TMI Blog2019 (12) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... anoj Kumar Aggarwal, AM For the Assessee : Ms. Vidushi Maheshwari Ld. AR For the Revenue : Shri Amit Pratap Singh Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as AY ] 2017-18 contest the order of Ld. Commissioner of Income-Tax (Appeals)-59, Mumbai [in short referred to as CIT(A) ], Appeal No.CIT(A)-59/IT-143/2017-18, dated 12/10/2018 on following grounds of appeal: - 1. The Order of the learned Commissioner is contrary to law, facts and circumstances of the case; 2. The learned Commissioner has erred in law in concluding that interest on late payment of TDS under section 201(1A) of the Act is to be computed based on calendar months without having regard to the fact that the provisions of section 201(1A) of the Act does not specifically prescribe the term 'calendar month'. 3. In the facts and circumstances of the case, the learned Commissioner has grossly erred in law in interpreting the term 'month' as 'calendar month' without appreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the Hon'ble Tribunal to decide the appeals according to law. The Appellant also craves leave to submit additional documents and facts as may be necessary for the purpose of disposal of this appeal. 2. The learned Authorized Representative for Assessee, Ms. Vidushi Maheshwari, at the outset, submitted that the sole issue under the appeal is squarely covered by recent decision of co-ordinate bench of this Tribunal rendered in ITA No.2295/Mum/2018 for AY 2014-15 order dated 01/07/2019 titled as UTI Mutual Fund Vs. DCIT. The copy of the order has been placed on record. The Ld. DR relied upon impugned order but could not place on record any contrary decision. 3.1 Facts in brief are that the assessee was saddled with interest on account of late payment of TDS for Quarter-3 of financial year 2016-17. The e-TDS return for the said period was filed on 31/01/2017, for which an intimation was received on 10/02/2017 raising demand of ₹ 1,13,270/- on account of interest on late payment of TDS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en there is little scope for reading it down or importing interpretational 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 has been laid out. It is well-settled that where the words of a statute are clear, plain and unambiguous, then the effect to that meaning has to be given irrespective of the consequences. 2.7 Adverting to the two judicial authorities pressed into service by the appellant, it is seen that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he co-ordinate bench. The findings, for ease of reference, could be extracted in the following manner: - 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 1961 Act, wherein further interest demand of ₹ 4,19,060/- were raised against the assessee in addition to suo motu voluntary deposit of interest for late deposit of TDS to the tune of ₹ 5,73,046/- paid by assessee while filing 3rd quarter TDS return in form no 26Q for Financial Year 2013-14. The delay in deposit of TDS to the credit of Central Government ranged for the period from 15 days to 35 days. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 573,04 6.00 7.2 The assessee while computing interest payable to Central Government for such d elay in deposit of TDS computed voluntarily interest payable of ₹ 5,73,046/- by taking period of delay in deposit of TDS in number of days wherein if the delay in deposit of TDS is upto 30/31 days, it was taken as one month delay but where it exceeded 30/31 days but up-to 61/62 days, the same was taken as 2 months delays while Revenue has taken rollover of month as basis for computing interest payable by the assessee for late deposit of TDS, as where the TDS is deducted in the month of October 2013 but paid in November 2013, the interest is computed by taking delay for 2 months and hence the differential demand for interest payable raised by Revenue to the tune of ₹ 4,19,060/- ,vide intimation dated 30.03.2014 issued by learned DCIT under Section 200A of the 1961 Act. We have observed that this issue had been subject matter of quite a controversy between the tax-payers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section. 24. Rule 119(A) of the said Rules applicable at the relevant time read as under:- 119A. In calculating the interest payable by the assessee or the interest payable by the Central Government to the assessee under any provision 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 interest shall be so calculated; (b) the amount of tax, penalty or other sum in respect of which such interest is to be calculated shall be rounded off to the nearest multiple of one hundred rupees and for this purpose any fraction of one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anguage used in the statutory provisions noticed by us. The case of the assessee however is that the word 'month' should be considered as per British Calender as defined in Section 3(35) of the General Clauses Act and accordingly if there is a fraction of a month on either side of the events i.e. payment of tax or refund thereof, both fractions should be considered as full months and for both months the assessee must be held entitled to receive interest. 30. First and foremost it is not in dispute that term month has not been defined in the Act. Ordinarily, therefore, the definition of term month contained in General Clause Act would be a useful guide in the present case also. However, Section 3 of the General Clauses Act which is a definition section itself starts with rider i.e. In this Act, in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context ....... Therefore if there is anything repugnant in Section 244A of the Act, the definition contained in Section 3(35) of the General Clauses Act would not be useful. We may also note that the decisions sought to be relied on by lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide interest to the assessee whose tax paid is found refundable at a later date. 37. To our mind the words appearing in sub-section (1) of Section 244A comprised in a period are significant. In clause (b) of section 244A(1) it is provided that the interest shall be calculated at the prescribed rate for every month or of part of a month comprised in the period from the date the tax is paid to the date on which refund is granted. Similarly, in Rule 119(A) of the Rules, in clause-b thereof, it is provided that every month or part of a month comprised in a period, fraction of a month shall be deemed to be a full month. Therefore, in order to ascertain for how many months assessee would be entitled to receive interest, the number of months comprised in the period shall have to be found out. In this context, the term 'month' in our opinion, must be given the ordinary sense of the term i.e. 30 days of period and not the British calender month as defined under Section 3(35) of the General Clauses Act. 38. We are of the opinion that the definition contained in Section 3(35) of the General Clauses Act defining the term 'month' cannot be ado ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount to the account of Central Government would be relevant factor for calculating interest under Section 244A of the Act. It was the case wherein the assessee deposited