Interest payable on late TDS payment for delay due to Cheque clearing / Govt holiday

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ITAT AGRA BENCH

G.M., Mprrda, PIU v. Income-tax Officer (TDS),

IT Appeal NOs. 370 & 371 (Agra) of 2011

Assessment Year 2008-09

Date of Pronouncement – 08.06.2012

Interest on late payment of TDS payable for delay due to Cheque clearing / Govt holiday

The undisputed fact is that the assessee is liable to deduct the tax at source on the payments made to the contractors. The assessee has also deducted tax at source as per Chapter XVII and the liability of assessee to deduct tax at source has also not been disputed. It is also not in dispute that after deducting the TDS, the assessee also made deposit of the tax that with the Central Government, but it was paid belatedly. The assessee in its appeals before the Commissioner (Appeals) also only challenged the interest payable for two months instead of one month. Therefore, in principle, it is admitted fact that the assessee was liable to deduct tax at source and since the assessee did not deposit the TDS within time, therefore, the interest was levied against the assessee under section 201(1A) which is mandatory in nature. The provisions of section 201(1A)(ii) also put the assessee on liability for payment of interest at the specified rate 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. Similarly, according to section 200 of the Income-tax Act, the assessee shall have to pay and deposit the amount of TDS at the credit of Central Government, as the Board may prescribe. Rule 30 of the Income-tax Rules. Also provides the modes of payment of tax deducted with the provisions of Chapter XVII by paying the amount of tax to the credit of the Central Government within the time prescribed. The cumulative effect of all the above provisions and Rules clearly provide that the assessee has to deposit the tax with the Government of India of the amount deducted at source and such tax shall be deemed to be paid to the Government when actual payment of tax has been brought to the Government by crediting the amount of taxes to the Central Government. The word ‘credit’ and ‘actual amount paid to the Government of India’ as prescribed in the above provision clearly denotes that the payment would be treated as made to the Government when the amount is actually credited and actually paid to the Government of India. Since the assessee has not deposited the amount of tax within the prescribed time, therefore, the assessee was liable for interest as per the above provisions. The time taken for clearing of cheques and Government holidays and reasonable cause etc. are not the reasons, which could be considered while levying the interest against the assessee. Such reasons are irrelevant and alien to the above provisions. Therefore, the contention of the assessee cannot be accepted and is, accordingly rejected. Since section 201(1A) of the Income-tax Act and relevant rules have specific provision of law and put the assessee in liability to pay mandatory interest for delay in depositing TDS within time, therefore, the provision of law shall have to be read as it is and cannot be stretched to give different meaning under the law. However, on consideration of the submissions of the assessee that excessive interest has been charged, it is found that the same have some points to argue because as per the schedule of payment, it is found that there may be some mistake in calculating the excessive interest as is demonstrated by the assessee on examining the payment of tax for the month of May, 2007 because the delay is apparently of 11 days but the Assessing Officer treated the default for 60 days. The said matter, therefore, requires reconsideration at the level of the Commissioner (Appeals).