TMI Blog2000 (10) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... from two to six months. In response to a show-cause notice issued by the Assessing Officer it was stated that the assessee had only credited the accounts of the lenders, without actual payment to them and that it was on account of financial difficulties that within the statutory period TDS was not remitted to the Government account. The Assessing Officer was not satisfied with the explanation and he proceeded to charge interest under section 201(1A) totalling Rs. 72,832 as per the annexure to the common order passed by him on 29-3-1994. Interest was charged, reckoning the period of delay from the last day of the relevant assessment year till the date of actual payment. 3. The assessee took up the matter in appeal and contended before the Commissioner (Appeals) that there was mistake in the calculation of interest in the sense that credit was not given for the interest already paid and further, the period of delay was not taken correctly in terms of the provisions of Rule 30(1)(b) of the Income-tax Rules. The appellate authority did not accept the assessee's contention regarding the period of delay to be reckoned in terms of Rule 30(1)(b). At the same time he directed the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l urged us to reverse the order of the Commissioner (Appeals) and to delete the interest charged on the assessee. 5. Sri G.S.D. Babu, the Departmental Representative, on the other hand, supported the order of the Commissioner (Appeals), and submitted that the appellate authority was fully justified in confirming the order passed by the Assessing Officer in view of the clear delay in remitting the TDS to the Central Government account. Drawing our attention to section 194A the ld. Departmental, Representative stated that the assessee was required to deduct tax at source at the time of crediting-the interest to the account of the payee. It was pointed out that for the default it is provided in section 201(1A) that the company shall be liable to pay simple interest at the prescribed rate. Sri Babu submitted that charging of interest under the section was mandatory in a case where there was delay or default in making the remittance to the Government account. He contended that there was nothing in the section to show that interest was chargeable only if the delay was without reasonable cause. Our attention was drawn to the decision of the Bombay High Court in the case of Pentagon Engg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is actually paid. It can be seen from the above that the provisions for payment of interest are mandatory and automatic and interest has to be paid from the date on which the tax was deductible till the date on which the tax is actually paid. The decision of the Rajasthan High Court in the case of Rathi Gum Industries goes to show that the levy of interest being mandatory it is not necessary for the Assessing Officer to show that the default was without reasonable cause. In the case of Pentagon Engg. Co. Ltd. the main ground on which the assessee objected to the levy of interest was extreme financial difficulties. In dealing with the assessee's objection the Court observed: "The use of the word 'shall' in section 201(1A) makes the liability to pay the interest in the circumstances mentioned mandatory and there is no pre-condition of consideration of reasonable cause for non-payment in time of tax deducted under section 192 of the Act. We hold that section 201(1A) of the Act is mandatory and the Tribunal was right in law in taking the view that the ITO was not required to take into consideration the reasonable cause for non-payment of taxes deducted under section 192 of the Act" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment account and in that sense there was no delay, to invoke the provisions of section 201(1A) for charging interest. At the same time we find force in the contention that the Assessing Officer was not correct in reckoning the period of delay from 1st April for charging the interest. The Assessing Officer had proceeded to consider the delay from 1st April, for the reason that interest was credited in the accounts of the payee for the period up to 31st March. But, as pointed out by the ld. counsel the entries could not have been made on 31st March, but much later only. Hence it would not be correct to take the view that the assessee ought to have deducted the tax on the interest income on 31st March itself. There is definitely the practical difficulty in ascertaining the 'time of credit of such income to the account of the payee' as required by section 194A. Rule 30(1) of the Income-tax Rules throw light in such cases where there is difficulty in ascertaining the correct date. Of course Rule 30 deals with the time and mode of payment to Government account, the amount of tax deducted at source. It is provided in Rule 30(1)(a) that in the case of deduction by or on behalf of the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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