TaxTMI 
TaxTMI 
2019 (7) TMI 178
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....TE PAYMENT OF TAX DEDUCTED AT SOURCE ("TDS"): 1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the action of the Assessing Officer ("AO") of levying additional interest u/s 201(1A) amounting to Rs. 4,19,090/- on late payment of TDS. 2. The Appellant prays that the additional interest levied by the AO and affirmed by the CIT(A) amounting to Rs. 4,19,090 be deleted." 3. The brief facts of the case are that the assessee has deducted Income-tax at source under Chapter XVII-B of the Income-tax Act, 1961 (hereinafter called " the Act") which was deposited late by the assessee to the credit of Central Government which led to raising of further demand towards interest of Rs. 4,19,090/- for late deposit of TDS by learned DCIT, Income Tax Department, TDS CPC, Ghaziabad, UP, vide intimation dated 30.03.2014 u/s. 200A of the 1961 Act against assessee, after adjusting interest of Rs. 5,73,046/- already suo motu paid by the assessee while filing TDS return in Form No. 26Q for 3rd Quarter of Financial year 2013-14. It all happened that assessee had deducted income-tax at source(TDS) in the month of October, 2013 on var....
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....paid by the assessee to the credit of Central Government was counted as second month for computing interest payable by the assessee on late deposit of TDS to the credit of Central Government, while on the other hand the assessee has taken 30/31 days as a month and if the period between deduction of TDS and payment thereof to the credit of Central Government is up-to 30/31 days, it was taken as one month but if the period of gap between the two dates is more than 30/31 days but up-to 61/62 days, it was taken as two months for computing interest payable on late deposit of TDS to the credit of Central Government. That is how differential interest payable by assessee is computed by Revenue to the tune of Rs. 4,19,090/-which arose on late deposit of TDS by assessee. There were some minor demand also raised against assessee of Rs. 360/- and Rs. 12/- for other defaults in the same intimation dated 30.03.2014 issued by learned DCIT u/s 200A, with which we are not presently concerned with. We will confine our discussions only to issue under dispute which concerns itself with interest payable by assessee on account of late deposit of TDS to the credit of Central Government to the tune of ....
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....st payable. The appellant alleged that the Justification Report showed that the reverse had been done, which was bad in law. The appellant also stated that during the years when NSDL was handling the TDS matters, the computation of interest was as per the version canvassed by it. Without prejudice to its arguments, the appellant pointed out that when two views were possible, the interpretation which was more beneficial to the assessee was to be applied, Finally, reliance was placed on the decision of the Hon'ble Gujarat High Court, in the case of Commissioner of Income Tax Vs. Arvind Mills Limited (Tax Appeal No.2486 of 2009 dated 13.09.2011). Reliance was also placed on the decision of the Ld. Appellate Tribunal, Hyderabad, in Navayuga Quazigund Expressway vs. DCIT, Circle 15(1), Hyderabad [2015] reported in 64 Taxmann.com 212. It also relied on two orders (both dated 03.02.2016) of the Id. Appellate Tribunal, Ahmedabad, namely : (i) Suzlon Gujarat Wind Park Ltd. (SMC Bench) in ITA Nos.2931-2933/Ahd/2015. (ii) Suzlon Energy Ltd. (SMC Bench) in ITA No.2934/Ahd/2015 2.4 The matter has been considered. The dispute lies in a narrow compass and has alread....
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....The appellant deposited the tax it deducted after the applicable due date for doing so. That is to say, the due date for depositing the tax deducted by it had already expired on 07.11.2013, when it actually deposited the same on 11.11.2013. Accordingly, the appellant would be liable to pay interest for two months, viz. for October and November, 2013. Both the parts of the months involved will be reckoned and included as full months since "part of a month" is also considered as a full month as per the clear stipulation of section 201(1A) of the Act. When the said section itself mandates that any fraction of a month is to be deemed a full month, then there is little scope for reading it down or importing interpretational issues based on extraneous considerations such as equity or comparisons with other sections of the statute. For instance, there is no mention of the calculation of a "period" which has been specified in clause (a) and clause (b) of rule 119A of the Income-tax Rules, 1962, wherein it has been stated that where interest is to be calculated for every month or a part of the month comprised in a "period", any fraction of a month shall be deemed to be a full month. ....
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....ther than 'month'. For example, the words 'thirty days' and 'sixty days' appear in section 249(2) and section 153 of the Act. 2.9 In view of the discussion as foregoing, no infirmity is found in the levying of interest in the impugned intimation of the CPC-TDS. The same requires no interference and is upheld. Consequently, the ground of appeal fails and is, therefore, dismissed." 5. Being still aggrieved by appellate order passed by learned CIT(A), the assessee has come in appeal before the tribunal and learned counsel for assessee at the outset submitted that the issue of computing interest payable for delay in deposit of TDS is governed by the provisions of Section 201(1A)(ii) of the 1961 Act read with Rule 119A(b) of the Income-tax Rules,1962. it is submitted by Ld. Counsel for the assessee that the Hon‟ble Courts/tribunal has consistently held that the month has to be considered as a period of 30 days, but since the TDS amount was deducted in the month of October 2013 on various dates while paid to the credit of Central Government on 11.11.2013, the Revenue has charged interest @ 1.5% per month for the period of two months. The assessee....
