Income Tax Appellate Tribunal - Bangalore
M/S Karnataka Power Transmission ... vs Department Of Income Tax on 10 April, 2013
Page 1 of 8 1 ITA No.35/Bang/2012
IN THE INCOME TAX APPELLATE TRIBUNAL,
BANGALORE BENCH 'A'
BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND
SHRI JASON P BOAZ, ACCOUNTANT MEMBER
ITA No.35/Bang/2012
(Asst. year 2009-2010)
The Income Tax M/s Karnataka Power
Officer, TDS Transmission Corporation
Ward, Mangalore. Ltd., Major Works
Vs Division, Mangalore.
PA No.AABCK 7281 M
(Appellant) (Respondent)
Date of Hearing : 10.04.2013
Date of Pronouncement : 19.04.2013
Appellant by : Shri Bijoy Kumar Panda, Addl. CIT
Respondent by : Shri A C Raju, FCA
ORDER
PER GEORGE GEORGE K :
This appeal filed by the department is directed against the order of the CIT(A)-LTU, Bangalore dated 22.8.2011. The relevant assessment year is 2009-10.
2. The solitary issue that arises for our consideration is whether the CIT(A) is justified in deleting the interest levied under section 201(1A) of the Act amounting to Rs.3,60,300/-.
Page 2 of 8 2 ITA No.35/Bang/2012
3. Briefly stated the facts are as follows:-
The assessee is a State Government Public Sector Company, carrying on the business of transmission of electricity from generating point to various electrical sub-stations in the State of Karnataka through the network of transmission lines and sub-stations. The assessee filed its TDS quarterly return for quarter ending 31/3/2009 and the same was processed under section 200A of the Act on 5/3/2011. The Assessing Officer issued notice under section 201(1) of the Act, proposing to levy interest for delayed remittance of tax deducted. In response to the said notice, the assessee contended that for the month of March, 2009, the last day of remittance of tax deducted was 7th April, 2009 and the same being a public/bank holiday on account of Mahavir Jayanti, the tax amount of Rs.2,65,28,628/- was remitted on the immediate next working day i.e. on 8th April, 2009. However, the bank debited the aforesaid amount on 9th April, 2009. In another instance, according to the assessee, it had remitted the tax amount of Rs.95,00,994/- on 6th April, 2009, which was well within the period of limitation, but due to negligence on the part of the banker, the said amounts were debited to the assessee's account only on 9th April, 2009. The Assessing Officer, however, rejected the submissions made by the assessee and passed an order under section 201(1)/201(1A) of the Act by levying interest for the delayed remittance of the TDS.
4. Aggrieved, the assessee filed an appeal before the first appellate authority.
5. The CIT(A), for her elaborate reasons recorded in para 4.1.1 and 4.2 of the impugned order, allowed the appeal of the assessee. The learned CIT(A) held that the date of presentation of the cheque should be taken as the date of payment, since admittedly in this case, cheques were honoured. The Page 3 of 8 3 ITA No.35/Bang/2012 CIT(A) also held that when due date of payment of tax deducted was a holiday, the assessee was justified in making the payment on the next date.
6. The revenue being aggrieved is in appeal before us raising the following grounds:-
i) The order of the learned CIT(A) allowing relief on sum of Rs.3,60,300 being interest charged under section 201(1A) is opposed to law, facts and circumstances of the case.
ii) The learned CIT(A) failed to appreciate the fact that the assessee had presented some of the cheques to the bank after the specified due date and the same resulted in the cheque being cleared belatedly. Relief was granted on the ground that the assessee is entitled to remit the taxes on 8/4/2009 as 7/4/2009 was a general holiday and that delay is caused by the Banker in realising the cheque on 9/4/2009.
iii) The learned CIT(A) erred in not considering the fact that the Central Board of Direct Taxes, has inserted Rule 125, vide notification S.O. No.493(E) dated 13/3/2008 which had notified the categories of taxpayers who are mandatorily required to electronically pay taxes on or after the 1st April, 2008 which included a company and a person (other than a company) to whom provisions of section 44AB are applicable.
iv) The learned CIT(A) has failed to appreciate that the assessee is a company and is precluded from payment of taxes in banks through physical challans and therefore cannot claim any shelter that the delay in tax remittances are attributable to the Banker.
v) The learned CIT(A) has erred in relying on the judgments (case laws and circulars) and receipt and payment rules submitted by the assessee during the course of appeal as the same are not applicable to the facts of the present case.
7. The learned DR relied on the grounds mentioned above. It was also submitted that the issue in question is squarely covered by the order of Agra Page 4 of 8 4 ITA No.35/Bang/2012 Bench of the Tribunal in the case of G M., MPRRDA, PIU v Income Tax Officer (TDS) (2012) 23 taxmann.com 174.
8. The learned AR, apart from reiterating the contentions raised before the Income Tax authorities, strongly relied on the reasoning mentioned in the CIT(A)'s order for allowing the assessee's appeal.
9. We have heard the rival submissions and perused the materials on record. The Central Board of Taxes has inserted Rule 125, vide notification S.O. No.493(E) dated 13/3/2008 which had notified the categories of taxpayers who are mandatorily required to electronically pay taxes on or after the 1st April, 2008 which included a company and a person (other than a company) to whom provisions of section 44AB are applicable. Therefore, the assessee, being a company, is precluded from payment of taxes in banks through physical challans and cannot claim that the delay in tax remittances is attributable to the Banker.
