TaxTMI 
TaxTMI 
2020 (8) TMI 665
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.....1 The learned Commissioner of Income Tax (Appeals)-60, Mumbai ["CIT(A)"] erred in law and on facts to confirm the levy of interest for late payment of tax deducted at source of Rs. 42,09,766 under section 201(1A) of the Income-tax Act. 1.2 The Learned CIT(A) erred in not appreciating that no interest under section 201(1A) of the Act is leviable as TDS on salary payments was deposited through a cheque by the prescribed due date of i.e. 7th of the following month. 1.3 The Learned CIT(A) erred in holding that interest under section 201(1A) of the Act was leviable in case where the cheque for payment of TDS is deposited within due date with authorized bank, duly honoured but the cheque is encashed thereafter. 1.4 The Learned CIT(A) erred in holding that section 201(1A)(ii) provides that interest is leviable up to the date tax is 'actually paid to the credit of the Government even if cheque towards the tax deducted at source is presented to Authorized Bank within prescribed due date. 1.5 The Learned CIT(A) erred in not considering the Supreme Court decision in the case of CIT v. Ogale Glass Works Ltd. 25ITR 529 wherein it is held that "the cheques not having been dishonored but....
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....essee to the bank and not on the date on which it was presented for collection by the bank. Reliance was, inter-alia, placed in the decision of Chennai Tribunal in P.L.Haulwel Trailers Ltd. Vs DCIT (100 ITD 485 20/01/2006) for the said proposition. Reliance was also placed on the decision of Hon'ble Supreme Court in CIT V/s Ogale Glass Works Ltd. (25 ITR 529 19/04/1954) for the submissions that the payment would relate back to the date of receipt of the cheque. The said decision was stated to be followed by Hon'ble Apex Court in DIT V/s Raunaq Educational Foundation (350 ITR 420) as well as Hon'ble Madras High Court in CIT V/s Repco Home Finance Ltd. (53 Taxmann.com 47). Reliance was placed on similar other decisions to support the various submissions. These decisions have already been enumerated in the impugned order. 3.3 The Ld. CIT(A), after perusing the detailed payment chart submitted by the assessee, noted that there was a difference in tendering of challans by the assessee to SBI and date of clearing / stamping on the challan. Going by the wordings of Section 201(1A) (ii) which used the expression actually paid, it was held that interest was to be levied from date of dedu....
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....ssee's favor. The operative part of the decision, for convenience and ease of reference, could be extracted as follows: - 6. We have heard the authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record. The issue involved in the present appeal lies in a narrow compass. We find that our indulgence in the present appeal has been sought by the assessee to adjudicate as to whether the CIT(A) is right in law and the facts of the case in treating the assessee as being in default for delay in deposit of TDS, though the cheque towards the amount of TDS was tendered by the assessee to the government bank within the stipulated time period. We have deliberated at length on the issue under consideration, and find that that as per CBDT Circular No. 261 [F.No. 385/61/79-IT (B)], dated 08.08.1979, it has been clarified that the date of tendering of cheque for payment of government dues shall be deemed to be the date of payment of such taxes. We find that the aforesaid CBDT circular is applicable to all government dues, and makes no distinction whether the payment is by way of TDS, advance tax, self-assessment tax etc. The rel....
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....and also has to be taken as having been rendered as otiose. 7. We shall now advert to certain judicial pronouncements which fortifies the claim of the ld. A.R that the assessee stood discharged of its liability of depositing the TDS on the date on which it had tendered the cheque with the government bank. We find that that Hon'ble Supreme Court in the case of K. Kaplana Saraswathi (supra) has held that payment by cheque should be taken to be due payment, if the cheque is subsequently encashed in the ordinary course. Further, the Hon'ble High Court of Madras in CIT v. Kumudam Publications (P) Ltd.[1981] 128 ITR 617 after deliberating on the Treasury Rules, had therein concluded that in view of Treasury Rules when cheques are handed over to the government officials or to the government officer authorised to received payment on behalf of the government, payment would be deemed to have been made on the date the cheque was handed over. We find that a coordinate bench of the Tribunal viz. ITAT Chennai in the case of P.L. Haulwel Trailers Ltd. v. Dy. CIT[2006] 100 ITD 485 (Chennai) while deliberating on the levy of interest under Sec. 234C of the Act, had observed that as the as....
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....id amount to the Government Account. We thus in the backdrop of our aforesaid deliberations, not being able to persuade ourselves to subscribe to the view taken by the lower authorities that the assessee was to be treated as being in default for delay in deposit of the amount of TDS, thus set aside the order of the CIT(A) and delete the interest of Rs. 37,510/-levied by the A.O under Sec. 201(1A) of the Act. 9. The appeal of the assessee is allowed. Upon perusal, we find that it was held by the bench that Circular No. 261, dated 08/08/1979 issued by the CBDT, unless withdrawn or amended, would hold the ground and would be binding on the revenue. Further, the payment would be deemed to have been made on the date the cheque was handed over to the banker and the date of payment was to be taken as the date of presentation of the cheques by the assessee. It also supports the proposition that the payment would relate back to the date of presentation of cheque unless the cheque is dishonored. The binding decisions cited by the assessee before Ld. CIT(A) also supports the said proposition. Similar view has been taken by Bangalore Tribunal in ITO V/s Broadcom Communication Technology P....