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2022 (11) TMI 1063 - HC - Income TaxLevy of interest under sub-section (1A) of Section 201 - delayed remittance of TDS deducted from compensation paid to persons from whom land was acquired for the purposes of establishing the Government Medical College at Manjeri - amounts were deducted in the month of January 2014 and the amounts were to be paid over to the Income Tax Department on or before 07.02.2014 - HELD THAT:- It is clear from a reading of Section 201 that the liability to deduct tax arises only when it is required to be deducted under the provisions of the Act. Where there is no liability to deduct TDS, the mere fact that TDS was so deducted and paid to the Income Tax Department belatedly, cannot give rise to a claim for interest under sub-section (1A) of Section 201. We feel that this can be the only reasonable interpretation that can be placed under the provisions of Section 201, as interest under sub-section (1A) of Section 201 is obviously to compensate the Government / Income Tax Department for the delay in payment of taxes, which are rightfully due to the Government. It is clear from Ext.P1 that the delay in remitting the amounts deducted as TDS arose only on account of the fact that the Officer in question was deputed for election duty for the period from January 2014 to May 2014 in connection with the Lok Sabha Election of 2014. Cumulatively, these facts compel me to hold that the levy of interest under sub-section (1A) of Section 201 was wholly unwarranted in the facts and circumstances of this case. The contention that the Income Tax Department had to pay interest on refund amount from a date prior to the date on which the Department received amounts is untenable. The Department was under no obligation to pay interest from a date prior to the date on which it actually received the amounts of TDS. The writ petition is, therefore, allowed.
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