11 Section 201(1A) – Interest u/s. 201(1A), on delay in deposit of TDS, is to be calculated for the period from the date on which tax was deducted till the date on which the tax was deposited.

[2017] 88 taxmann.com 103 (Ahmedabad)

Bank of Baroda vs. DCIT

ITA No. : 1503/Ahd./2015

A.Y.: 2014-15                     
Date of Order:  30^th November,
2017

FACTS 

The assessee, a branch of a nationalised
bank, deposited tax deducted at source, u/s. 194A of the Act, for the month of
September 2014 on 8^th October, 2014. While processing the TDS return
u/s. 200A, a sum of Rs. 2,78,607 was charged as interest for delay in
depositing the tax at source, for a period of two months, i.e. September and
October 2014. This interest amount of Rs.2,78,607/- was sought to be recovered
by the Assessing Officer.

Aggrieved, by the action of levying interest
for a period of two months, assessee carried the matter in appeal before the
CIT(A) who observed that the issue in dispute is whether the day on which tax
was deducted is to be excluded or not. Relying on the decision of the Hon’ble
Apex Court in Criminal Appeal No.1079 of 2006 in case of Econ Antri Ltd. vs.
Ron Industries Ltd. & Anr, in order dated 26-03-2013 he held that for
the purpose of calculating period of one month, the period has to be reckoned
by excluding the date on which the cause of action arose. He held that the
assessee was liable to pay interest for a period of one month.

Aggrieved, the assessee preferred an appeal
to the Tribunal.

HELD  

The Tribunal observed that the time limit
for depositing the tax deducted at source u/s. 194A, as set out in rule
30(2)(b) – which applies in the present context, is “on or before seven
days from the end of the month in which the deduction is made”. It noted
that since the TDS was deposited on 8^th of October 2014, admittedly
there was clearly a delay in depositing tax at source. It noted that the
contention on behalf of the assessee is that the levy of interest should be
reduced to actual period of delay in depositing the tax at source, i.e. from
the date on which tax was deducted and till the date on which tax was
deposited. It is only if such a period exceeds one month, then the question of
levy of interest will arise. It observed that what has been done in the present
case is that the interest has been charged for two calendar months, i.e.
September and October. It held that the question of levy of interest for the
second month can arise only if the period of time between the date on which tax
was deducted and the date on which tax was paid to the Government exceeds one
month. The Tribunal directed the Assessing Officer to re-compute the levy of
interest u/s. 201(1A) accordingly.