TaxTMI 
TaxTMI 
2019 (12) TMI 1032
X X X X Extracts X X X X
X X X X Extracts X X X X
....cts and circumstances of the case, the learned Commissioner has grossly erred in law in interpreting the term 'month' as 'calendar month' without appreciating the settled law which provides that the interpretation of the provisions of the Act cannot be extended beyond the scope of the provisions under the Act. 4. In the facts and circumstances of the case, the learned Commissioner has erred in law in applying the provisions of section 3(35) of the General Clauses Act, 1897 to interpret the meaning of the term 'month' as 'calendar month'. 5. In the facts and circumstances of the case, by interpreting the term 'month' as 'calendar month', the learned Commissioner has failed appreciate that such an interpretation is analogous and shall result into undue hardship to the appellant. 6. The learned Commissioner has erred in rejecting the favorable decisions of the Hon'ble Gujrat High Court in the case of CIT vs Arvind Mills Limited (Appeal No. 2486 of 2009, dated 13/09/2011) and the Hon'ble Income-tax Appellate Tribunal, Hyderabad, the case of Navayuga Quazigund Expressway (P.) Ltd (Appeal No. 1651 of 2014, dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1,13,270/- on account of interest on late payment of TDS. Upon perusal of justification report showing computation of interest, it was noted that CPC-TDS calculated interest on late payment of TDS on the basis of each calendar month during which the default was in existence. The plea of the assessee was that interest should be calculated, based upon the concept of month starting from the date of commencement of the default. In other words, the assessee submitted that where the period of delay was more than 30 / 31 days, the interest was to be computed for two months but where it was less than 30 / 31 days, the interest was to be computed for one month. Reliance was placed on the decision of Hon'ble Gujarat High Court in the case of CIT V/s Arvind Mills Limited (ITA No.2486 of 2009, dt.13-09-2011) and also on the decision of Coordinate Bench of Hyderabad Tribunal in Navayuga Quazigund Expressway Vs. DCIT (2015 64 Taxmann.com 212). 3.2 However, not convinced, Ld. CIT(A), upon perusal of the statutory provisions of Section 201(1A) of the Act held that interest on late deposit of TDS was to be calculated for demands of October, 2016 and November, 2016 since it was due across both....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that section 244A(l) refers to month or part of the month 'comprised in a the period' for all refund scenarios covered by sub-clauses (a), (aa) and (b) thereof. This corresponds to reference to the determination of a 'period' in rule U9A of the Income-tax Rules, 1962, as discussed above. On the other hand, there is no reference to the computation of 'period' in section 201(1A) of the Act. The other decision, i.e., the one rendered by the td. Appellate Tribunal, Hyderabad, in Navayuga Quazigund Expressway vs DCIT, Circle 15(1), Hyderabad (supra) though on the computation of interest under section 201(1A) of the Act, is completely based on the aforecited decision of the Hon'ble Gujarat High Court. No decision of a binding jurisdictional authority was cited by the appellant. 2.8 It may also he perhaps worthwhile to mention that interest levied need not wholly be compensatory in nature in all cases. Such a levy may also he penal-deterrent in nature, which is best exemplified by the differential rates of ink-rest provided for in section 201(1A)(i) and section 201(1A)(ii) of the Act. It also perhaps deserves consideration that there was no bar on the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 MONTH S 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% 153,95 1.00 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% 135,09 8.00 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% 139,96 0.00 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% 144,03 7.00 Period of delay is less than 30 days hence 1 month is considered Total 573,04 6.00 7.2 The assessee while computing interest payable to Central Gov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 applicable at the relevant time read as under:- "119A. In calculating the interest payable by the assessee or the interest payable b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 fraction of a month on either side of the events i.e. payment of tax or refund thereof, both fractions should be considered as full months and fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tionary 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 prescribed rate for every month or of part of a month comprised in the period from the date the tax is paid to the date on which refund is granted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ourts 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 to that extent on 30th December, 2003 but credited to the Central Government account only on 1st January, 2004. The question was can the tax be said to have....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted 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 deducted, and the penalty had to be worked out on the basis of this reduced amount. The Tribunal held that the word "month" occurring in section 271(1)(a)(i) of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 cases lead to a defaulting assessee escaping penalty altogether, in spite of default. To take an illustration: Let us assume that time is given to an asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 following the decision of the Gujarat High Court in the case of Arvind Textile Mills, considered the definition of month in the context of Section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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 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".....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 Clauses Act, therefore, the period of time between 16th November 2010 to 14th December 2012 is less than 25 months, and, accordingly....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppeal 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 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Mills Limited (supra) and direct the Assessing Officer to recompute the interest payable under S.201(1A) ....