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2019 (7) TMI 178

..... t British Calendar Month? - month and part of month - HELD THAT:- Month is to be interpreted as period of 30 days and not British calendar. There are other judgments also relied upon by assessee wherein similar view has been taken. See ARVIND MILLS LIMITED [2011 (9) TMI 244 - GUJARAT HIGH COURT] We allow the appeal of the assessee, by holding that for purpose of computation of interest payable u/s. 201(1A)(ii) of the 1961 Act read with Rule 119A(b) of the 1962 Rules, month is to be interpreted as period of 30 days and not British Calendar Month. However, now for the purpose of computation of interest payable by the assessee in accordance with our decision in this order, we are restoring the mater back to the file of AO for limited purpose of computing the interest payable by assessee u/s 201(1A)(ii). AO is directed to compute interest payable by the assessee u/s 201(1A) of the 1961 Act in accordance with our decision in this order. - I.T.A. No.2295/Mum/2018 - 1-7-2019 - Shri C.N Prasad, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Ms. Krupa Gandhi For the Revenue : Shri. Rajeev Gubgotra (DR) ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, file .....

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..... as detailed here under:- Date Of Payment Date of Deduction Due Date Date of Deposit TDS amount Delay in days both DATES inclusive DELAY PERIOD IN MONTHS PER S.201(1A) Rate of interest per month Interest payable REMARKS 7/10/2013 7/10/2013 7/11/2013 11/11/2013 5,131,710.00 35 2 1.50% 153,951.00 Period of delay is more than 30 days hence 2 months are considered 14/10/2013 14/10/2013 7/11/2013 11/11/2013 9,006,510.00 29 1 1.50% 135,098.00 Period of delay is less than 30 days hence 1 month is considered 21/10/2013 21/10/2013 7/11/2013 11/11/2013 9,330,686.00 22 1 1.50% 139,960.00 Period of delay is less than 30 days hence 1 month is considered 28/10/2013 28/10/2013 7/11/2013 11/11/2013 9,602,433.00 15 1 1.50% 144,037.00 Period of delay is less than 30 days hence 1 month is considered Total 573,046.00 3.2. The assessee while computing interest payable to the credit of Central Government for such delay in deposit of TDS computed voluntarily interest payable of ₹ 5,73,046/- as detailed in the above chart which was claimed to be duly paid by the assessee voluntarily suo motu while filing TDS return for Quarter 3 of financial year 2013-14 in Form no. 26Q. But the Revenue was of the v .....

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..... on various dates in the month of October, 2013. The amounts so deducted was deposited in the government account on 11.11.2013 as against the due date of 07.11.2013 for doing so. It was stated that since the tax deducted was deposited after the due date, the appellant suo moto paid interest of ₹ 5,73,046/- for the delayed period in terms of section 201(1A) of the Act. However, the appellant received an additional demand of ₹ 4,19,090/- as interest for late payment of TDS. To put it differently, the total interest on late deposit of tax deducted, was determined by CPC-TDS at ₹ 9,92,135/- as against ₹ 5,73,046/- computed by the appellant. It was stated that as per the relevant Justification Report, the aforesaid difference had arisen by taking the period of delay at two months, as per column (17) thereof, 2.3 The appellant protested that the period of delay of two months was incorrect since the CPC-TDS had taken the date of deduction of tax in a month as one complete calendar month and the date of deposit of tax in the subsequent month as one more complete calendar month. To put it in actual context, the delay was taken for the two months of October, 2013 and .....

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..... he CPC-TDS took the same for full two months by recognizing the part periods in October and November, 2013 as full two months for this purpose. 2.5 The appellant's arguments are misconceived. Section 201(1A) of the Act is free from doubt. For ready reference, the section is extracted below (emphasis supplied): "Consequences of failure to deduct or pay 201 (1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,- (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month 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, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200" 2.6 In the .....

