Interest u/s 201(1A) shall continue till the date of tax payment by the payees, says ITAT

The Income Tax Appellate Tribunal (ITAT) has ruled that interest under Section 201(1A) of the Income Tax Act continues to accrue until the date the payees actually pay their tax. This means interest liability doesn't cease simply because the payee has filed their income tax return. The tribunal clarified that while a payee can avoid the deductor being treated as an assessee-in-default if they declare the payment and pay tax due, the interest on delayed TDS payment is mandatory.

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI

BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM (Hearing Through Video Conferencing Mode)

I.T.A. No.5895/Mum/2017

Assessment Year: 2008-09

Mobile Trading & Investment Pvt. Ltd. 141, Mittal Tower, C-Wing Nariman Point, Mumbai-400 021

PAN/TAN AACCM-1419-N

Appellant)

Vs

ACIT CPC-TDS Aaykar Bhavan, Sector-3, Vaishali, Ghaziabad(UP) Pin 201010

Respondent

Assessee by
:
Ms. Dinkle Haria, Ld. AR
Revenue by
:
Shri Bharat Andhale, Ld. Sr. DR

Date of Hearing: 01/06/2021

Date of Pronouncement:26/07/2021

O R D E R

Aforesaid appeal by assessee for Assessment Year (AY) 2008-09 arises out of the order of learned Commissioner of Income-Tax (Appeals)-59, Mumbai [CIT(A)], Appeal No. CIT(A)59/IT-133/ITO(TDS)-1(3)(4)/2015-16 dated 30/06/2017

2.The relevant facts are that the assessee received an intimation u/s 200A dated 07/10/2015 from TDS, CPC, Ghaziabad in respect of quarterly TDS return in Form No.26Q as filed by the assessee for Q-1 of AY 2008-09. An aggregate demand of Rs.4,22,710/- was raised.

3.We find that as per the provisions of Sec.201(1), where the assessee, inter-alia, fails to deduct whole or any part of the tax then such persons shall be deemed to be an assessee-in-default. However, as per the first proviso, the assessee shall not be deemed to be assessee-in-default in respect of such tax if the payee has furnished his return of income u/s 139 and has taken into account such payment for computing income and has paid tax due on income declared by him in such return of income. For the same, the payee is required to furnish a prescribed certificate to that effect.

4.Therefore, the statutory provisions are quite clear. The payment of interest shall be mandatory and the period shall run from the date on which tax was payable to the date of furnishing of return of income by the payee. We order so.

5. To summarize, payment of interest is mandatory but the same may be re-computed at correct rates after ascertaining the fact that whether the assessee could be treated as assessee-in -default or not. The grounds, thus raised, stand partly allowed for statistical purposes.

6. The appeal stands partly allowed for statistical purposes. Order pronounced on 26th July 2021.

Please find attached the enclosed file for the full judgement