9.1 The relevant Rule reads as under:-
"Electronic Payment of tax (1) The following persons shall pay tax electronically on or after the 1st day of April, 2008:-
(a) a company; and
(b) a person (other than a company), to whom the provisions of section 44AB are applicable. (2) For the purposes of this rule :-
(a) "Pay tax electronically" shall mean, payment of tax by way of -
(i) internet banking facility of the authority bank; or Page 5 of 8 5 ITA No.35/Bang/2012
(ii) credit or debit cards.
(b) the word "tax" shall have the meaning as assigned to it in clause (43) of section 2 of the Act and shall include interest and penalty".
It was also clarified in Board Circular No.5/2008 dated 14/7/2008 that the payment of any amount by a deductor by way of tax deducted at source (TDS) or tax collected at source (TCS) shall fall within the meaning of 'tax' for the purpose of Rule 125.
9.2 In the case of G M., MPRRDA, PIU v Income Tax Officer (TDS) (2012) 23 taxmann.com 174, the assessee put forth plea before the Tribunal that cheques were deposited in time but due to time consumed in clearance of cheques and Government holiday, there was delay and hence, interest under section 201(1A) of the Act cannot be levied. The Tribunal rejected the above plea of the assessee by holding that the interest under section 201(1A) is mandatory in nature and time taken for clearance of cheques and Government holidays were not the reasons, which could be considered while levying interest under section 201(1A) of the Act. The relevant finding of the Tribunal reads as follows:-
"The undisputed fact is that the assessee is liable to deduct the tax at source on the payments made to the contractors. The assessee has also deducted tax at source as per Chapter XVII and the liability of assessee to deduct tax at source has also not been disputed. It is also not in dispute that after deducting the TDS, the assessee also made deposit of the tax that with the Central Government, but it was paid belatedly. The assessee in its appeals before the Commissioner (Appeals) also only challenged the interest payable for two months instead of one month. Therefore, in principle, it is admitted fact that the assessee was liable to deduct tax at source and since the assessee did not Page 6 of 8 6 ITA No.35/Bang/2012 deposit the TDS within time, therefore, the interest was levied against the assessee under section 201(1A) which is mandatory in nature. The provisions of section 201(1A)(ii) also put the assessee on liability for payment of interest at the specified rate 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. Similarly, according to section 200 of the Income-tax Act, the assessee shall have to pay and deposit the amount of TDS at the credit of Central Government, as the Board may prescribe Rule 30 of the Income-tax Rules. Also provides the modes of payment of tax deducted with the provisions of Chapter XVII by paying the amount of tax to the credit of the Central Government within the time prescribed. The cumulative effect of all the above provisions and Rules clearly provide that the assessee has to deposit the tax with the Government of India of the amount deducted at source and such tax shall be deemed to be paid to the Government when actual payment of tax has been brought to the Government by crediting the amount of taxes to the Central Government. The word 'credit' and 'actual amount paid to the Government of India' as prescribed in the above provision clearly denotes that the payment would be treated as made to the Government when the amount is actually credited and actually paid to the Government of India. Since the assessee has not deposited the amount of tax within the prescribed time, therefore, the assessee was liable for interest as per the above provisions. The time taken for clearing of cheques and Government holidays and reasonable cause etc. are not the reasons, which could be considered while levying the interest against the assessee. Such reasons are irrelevant and alien to the above provisions. Therefore, the contention of the assessee cannot be accepted and is, accordingly rejected. Since section 201(1A) of the Income-tax Act and relevant rules have specific provision of law and put the assessee in liability to pay mandatory interest for delay in depositing TDS within time, therefore, the provision of law shall have to be read as it is and cannot be stretched to give different meaning under the law. However, on Page 7 of 8 7 ITA No.35/Bang/2012 consideration of the submissions of the assessee that excessive interest has been charged, it is found that the same have some points to argue because as per the schedule of payment, it is found that there may be some mistake in calculating the excessive interest as is demonstrated by the assessee on examining the payment of tax for the month of May, 2007 because the delay is apparently of 11 days but the Assessing Officer treated the default for 60 days. The said matter, therefore, requires reconsideration at the level of the Commissioner(Appeals)".
9.3 The CIT(A) in the impugned order has not considered the introduction of Rule 125 w.e.f. 13/3/2008. The assessee, being a company, it was mandatory for it to have paid the taxes electronically. Therefore, as rightly pointed out by the learned DR, delay in tax remittance cannot be attributed to the banker. Since the learned CIT(A) has not dealt with these issues, we deem it fit and proper to restore the matter to the file of CIT(A) for denovo consideration. The CIT(A) shall dispose off the matter as expeditiously as possible after affording reasonable opportunity of hearing to the assessee. It is ordered accordingly.
10. In the result, the appeal filed by the revenue is allowed for statistical purposes.
Order pronounced in the open court on 19th day of April, 2013.
Sd/- Sd/-
(JASON P BOAZ) (GEORGE GEORGE K)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Page 8 of 8 8 ITA No.35/Bang/2012
Copy to :
1. The Revenue 2. The Assessee 3. The CIT concerned. 4. The CIT(A) concerned. 5. DR 6. GF MSP/ By order Senior Private Secretary, ITAT, Bangalore.