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..... ' in section 201(1A) of the Act. The decision of the Ld. Appellate Tribunal, Hyderabad, in Navayuga Quazigund Expressway vs DCIT, Circle 15(1), Hyderabad (supra) though on the computation of interest under section 201(1A) of the Act, is completely based on the aforecited decision of the Hon'ble Gujarat High Court. No decision of a binding jurisdictional authority was cited by the appellant. Similar is the position with respect to the two decisions dated 03.02.2016 of the ld. Appellate Tribunal, Ahmedabad (SMC Bench, supra) relied upon by the appellant. 2.8 The other argument regarding the manner in which the computation of interest was earlier made by NSDL in its case, even if correct, is not an argument that compels a position to be taken contrary to the provision of the Act against which there cannot be an estoppels. Another submission put forth that a position beneficial to the assessee is to be taken when two views are possible, is valid only when two equally possible views on a particular aspect subsist simultaneously. This is not what obtains in the appeal at hand given the clear words of the statute as enshrined in section 201(1A) of the Act. It may also be worthwhil .....

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..... the month of October 2013, while payment for TDS was deposited to the Credit of Central Government in the month of November 2013, which means that there were two months involved namely October and November 2013 and as per provisions of Section 201A(ii) of the 1961 Act read with Rule 119A(b) of the 1962 Rules clearly stipulated that the fraction of the month is to be rounded off to next integer. The learned DR would rely on the orders of the authorities below. Our attention was drawn to para 2.5 of the appellate order passed by Ld. CIT(A). 7. We have considered rival contentions and perused the material on record including cited laws. We have observed that the assessee has deducted Income-tax at source under Chapter XVII-B of the 1961 Act on various dates of the month of October 2013 which was required to be deposited to the credit of Central Government on 7th November 2013 but was deposited late to the credit of Central Government on 11.11.2013, which led to raising of additional demand towards interest payable by assessee for late deposit of TDS to the credit of Central Government, by Income Tax Department, TDS CPC, Ghaziabad, UP vide intimation dated 30.03.2014 u/s. 200A of the 1 .....

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..... t view has been taken by Hon‟ble Courts and the tribunal that period of month in such cases is to be taken as period of 30/31 days as contemplated by the assessee in the instant case before us and not as by rollover of month viz. British Calendar Month as contemplated by Revenue. Reference is drawn to the decision of Hon‟ble Gujarat High Court in CIT v. Arvind Mills Limited reported in (2011)16 taxmann.com 291(Guj), wherein Hon‟ble Gujarat High Court held in context of provisions of Section 244A of the 1961 Act, as under:- 21. Before dealing with the rival contentions it would be useful to take note of statutory provisions applicable. Since the adjustment of the tax previously paid occurred during the period of March, 1997 to November, 2000, we would be taking note of statutory provisions as applicable during the said period. 22. Relevant provisions of Section 244A(1)(a) of the Act at the relevant point of time read as under: "244A. (1) [Where refund of any amount becomes due to the assessee under this Act], he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the fo .....

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..... ct reads as under, "3(35) "month" shall mean a month reckoned according to the British calender;" 26. From the above statutory provisions, it can be seen that Section 244A provides for payment of interest where refund of any amount becomes due to the assessee under the said Act. In such a case the assessee is entitled to receive in addition to the refund amount, simple interest at the prescribed rate. Clause (b) of section (1) of Section 244A of the Act in particular provides that such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. In the other words, interest at the prescribed rate is to be paid to the assessee on the refund of tax paid for every month or part of a month comprised in the period from the date of payment of the tax to the date on which refund is granted. 27. Rule 119(A) of the said Rules further clarifies that in calculating the interest payable by the Government to the assessee under any provision of the act where interest is to be calculated .....

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..... . 31. Word 'month' is described in Webster's Third New International Dictionary (unabridged) as a measure of time corresponding or nearly corresponding to the period of time moon's revolution or as one of the twelve portions into which the year is divided in the Gregorian calender as also a period of time about the length of a lunar month but not necessarily coinciding with a calender month. The same dictionary also explains term 'calender month' as one of the months as named in the 'calender' or the period from a day of one month to the corresponding day of the next month if such exists or if not to the last day of the next month. 32. In 'Judicial Officer's Law Lexicon' by Justice C.K.Thakker term calender month is explained as under: "A period of time consisting of 30 days in April, June, September and November; of 31 days in the remainder of the months, except February, which consists of 28 days, except in leap-year, when the intercalary day is added, making 29 days. 33. In Judicial Dictionary by Aiyar's, the term 'calender month' is described as a legal and technical term in computation the time by calender months, th .....

