TaxTMI 
TaxTMI 
2019 (12) TMI 1032
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....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, dated 13/03/2015) which are similar to the facts and circumstances of the case. 7. The....
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....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 these part months. The findings given by Ld. CIT(A) are as under: - "2.5 In the instant case, interest for late deposit....
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....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 statute itself in providing for a period in 'days' rather than 'month'. For example, the words 'thirty days' and 'sixty days' appear....
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.... 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 Government for such delay in deposit of TDS computed voluntarily interest payable of Rs. 5,73,046/- by taking period of delay in deposit of TDS in number of days wherein if the delay in deposit of TDS is upto 30/31 days, it was taken as one month delay but where it exceeded 30/31....
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....ll 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 by the Central Government to the assessee under any provision Act,- (a) where interest is to be calculated on annual basis, the period for which such interest is to be calculated shall be rounded off to a whole month or months and for this purpose any fraction of a month shall be ignored; and the period so rounded off shall be dee....
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....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 for both months the assessee must be held entitled to receive interest. 30. First and foremost it is not in dispute that term month has not been defined in the Act. Ordinarily, therefore, the definition of term month contained in General Clause Act would be a useful guide in the present case also. However, Section 3 of the General Clauses Act which is a definition section itself starts with ri....
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....nth' 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. Similarly, in Rule 119(A) of the Rules, in clause-b thereof, it is provided that every month or part of a month comprised in a period, fraction of a month shall be deemed to be a full month. Therefore, in order to ascertain for how many months assessee would be entitled to receive interest, the number of months comprised in the period shall have to be found out. In this context, the term 'month' in our opinion, must be given the ordinary sense o....
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.... 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 been paid on 30th December or on 1st January. Of course after holding that the tax was paid on 31st December 2003, the High Court further went out to observe that as per the Rule 119(A)(b) of the said Rules, upon refund, the assessee had to be granted interest for the entire period of December, 2003. We cannot, however, read such observation as the ratio of the decision of the Court. What was the controversy and what was decided by the Court was the actual date of payment ....
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....ndar 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 the Act meant a full calendar month, and inasmuch as the assessee was in default for only two full calendar months, i.e., December and January, the penalty could be levied only in respect of two months' default. It also held that inasmuch as the penalty is imposable under section 271(1)(a) of the Act, on the basis "of tax, if any, payable" and not on the total amount of tax, the penalty that was imposable on the assessee was to be calculated with reference to tax found due on the date of the completion of the assessment, subject to its....
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.... 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 assessee up to the 30th of January in a particular year for filing a return and he defaults. He, thereafter, files his return on the 27th February. If the word "month" occurring in the section is taken to mean a full calendar month, the assessee in such a case would not be liable for any amount of penalty. Such a result is not contemplated by the language of the sub-section, for the sub-section in clear and unambiguous terms makes every assessee liable for penalty during the period of default. In the circumstances, it is not appropriate to import the meaning of the word "month....
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....ot 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 201(1A) of the Act and held that Section 244A(1) is analogous to provisions of Section 201(1A)(ii) read with Rule 119A of the Act and a month must be given ordinary meaning of the term by taking period of 30 days and not British calendar month as defined u/s 3(35) of the General Clauses Act. In the case of ONGC (supra), the Ahmadabad Bench of the Tribunal again considered this question in the context of Section 201(1A) of the Act and reached a similar conclusion. 10. In view of this established position of law, we are unable to endorse the view of the ld. AO and accept the calculation of month reckoned by him. However, in view of the fact that the asses....
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....essee 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". The context in which the expression "month" is used here is a measurement of period for which time value of money is to be compensated. If a person ought to have deducted the tax on, say, 21st of October and he actually does so on 3rd of November, the period for which the Government is deprived of its legitimate taxes is less than a month. However, if we go by the interpretation canvassed by the Assessing Officer, which has the approval of the CIT(A) as well, this will be a period of two months - i.e. a part of October as also a part of November. Such a result is clearly incongruous. As for the alternate contention of the revenue, i.e. the period of a month could at best be taken as thirty days and, therefore, the period of 7th No....
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....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, interest under section 201(1A) could not have been levied for a period of more than 25 months. 8. During the course of arguments before me, the connotations of 'calendar month' were argued at length but these discussions proceeded on the fallacious assumption that the expression 'month', appearing in Section 201(1A), is either required to be interpreted as a calendar month or a period of thirty days. As a matter of fact, as evident from the discussions above, the expression 'month' refers to "a month reckoned according to the British calendar". "A month as per the British calendar" and "a month reckoned (emphasis supplied by me) as per British calendar" are not the same thing and cannot be used interchangeably. While former refers to a calendar mon....
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....ch 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 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:‖ The procedure to be followed for calculating the interest payable by the assessee or by the Central Government is given in Rule 119A of Income-tax Rules, 1962 as under- "119A. In calculating the interest payable by the assessee or the interest payable by the Central Government to the assessee under any provisions of the Act- (a) where interest is to be calculated on annual basis, the period for which such interest is to be calculated shall be rounded off to a whole month or months and for this purpose any fraction o....