TMI Blog2019 (7) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1A) of the 1961 Act in accordance with our decision in this order. - I.T.A. No.2295/Mum/2018 - - - Dated:- 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, filed by assessee, being ITA No. 2295/Mum/2018, is directed against appellate order dated 17.01.2018, passed by learned Commissioner of Income Tax (Appeals)-59, Mumbai (hereinafter called the CIT(A) ) in Appeal No. CIT(A)-59/IT-116 [IT-114(Apl.-60)]/2017-18, for assessment year 2014-15, which in turn has arisen from intimation issued by learned Deputy Commissioner of Income-tax, Income Tax Department, TDS CPC, Ghaziabad, UP, dated 30.03.2014 u/s. 200A of the 1961 Act 2. The grounds of appeal raised by assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- GROUND NO. 1: LEVYING OF ADDITIONAL INTEREST U/S 201(1A) FOR LATE PAYMENT OF TAX ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30.03.2014 issued by learned DCIT u/s 200A, with which we are not presently concerned with. We will confine our discussions only to issue under dispute which concerns itself with interest payable by assessee on account of late deposit of TDS to the credit of Central Government to the tune of ₹ 4,19,090/-. 4. The assessee being aggrieved by demand raised by Revenue vide intimation dated 30.03.2014 issued by learned DCIT vide intimation u/s 200A of the 1961 Act has filed first appeal with learned CIT(A). The learned CIT(A) was pleased to dismiss appeal of the assessee, vide appellate orders dated 17.01.2018, by holding as under:- 2.1 The first ground of appeal agitates against the levy of interest on late payment amounting to ₹ 4,19,090/- as reflected in column no.3(b) of the intimation under section 200A of the Act dated 30.03.2013 of the CPC-TDS., 2.2 In the Statement of Facts, it was stated that TDS aggregating ₹ 3,30,71,399/- in respect of some payees was deducted 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 du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in 64 Taxmann.com 212. It also relied on two orders (both dated 03.02.2016) of the Id. Appellate Tribunal, Ahmedabad, namely : (i) Suzlon Gujarat Wind Park Ltd. (SMC Bench) in ITA Nos.2931-2933/Ahd/2015. (ii) Suzlon Energy Ltd. (SMC Bench) in ITA No.2934/Ahd/2015 2.4 The matter has been considered. The dispute lies in a narrow compass and has already been set out, supra. In specific terms, the grievance of the appellant relates to late deposit interest levied vis-a-vis three tax deduction at source made by it on 14.10.2013, 21.10.2013 and 28.10.2013. Since these were in the month of October, 2013, their common due date for deposit in Central Government Account was November 07, 2013. However, there was a default as the three deductions were actually deposited in the government account on November 11, 2013. Resultantly, there was a delay of 29, 22 and 15 days as per the appellant, That is to say, there arose a delay period of one month only as per the appellant's reckoning since the aforementioned delay in none of the three defaults, exceeded a period of 30/31 days. On the other hand, the CPC-TDS took the same for f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal issues based on extraneous considerations such as equity or comparisons with other sections of the statute. For instance, there is no mention of the calculation of a period which has been specified in clause (a) and clause (b) of rule 119A of the Income-tax Rules, 1962, wherein it has been stated that where interest is to be calculated for every month or a part of the month comprised in a period , any fraction of a month shall be deemed to be a full month. Section 201(1A) of the Act has to be taken as a self-contained procedure where the modalities for calculation of interest payable for TDS default has been laid out. 2.7 The decision rendered in the case of CIT vs Arvind Mills Limited (supra) was in the context of section 244A and not in the context of 201(1A) of the Act which applies to the case under consideration. It deserves consideration that section 244A(1) refers to month or part of the month 'comprised in a the period' for all refund scenarios covered by sub-clauses (a), (aa) and (b) thereof. This corresponds to reference to the determination of a 'period' in rule 119A of the Income-tax Rules, 1962, as discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S is governed by the provisions of Section 201(1A)(ii) of the 1961 Act read with Rule 119A(b) of the Income-tax Rules,1962. it is submitted by Ld. Counsel for the assessee that the Hon‟ble Courts/tribunal has consistently held that the month has to be considered as a period of 30 days, but since the TDS amount was deducted in the month of October 2013 on various dates while paid to the credit of Central Government on 11.11.2013, the Revenue has charged interest @ 1.5% per month for the period of two months. The assessee relied upon following judgements to support its contentions :- a) CIT v. Arvind Mills Ltd, (2011) 16 Taxmann.com 291 (Gujarat) b) CIT v. Laxmi Rattan Cotton Mills Co. Ltd, (1974) 97 ITR 285 (Allahabad) c)E.I.DuPont India Private Ltd v. Dy. CIT. CPC - TDS, ITA No. 386 387/ Del 2016) (Delhi Tribunal) d)Oil Natural Gas Commission v. ACIT (TDS) (ITA No. 1955 to 1965 Ahd/2015) (Ahmedabad SMC Bench) e)Navayuga Quazigund Expressway (P) Ltd., v. DCIT (ITA no. 1651/Hyd/14) (Hyderabad) f) Bank of Baroda v. DCIT, CPC, TDS [(2017) 88 taxmann.com 103) (Ahmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 following manner, namely :- (a) where the refund is out of any tax [paid under section 115WJ or] [collected at source under section 206C or] paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of [one-half per cent] for every m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest 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 for every month or part of a month comprised in a period, every fraction of month shall be deemed to be full month and the interest so calculated. 