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2015 (10) TMI 2541 - ITAT CHANDIGARH

2015 (10) TMI 2541 - ITAT CHANDIGARH - TMI - Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments c .....

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inst two different orders of ld. CIT(Appeals)-I, Chandigarh dated 20.05.2015 for above assessment years, challenging the levy of fees under section 234E of the Income Tax Act. 2. The issue is common in all the appeals, therefore, all appeals were heard together and we dispose of the same through this common consolidated order. 3. Briefly the facts of the case are that these appeals are against intimation under section 200A of the Income Tax Act, whereby late filing fee under section 234E has bee .....

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e due to Accountant's fault. It was also contended that fees under section 234E can be recovered at the time of filing of the return and not thereafter. 4. The ld. CIT(Appeals), considering the submissions of the assessee noted that in all the intimations under section 200A of the Act, late fees under section 234E of the Act has been charged. A deductor is allowed to file the TDS Statement beyond the prescribed time provided he pays the fees as prescribed under section 234E of the Act. In ot .....

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ssessee reiterated the submissions made before authorities below and submitted that in all the cases, the intimation was issued under section 200A of the Act whereby the late filing fee under section 234E has been levied. He has submitted that Section 200A(1)(c) was substituted by Finance Act, 2015 w.e.f. 01.06.2015 whereby the provision was made which reads as under : "C- The fee, if any, shall be computed in accordance with the provisions of Section 23 E." 6. The ld. counsel for the .....

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15 in which in paras 4 to 10, identical issue has been decided in favour of the assessee. The order of the Tribunal is reproduced as under : "4. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. In addition to his argument on the merits, learned counsel has also invited our attention to the reports about the decisions of various Hon'ble High Courts, including Hon'ble Kerala High Co .....

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E. The full text of these decisions were not produced before us. However, as admittedly there are no orders from the Hon'ble Courts above retraining us from our adjudication on merits in respect of the issues in this appeal, and as, in our humble understanding, this appeal requires adjudication on a very short legal issue, within a narrow compass of material facts, we are proceeding to dispose of this appeal on merits. 5. We may produce, for ready reference, section 234E of the Act, which wa .....

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the failure continues. (2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be. (3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C. (4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the p .....

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ction at source, or a correction statement, has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:- (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the statement; or (ii) an incorrect claim, apparent from any information in the statement; (b) the interest, if any, shall be compute .....

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; and (f) the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor: Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation : For the purposes of this sub-section, "an incorrect claim apparent from any information in the statement" shall mean a claim, on the basis of an entry, in the statement- (1) of a .....

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d sub section. 7. By way of Finance Act 2015, and with effect from 1 st June 2015, there is an amendment in Section 200A and this amendment, as stated in the Finance Act 2015, is as follows: In section 200A of the Income-tax Act, in sub- section (1), for clauses (c) to (e), the following clauses shall be substituted with effect from the 1st day of June, 2015, namely:- "(c) the fee, if any, shall be computed in accordance with the provisions of section 234E; (d) the sum payable by, or the am .....

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ce of the determination under clause (d) shall be granted to the deductor. 8. In effect thus, post 1st June 2015, in the course of processing of a IDS statement and issuance of intimation under section 200A in respect thereof, an adjustment could also be made in respect of the "fee, if any, shall be computed in accordance with the provisions of section 234E". There is no dispute that what is impugned in appeal before us is the intimation under section 200A of the Act, as stated in so m .....

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ter making adjustment on account of "arithmetical errors" and "incorrect claims apparent from any information in the statement" Section 200A(1)(a) (b). after making adjustment for 'interest, if any, computed on the basis of sums deductible as computed in the statement". 9. No other adjustments in the amount refundable to, or recoverable from, the tax deductor, were permissible in accordance with the law as it existed at that point of time. 10. In view of the above di .....

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tion 234E. That is not the issue here. The issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be .....

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grievance of the assessee and delete the impugned levy of fee under section 234E of the Act. The assessee gets the relief accordingly." 7. On the other hand, ld. DR opposed the submissions of ld. counsel for the assessee and relied upon orders of the authorities below. He has relied upon decision of Bombay High Court in the case Rashmikant Kundalia Vs Union of India dated 06.02.2015 in Writ Petition No. 771/2014 and decision of Rajasthan High Court in the case of M/s Dundlod Shikshan Sanst .....

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visions of Section 234 E of the Income Tax Act." 9. The identical issue was considered by ITAT Amritsar Bench in the case of Sibia Healthcare Pvt. Ltd. (supra) and the issue has been decided in favour of the assessee. In the case of the assessee, the fee under section 234E of the Act has been levied for assessment years prior to the amendment in sub clause (c) of Section 200A (1) of the Act i.e. prior to 01.06.2015. Therefore, issue is covered in favour of the assessee by order of ITAT Amri .....

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g fee under section 234E was levied, was dt. 07/05/2014. On the said date the applicable provisions of Section 200A was as follows: " 200A. (1) Where a statement of tax deduction at source or a correction statement has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:- (a) the sums deductible under this Chapter shall be computed after making the following adjustmen .....

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from any information in the statement or the levy of any interest on TDS. No other adjustment could be made while processing the TDS statements under section 200A. The levy of fee under section 234E, in the impugned case was clearly therefore beyond the powers prescribed under section 200A. It is pertinent to point out that by virtue of amendment to section 200A brought about by the Finance Act 2015, with effect from 01/06/2015, the power to levy fees under section 234E has been specifically inc .....

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in our considered view, the adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. This intimation is an appealable order under section 246A(a), and, therefore, the CIT(A) ought ot have examined legality of the adjustment made under this intimation in the light of the scope of the section 200A. Learned CIT(A) has not done so. He has justified the levy of fees on the basis of the provisions of Section 234E. .....

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thin one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is unsustainable in law. We, therefore, uphold the grievance .....

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bunal is of the considered opinion that the Assessing Officer has exceeded his jurisdiction in levying fee under Section 234E while processing the statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law." 10. At this juncture it is imperative to state that the Bench has only adjudicated upon the issue of levy of fee u/s 234E while processing TDS statements u/ .....

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