) (P.) Ltd. (supra) held as under: - "34. A perusal of Section 201(1) and Section 201(1A) shows that both these provisions are without prejudice to each other. It means that the provisions of both the sub-sections are to be considered independently without affecting the rights mentioned in either of the sub-sections. Further, interest under Section 201(1A) is compensatory measure for withholding the tax which ought to have gone to the exchequer. The levy of interest is mandatory and the absence of liability fo....

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....ld be seen from the above, it has been categorically held that the levy of interest u/s. 201(1A) is compensatory measure for withholding the tax which ought to have gone to the exchequer and therefore levy of interest is mandatory and the absence of liability for tax will not dilute the default. As far as the levy of interest u/s. 201(1A) of the Act is concerned it is mandatory. 12. Now the question to be addressed is what is the period for which the interest is to be calculated. On a reading of the provisions u/s. 201(1) and 201(1A) of the Act, we observe that there was an amendment to these provisions wherein the provisos were inserted by the Finance Act, 2012 w.e.f. 01.07.2012. The proviso to Section 201(1) of the Act stipulates that an....