28. By reading of Section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponding 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, the time must be reckoned by looking at calender and by not computing test. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee would be entitled to interest for both the months in entirety irrespective 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, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e default continued, but not exceeding in the aggregate fifty per cent. of the tax. **** Coming now to the first question, section 271(1)(a)( i) of the Act is a penal provision, and in the event of the default contemplated 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 78 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onth. We, therefore, answer the first question in the negative and in favour of the Commissioner,.....bear their 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of 30 days and not British calendar month as defined u/s 3(35) of the General Clauses Act. In the case of ONGC (supra), the Ahmadabad Bench of the Tribunal again considered this question in the context of Section 201(1A) of the Act and reached a similar conclusion. 10. In view of this established position of law, we are unable to endorse the view of the ld. AO and accept the calculation of month reckoned by him. However, in view of the fact that the assessee did not furnish the requisite information as observed by the learned CIT(A) in para 2.3 of his order, we deem it just and necessary, while setting aside the impugned order, to remand the matter to the file of the learned CIT(A) to enable the assessee to submit the actual calculation showing the discrepancies in the calculation of interest by the AO and the assessee respectively. Learned CIT(A), after considering the same, would decide the matter in the light of our above observations that the 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 statisti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of money is to be compensated. If a person ought to have deducted the tax on, say, 21st of October and he actually does so on 3rd of November, the period for which the Government is deprived of its legitimate taxes is less than a month. However, if we go by the interpretation canvassed by the Assessing Officer, which has the approval of the CIT(A) as well, this will be a period of two months i.e. a part of October as also a part of November. Such a result is clearly incongruous. As for the alternate contention of the revenue, i.e. the period of a month could at best be taken as thirty days and, therefore, the period of 7th November 2010 to 14th December 2012 should be constructed as 26 months, it is also devoid of any merits. If that is the principle to be followed, when a person required to deduct tax at source on 21st March, actually deducts the tax at source on 18th March in the subsequent year, the period of delay will have to be taken as 13 months (i.e. 12X30= 360 days plus 2 days as part of the month). This approach also, thus, leads to incongruous, and, if I may say so, somewhat absurd results. Clearly, therefore, approach followed by the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 months. 8. During the course of arguments before me, the connotations of calendar month were argued at length but these discussions proceeded on the fallacious assumption that the expression month , appearing in Section 201(1A), is either required to be interpreted as a calendar month or a period of thirty days. As a matter of fact, as evident from the discussions above, the expression month refers to a month reckoned according to the British calendar . A month as per the British calendar and a month reckoned (emphasis supplied by me) as per British calendar are not the same thing and cannot be used interchangeably. While former refers to a calendar month by itself, the latter refers to a period of time which qualified to be treated as a month . The subtle distinction between the scope of these two expressions cannot be ignored. 9. As I have decided the matter on the first principles and in the light of the plain meanings of the statutory provisions in the given context, and as learned Departmental Representative has not invited my attention to any judicial precedent holding to the contrary in this context, it is not really necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident: The procedure to be followed for calculating the interest payable by the assessee or by the Central Government is given in Rule 119A of Income-tax Rules, 1962 as under- 119A. In calculating the interest payable by the assessee or the interest payable by the Central Government to the assessee under any provisions of the Act- (a) where interest is to be calculated on annual basis, the period for which such interest is to be calculated shall be rounded off to a whole month or months and for this purpose any fraction of a month shall be ignored; and the period so rounded off shall be deemed to be the period in respect of which the interest is to be calculated; (b) 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the interest payable under S.201(1A) by taking a period of 30 days as a month instead of British calendar month. 7.7 The learned DR could not controvert the above position and no contrary decision is brought on record. As could be seen from above, the Hon‟ble High Court as well tribunal has taken a consistent view 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. Thus, Respectfully following the ratio of aforesaid decision‟s, 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) of the 1961 Act. The AO is directed to compute interest payable by the assessee u/s 201(1A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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