a cheque for the amount of tax demanded with authorized agent of Central Government on 29th December, 2003 and account of assessee was debited to that extent on 30th December, 2003 but credited to the Central Government account only on 1st January, 2004. The question was can the tax be said to have been paid on 30th December or on 1st January. Of course after holding that the tax was paid on 31st December 2003, the High Court further went out to observe that as per the Rule 119(A)(b) of the said Rules, upon refund, the assessee had to be granted interest for the entire period of December, 2003. We cannot, however, read such observation as the ratio of the decision of the Court. What was the controversy and what was decided by the Court was the actual date of payment of the tax i.e. 30th December, 2003 when the assessee's account was debited and not 1st January, 2004 when such amount was credited to the account of the Central Government. Any further observation regarding the eligibility of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and a part of February in which default occurred was not for the whole calendar month, and had as such to be excluded. As regards the amount of penalty that could be imposed for the default, it was contended that while computing the tax payable on which the penalty had to be imposed, the advance tax and the taxes paid as per provisional assessment had to be deducted, and the penalty had to be worked out on the basis of this reduced amount. The Tribunal held that the word month occurring in section 271(1)(a)(i) of the Act meant a full calendar month, and inasmuch as the assessee was in default for only two full calendar months, i.e., December and January, the penalty could be levied only in respect of two months' default. It also held that inasmuch as the penalty is imposable under section 271(1)(a) of the Act, on the basis of tax, if any, payable and not on the total amount of tax, the penalty that was imposable on the assessee was to be calculated with reference to tax found due on the date of the completion of the assessment, subject to its final computation by the appellate authorities. Inasmuch as the answer to the question referred depends on the interpretation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of thirty days. This provision was enacted for the purpose of imposing a penalty on an assessee who had not filed his return during the prescribed time, and was enacted to serve as a deterrent for such lapses. The penalty is imposable for every month during which the default continues. If the meaning ascribed to this word in the General Clauses Act is adopted, it may in some cases lead to a defaulting assessee escaping penalty altogether, in spite of default. To take an illustration: Let us assume that time is given to an assessee up to the 30th of January in a particular year for filing a return and he defaults. He, thereafter, files his return on the 27th February. If the word month occurring in the section is taken to mean a full calendar month, the assessee in such a case would not be liable for any amount of penalty. Such a result is not contemplated by the language of the sub-section, for the sub-section in clear and unambiguous terms makes every assessee liable for penalty during the period of default. In the circumstances, it is not appropriate to import the meaning of the word month given in the General Clauses Act in the sub-section, for it doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Two months 8. It is, therefore, clear that the ld. AO had taken the month to be the British calendar month as defined in Section 3(35) of the General Clauses Act and it is only on that premise, he calculated one day in March and two days in May as two full months and calculated interest for three months including the month of April also. 9. In CIT vs. Arvind Mills Ltd. (supra), in the context of interest on refunds u/s 244A of the Act, the Hon ble Gujarat High Court held that the term ‗month must be given the ordinary sense of the term i.e. 30 days of period and not the British calendar month as defined u/s 3(35) of the General Clauses Act and such a definition under the General Clauses Act cannot be adopted for the purposes of Section 244A of the Act inasmuch as such importation of definition would lead to anomalous situation. In the case of Navayuga Quazigund Expressway P. Ltd. (supra) , the Hyderabad Bench of this Tribunal, while respectfully following the decision of the Gujarat High Court in the case of Arvind Textile Mills, considered the definition of month in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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: Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum 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 6. The provision is quite simple and unambiguous inasmuch as interest is to be charged for every month or part of a month on the amount of such tax from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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- -vis the point of time when the tax was actually deducted, and it is in this context that connotation of expression month is to be examined. Now, if one has to compute the months as per the British calendar, the period from 21st October to 3rd November, as taken in the first example, is less than a month because it is only when the same date comes in the next month, the period of one month can be said to have elapsed. Similarly, the period of 21st March to 18th March of the subsequent year, as per the British calendar, is less than 12 months since the period of twelve months has not elapsed in between these two dates. Coming to the case in hand, the period of time gap between 16th November 2010 to 14th December 2012 is less than 25 months because, on 14th December 2012, the period of 25 months has not elapsed from 16th November, 2010. The period which is elapsed between these two dates is 24 months and 28 days. Going by the provisions of the General Clauses Act, therefore, the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the provisions of subsection (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 deduction 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 percent 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 subsection (3) of section 200; Provided that in case any person, including the principal officer of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provisions of clause (ii) of S.201(1A) read with Rule 119A, would make it clear that the term ‗month must be given the ordinary meaning of the term of 30 days period and not the British calendar month as defined in S.3(35) of the General Clauses Act. It was held that the definition given in General Clauses Act cannot be adopted for the purposes of subsection (1) of S.244A as such importation of the definition would lead to anomalous situation. In our opinion, the ratio of the decision of the Hon ble Gujarat High Court in the case or CIT V/s. Arvind Mills Limited (supra) is squarely applicable in the present case, and there being no decision cited by the learned Departmental Representative of any High Court taking a contrary view, we respectfull ..... X X X X Extracts X X X X X X X X Extracts X X X X
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