Dy Cit -Cc-8(1), Mumbai vs M/S. Niku Mercantile P. Ltd, Mumbai on 4 February, 2022
6. The Jurisdictional High Court has, in the case of Nirved Traders P Ltd. vs. DCIT:
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Amoha Traders P.Ltd, Mumbai vs Dcit 3(1), Mumbai on 9 August, 2019
Standard Chartered Bank, Mumbai vs Dcit (Tds) 2(2), Mumbai on 21 August, 2020
3.2 Aggrieved as aforesaid, the assessee challenged the interest
demand before Ld. CIT(A) by submitting that TDS of each month was
deposited on or before the stipulated date of 7th of succeeding month as
prescribed u/s 200 of the Act read with Rule 30 of Income Tax Rules,
1962 and therefore, the question of levy of interest u/s 201(1A) would
not arise. It was also submitted that the processing system, for the
purpose of computing interest, erroneously considered the date of
realization of cheques as the date of payment instead of date of
tendering of TDS cheques to the authorized bank by the assessee. It
was pleaded that the date of deposit would be the date on which
constructive payment was made and a cheque, unless dishonored,
would amount to payment. Once the cheque was tendered to the bank
and it was honoured, the tax would be considered to have been paid on
the date on which the cheque was tendered by the assessee to the bank
and not on the date on which it was presented for collection by the bank.
Reliance was, inter-alia, placed in the decision of Chennai Tribunal in
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Standard Chartered Bank
ITA Nos.2153 to 2156/Mum/2018
Assessment Year: 2008-09
P.L.Haulwel Trailers Ltd. Vs DCIT (100 ITD 485 20/01/2006) for the
said proposition. Reliance was also placed on the decision of Hon'ble
Supreme Court in CIT V/s Ogale Glass Works Ltd. (25 ITR 529
19/04/1954) for the submissions that the payment would relate back to
the date of receipt of the cheque. The said decision was stated to be
followed by Hon'ble Apex Court in DIT V/s Raunaq Educational
Foundation (350 ITR 420) as well as Hon'ble Madras High Court in CIT
V/s Repco Home Finance Ltd. (53 Taxmann.com 47). Reliance was
placed on similar other decisions to support the various submissions.
These decisions have already been enumerated in the impugned order.
3.3 The Ld. CIT(A), after perusing the detailed payment chart
submitted by the assessee, noted that there was a difference in
tendering of challans by the assessee to SBI and date of clearing /
stamping on the challan. Going by the wordings of Section 201(1A) (ii)
which used the expression actually paid, it was held that interest was to
be levied from date of deduction to the date on which such tax was
actually remitted to the credit of the Government. The case laws being
relied upon by the assessee were held to be not applicable. The
assessee's reliance on CBDT Circular No. 261 dated 08/08/1979 was
rejected in view of the fact that the said circular was based on Rule 80 of
the compilation of the treasury rules which became redundant and were
replaced by Central Government (receipt and payment) Rules, 1983. As
per Rule 20 of new rules, the date of receipt of government revenue
would be the date on which cheque / draft was cleared and entered in
the receipt scroll. Since the basis on which old circular was framed no
longer existed, the continuation of the said circular would fall. Regarding
5
Standard Chartered Bank
ITA Nos.2153 to 2156/Mum/2018
Assessment Year: 2008-09
assessee's reliance on Circular No. 676 dated 14/01/1994, it was held
that the same was in the context of Section 234B and Section 234C of
the Act and therefore, would not apply. Finally, it was held that the tax
shall be deemed to have been paid to the government when the actual
payment of tax has been brought to the credit of government. The time
taken for clearing of cheques was not to be considered while levying
interest u/s 201(1A). Accordingly the levy of interest was held to be
justified.
M/S Municipal Corporation Of Greater ... vs Dcit-1(3), Mumbai on 6 May, 2021
[Emphasized by us]
The Tribunal after considering CTR, R&P Rules, 1983 and Circular No.261
(supra) concluded that the Department is bound by Board Circular. Since, the
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ITA NO. 1024 to 1031/MUM/2019 (A.Y2011-12 & .2012-13)
said circular has not been withdrawn, it is still valid and holds the ground. Thus,
the date of deposit of cheque in the bank is the date of payment.
M/S Moody'S Analytics Knowledge ... vs Income Tax Officer (Tds) Circle-2(1), ... on 13 December, 2019
7. The aforesaid decision will apply with much greater force in the
present case as the payment in the present case is online and the credit to
the Government's account is instant. The Central Government Account
(Receipts and Payments) Rules, 1983 do not apply to payments online
but are applicable to payments made by cheques and the date of payment
when payments are made by Cheques. Even in such cases, the rule is
that if the cheques are ultimately honored the date of handing over the
ITA Nos.142 to 145/Bang/2019
Page 7 of 7
cheque to the Government should be regarded as the date of payment.
Therefore the aforesaid decision of ITAT Chennai Bench in the case of
P L Haulwel Trailers Ltd. (supra)supports the plea of the assessee that
the levy of interest under section 201(1A) of the Act to the facts and
circumstances of the present case cannot be justified. We, therefore,
direct that the order under section 201(1A) of the Act be cancelled. The
appeals of the assessee are accordingly allowed.
M/S. Foresight Automation Products ... vs Assistant Commissioner Of Income Tax, ... on 11 September, 2020
7. The aforesaid decision will apply in the present case as the payment
in the present case is on 30.4.2018 and the money has gone out of the
control of the Assessee. The Central Government Account (Receipts
and Payments) Rules, 1983 do not apply to payments but are applicable
to payments made by cheques and the date of payment when payments
are made by Cheques. Even in such cases, the rule is that if the cheques
are ultimately honored the date of handing over the cheque to the
Government should be regarded as the date of payment. Therefore the
aforesaid decision of ITAT Chennai Bench in the case of P L Haulwel
Trailers Ltd. (supra)supports the plea of the assessee that the levy of
interest under section 201(1A) of the Act to the facts and circumstances
of the present case cannot be justified. We, therefore, direct that the
order under section 201(1A) of the Act be cancelled. The appeals of
the assessee are accordingly allowed.
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