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..... esent case is accepted, in a case where the assessee pays tax on 31st January and is granted refund on 1st February of the same year, shall also be entitled to interest for two full months. This would be so because the assessee contends that for the purpose of sub-section (1) of Section 244A the term 'month' should be understood as British Calender month and since Rule 119(A) of the Rules provides for ignoring a fraction of month and granting interest for the full month instead, the assessee in the second example given above should receive interest for month of January as well as for the month of February. To our mind such interpretation would only lead to anomalous situation and should therefore be avoided. 39. As already noted earlier, various decisions cited before us adopting the definition of term month contained in section 3(35) of the Act were rendered in the background of penal provisions contained in Section 271(1)(a) of the Act. The said provision prescribes penalty for non-filing or late filing of returns and the penalty is to be calculated on every month of such default. Under this background various Courts were of the opinion that the term 'month' must .....

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..... of dates when the tax was paid and refunded /adjusted. We answer the question in favour of the Revenue and against assessee. The judgment of the Tribunal is set aside. 7.3 The above decision in the case of Arvind Mills Limited(supra) was rendered in the context of provisions of Section 244A of the 1961 Act. We have also noted that Hon‟ble Allahabad High Court in the case of CIT v. Laxmi Rattan Cotton Mills Co. Ltd., reported in (1974) 97 ITR 285 (All. HC) has also interpreted month‟ in context of Section 271(1)(a) of the 1961 Act, by holding as under:- The Income-tax Appellate Tribunal, Allahabad, has under section 256(1) of the Income-tax Act, 1961, referred the following two questions for our opinion: "1.Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the word 'month' occurring in section 271(1)(a)(i) referred to English calendar month? 2.*** The assessee did not file his return for the assessment year 1958-59 by November 15, 1958, up to which date the Income-tax Officer had allowed time. The return was filed on February 18, 1959 after about three months of the expiry of that date. After the assessment .....

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..... ntemplated by this section, an assessee becomes liable to payment of penalty at the rate of 2% of the tax for "every month during which the default continued". The word "month" has not been defined in the Act. The Tribunal has, however, taken this word to mean "a calendar month" by referring to section 3(35) of the General Clauses Act, which defines "a month" as meaning a month reckoned according to the English calendar month. This definition, however, in view of the opening part of section 3 of the General Clauses Act, can be read into a statute provided there is nothing repugnant in the subject or context of the statute. It as such has to be seen whether the meaning given in the General Clauses Act to the word "month" is repugnant to the context. It is settled that the word "month" is normally understood to mean "a lunar month", i.e., a period of thirty days. (See Simpson v. Margitson [1847] 11 QB 23, 31, Ryalls v. R. [1848] 11 QB 781, 798, Rogers v. Kingston-upon-Hull Dock Co. [1864] 4 New Rep. 494, 496, Schiller v. Peterson & Co. Ltd. [1924] 1 Ch. 394, 420, 421 (CA), Phips ( P.) & Co. (Northampton and .....

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..... own costs 7.4. We have also noted that Delhi Tribunal in the case of E.I DuPont India Private Ltd. v. DCIT in ITA no. 386 & 387/Del/2016 vide order dated 24.01.2019 in context of section 201(1A) has interpreted month as period of 30 days and not a British calendar month by relying upon aforesaid decision of Hon‟ble Gujarat High Court in the case of Arvind Mills Limited(supra), by holding as under:- 7. We have gone through the record. There is no dispute that in so far as the tax deducted at source for salary is concerned, the AO calculated the interest on late payment at ₹ 9,80,607/- whereas the assessee calculated the same at ₹ 9,48,970/-, and the difference being ₹ 31,637/-. According to the assessee, the calculation of interest for three months by the ld. AO is incorrect. For the sake of clarity, we tabulate the interest calculation by the AO and the assessee as under: Admitted Facts: Date of deduction 31.3.2013 Due date of remittance 30.04.2013 Actual date of remittance 01.05.2013 Calculation made by the AO 31.3.2013 to 31.3.2013 One month 1.4.2013 to 30.4.2013 One month 01.05.2013 to 2.5.2013 One month Total Three month Calculation made by the Asses .....