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....credit of Central Government ranged for the period from 15 days to 35 days. The asessee has submitted a chart to make its contention as to how the interest for late deposit of TDS is to be computed u/s 201(1A), as detailed here under:- Date Of Payment Date of Deduction Due Date Date of Deposit TDS amount Delay in days both DATES inclusive DELAY PERIOD IN MONTHS PER S.201(1A) Rate of interest per month Interest payable REMARKS 7/10/2013 7/10/2013 7/11/2013 11/11/2013 5,131,710.00 35 2 1.50% 153,951.00 Period of delay is more than 30 days hence 2 months are considered 14/10/2013 14/10/2013 7/11/2013 11/11/2013 9,006,510.00 29 1 1.50% 135,098.00 Period of delay is less than 30 days hence 1 month is considered 21/10/2013 21/10/2013 7/11/2013 11/11/2013 9,330,686.00 22 1 1.50% 139,960.00 Period of delay is less than 30 days hence 1 month is considered 28/10/2013 28/10/2013 7/11/2013 11/11/2013 9,602,433.00 15 1 1.50% 144,037.00 Period of delay is less than 30 days hence 1 month is considered Total &nb....
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....nder section 115WJ or] [collected at source under section 206C or] paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of [one-half per cent] for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted. Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined [under [sub-section (1) of section 115WE or] sub-section (1) of section 143 or] on regular assessment;" 23. Section 245 of the Act pertains to set off of refund against tax remaining payable and provides inter alia that when a refund is found due to any person the officers mentioned in the said section may in lieu of payment of refund set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section. 24. Rule 119(A) of the said Rules ap....
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....r part of a month comprised in a period, every fraction of month shall be deemed to be full month and the interest so calculated. 28. By reading of Section (1) of Section 244A of the Act with Rule 119(A) of the said Rules would bring about situation when an assessee who has paid the tax and such tax is to be refunded, the assessee is to be paid interest at the prescribed rate for every month or part of a month comprising the period from the date of payment of the tax to the date on which the refund is granted. If such period is a fraction of a month, the same shall be deemed to be a full month and the interest shall be calculated for the entire month accordingly. In other words while calculating the period for grant of interest, if there is any fraction of a month, such fraction shall be ignored and instead, the assessee shall be paid interest for the full month. 29. So much is clearly emerging from the plain language used in the statutory provisions noticed by us. The case of the assessee however is that the word 'month' should be considered as per British Calender as defined in Section 3(35) of the General Clauses Act and accordingly if there is a fracti....
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....the time by calender months, the time must be reckoned by looking at calender and by not computing test. 34. Black' s Law Dictionary describes the term 'month' as one of the twelve periods of time in which the calender is divided, any time period approximating 30 days. 35. In Law. Lexicon by T.P.Mukherjee [5th Edition], it is stated "the word 'month' would in its ordinary acceptance, mean a 'calender month' and not a 'lunar month'. 36. What is to be ascertained in the present case is as to which definition of term 'month' shall have to be adopted for Section 244A(1) of the Act. In other words the question is, should the definition of term "month" be adopted from General Clauses Act, or not. This exercise shall have to be done on the basis of relevant statutory provisions and the intention of the legislature to provide interest to the assessee whose tax paid is found refundable at a later date. 37. To our mind the words appearing in sub-section (1) of Section 244A "comprised in a period" are significant. In clause (b) of section 244A(1) it is provided that the interest shall be calculated at the prescrib....
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....kground various Courts were of the opinion that the term 'month' must be understood as defined under Section 3(35) of the General Clauses Act. The Courts were of the opinion that there is nothing repugnant in Section 271(1)(a) of the Act so as to reject the applicability thereof. In the present case, however, we find that there are inbuilt indications why the term month must not be understood as British calender month. Any other interpretation as already observed would lead to anomalous situation. 40. Before closing we may also notice the decision of the Bombay High Court in the case of Asian Paints Ltd. (supra) which was arising in the background of controversy whether the tax calculated by an authorized agent of the Central Government would be sufficient to complete the tax payment or whether any delay on the part of such authorized agent to credit such amount to the account of Central Government would be relevant factor for calculating interest under Section 244A of the Act. It was the case wherein the assessee deposited a cheque for the amount of tax demanded with authorized agent of Central Government on 29th December, 2003 and account of assessee was debited ....
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....r had allowed time. The return was filed on February 18, 1959 after about three months of the expiry of that date. After the assessment had been completed on April 1, 1962, the Income-tax Officer initiated penalty proceedings under section 271(1)(a) of the Income-tax Act, 1961, and after giving an opportunity to the assessee, imposed a penalty of Rs. 1,00,348. *** In respect of two questions which have been referred to us, it was urged by the assessee that inasmuch as the word "month" had not been defined in the Act, the meaning given to that word in section 3(35) of the General Clauses Act should be adopted, and the word "month" should be taken to be the English calendar month, and as such the period of default committed by the assessee would be of only two months, inasmuch as a part of November and a part of February in which default occurred was not for the whole calendar month, and had as such to be excluded. As regards the amount of penalty that could be imposed for the default, it was contended that while computing "the tax payable" on which the penalty had to be imposed, the advance tax and the taxes paid as per provisional assessment had to be ded....