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..... month as occurred in Section 201(1A) shall mean a period of 30 days and not a British calendar month. We order so accordingly. 11. In the results, appeals of the assessee are allowed for statistical purposes. 7.5 Further, we have noted that Ahmadabad-tribunal in SMC Bench in ITA no. 1955 to 1965/Ahd/2015 vide common order dated 15th September 2015 in context of section 201(1A) of the 1961 Act has interpreted the month‟ as period of 30 days, wherein Hon‟ble tribunal held the said provision to be compensatory in nature, by holding as under:- 4. I 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. 5. Section 201(1A), for ready reference, is reproduced below: (1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,- (i) at one per cent for every month or part of a month on the amount of such tax from the date on which .....

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..... d by the authorities below does not merit my approval 7. There is no dispute that the expression month is not defined for the purpose of Section 201 (1A) nor there is any direct judicial authority in the context of Section 201. Section 3(35) of the General Clauses Act defines month as, unless there is anything repugnant in the subject or the context, a month reckoned according to the British calendar . The expression reckoned , in plain English, refers to count, compute or calculate . In substance thus, the mandate of Section 3(35) is to count, compute or calculate according to, or as per, the British calendar. It is also important to note that even this definition is not in absolute terms inasmuch as when there is anything repugnant in the subject or the context , this definition can be discarded. It is the context in which the matter is being examined that must be treated as decisive factor. The levy of interest under section 201(1A) is compensatory in nature and it represents the time vale of money attributable to delay in deduction of tax at source. What is to be thus seen is the gap of time between the point of time when tax ought to have been deducted at source vis-à-v .....

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..... r to draw strength from those judicial precedents. I leave it at that. 10. In view of the above discussions, as also bearing in mind entirety of the case, I uphold the grievance of the assessee that, on the facts of this case, interest under section 201(1A) could not have been charged for more than 25 months. The Assessing Officer is, accordingly, directed to recompute the interest under section 201(1A) in the light of my observations above. 11. In the result, all the eleven appeals are allowed. Pronounced in the open court today on the 15th day of September, 2015. 7.6 Further, we have noted that Hyderabad-tribunal in Navayuga Quazigund Expressway Private Ltd. v. DCIT in ITA No. 1651/Hyd/14 vide order dated 13.03.2015 has held that month‟ is to be interpreted as period of 30 days and not British Calendar Month in context of Section 201(1A) of the 1961 Act, by holding as under:- 5. We have heard the arguments of both the sides and also perused the relevant material on record. The issue involved in this appeal relates to the computation of interest payable by the assessee under S.201(1A), the provisions of which read as under- 201.(1)…… (1A) Without prejudice to t .....

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..... and the amount so rounded off shall be deemed to be the amount in respect of which the interest is to be calculated. 6. In the present case, clause (ii) of S.201(1A) read with Clause (b) of Rule 119A is applicable and it provides that where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be a full month, and the interest shall be so calculated. The dispute in this context as involved in the present case is whether the month for such calculation of interest is to be taken as a British calendar month or a period of 30 days. It is observed that similar controversy had arisen in the case of CIT V/s. Arvind Mills Limited (2011)16 Taxman.com.291 (Guj), wherein the assessee claimed interest under S.244A on the basis of British calendar month. The claim of the assessee, although was not allowed by the Assessing Officer as well as the learned CIT(A), the Tribunal allowed the same. When the matter was carried before the Hon ble Gujarat High Court in an appeal filed by the Revenue, Their Lordships held that a reading of sub-section (1) of S.244A, the relevant provisions of which are analogous to the provisi .....

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