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..... 394, 420, 421 (CA), Phips ( P.) & Co. (Northampton and Towcester Breweries) Ltd. v. Rogers [1925] 1 KB 14, 26, 27 (CA) and South British Fire and Marine Insurance Co. v. Brojo Nath Shaha [1909] ILR 36 Cal. 516 [FB]. Although these cases do not deal with the interpretation to be put on the word "month" as occurring in a statute, and relate to cases relating to contract, they throw light on the meaning of the word as commonly understood. This court in the case of Misri Lal v. Jwala Prasad [1962] ILR 1 All. 761 has, however, taken the view that, in some cases, the word "month", as occuring in a statute, may be taken to mean a period of thirty days. On an examination of the scheme and purpose of this section, we are of the view that the word "month" as occurring in this sub-section must be taken to mean a period of thirty days. This provision was enacted for the purpose of imposing a penalty on an assessee who had not filed his return during the prescribed time, and was enacted to serve as a deterrent for such lapses. The penalty is imposable for every month during which the default continues. If the meaning ascribed to this word in the General Clauses Act is adopted, it may in some ....
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....One month Total Three month Calculation made by the Assessee 31.3.2013 to 30.04.2013 One month 01.05.2013 to 2.5.2013 One month part of month considered as full month as per Rule 119A Total Two months 8. It is, therefore, clear that the ld. AO had taken the month to be the British calendar month as defined in Section 3(35) of the General Clauses Act and it is only on that premise, he calculated one day in March and two days in May as two full months and calculated interest for three months including the month of April also. 9. In CIT vs. Arvind Mills Ltd. (supra), in the context of interest on refunds u/s 244A of the Act, the Hon'ble Gujarat High Court held that the term 'month' must be given the ordinary sense of the term i.e. 30 days of period and not the British calendar month as defined u/s 3(35) of the General Clauses Act and such a definition under the General Clauses Act cannot be adopted for the purposes of Section 244A of the Act inasmuch as such importation of definition would lead to anomalous situation. In the case of Navayuga Quazigund Expressway P. Ltd. (supra), the Hyderabad Bench of this Tribunal, while respectfully....
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....is Act, he or it shall be liable to pay simple interest,- (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200: Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident 6. The provision is quite simple and unambiguous inasmuch as interest is to be charged for "every mont....
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.... in nature and it represents the time vale of money attributable to delay in deduction of tax at source. What is to be thus seen is the gap of time between the point of time when tax ought to have been deducted at source vis-à-vis the point of time when the tax was actually deducted, and it is in this context that connotation of expression 'month' is to be examined. Now, if one has to compute the months as per the British calendar, the period from 21st October to 3rd November, as taken in the first example, is less than a month because it is only when the same date comes in the next month, the period of one month can be said to have elapsed. Similarly, the period of 21st March to 18th March of the subsequent year, as per the British calendar, is less than 12 months since the period of twelve months has not elapsed in between these two dates. Coming to the case in hand, the period of time gap between 16th November 2010 to 14th December 2012 is less than 25 months because, on 14th December 2012, the period of 25 months has not elapsed from 16th November, 2010. The period which is elapsed between these two dates is 24 months and 28 days. Going by the provisions of the General C....
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....We have heard the arguments of both the sides and also perused the relevant material on record. The issue involved in this appeal relates to the computation of interest payable by the assessee under S.201(1A), the provisions of which read as under- "201.(1)...... (1A) Without prejudice to the provisions of subsection (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deduction fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest, - (i) At one percent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) At one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid; and such interest shall be paid before furnishing the statement in accordance with the provisions of subsection (3) of section 200; Provided that in case any person, including the principal officer of a company fails to deduct....
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.... month. The claim of the assessee, although was not allowed by the Assessing Officer as well as the learned CIT(A), the Tribunal allowed the same. When the matter was carried before the Hon'ble Gujarat High Court in an appeal filed by the Revenue, Their Lordships held that a reading of sub-section (1) of S.244A, the relevant provisions of which are analogous to the provisions of clause (ii) of S.201(1A) read with Rule 119A, would make it clear that the term 'month' must be given the ordinary meaning of the term of 30 days period and not the British calendar month as defined in S.3(35) of the General Clauses Act. It was held that the definition given in General Clauses Act cannot be adopted for the purposes of subsection (1) of S.244A as such importation of the definition would lead to anomalous situation. In our opinion, the ratio of the decision of the Hon'ble Gujarat High Court in the case or CIT V/s. Arvind Mills Limited (supra) is squarely applicable in the present case, and there being no decision cited by the learned Departmental Representative of any High Court taking a contrary view, we respectfully follow the decision of the Hon'ble Gujarat High Court in the case of Arvind....