The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the computation of fee under section 234E of the Income Tax Act,1961 cannot be done for delayed filing of return of Tax Deducted at Source (TDS) before the period of 01.06.2015.
Channabasaveshwara, the appellant assessee was a Trust and was running an educational Institute and order had been passed Under section 200A of the Income Tax Act, while processing the TDS returns, by levying fees Under section 234E of the Income Tax Act and raising a demand.
The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) in respect of the levy of interest under section 234E of the Income Tax Act for the belated filing of TDS returns.
Narendra Sharma, the counsel for the assessee contended that the amendment made under section 200A of the Income Tax Act providing that fee under section 234E of the Income Tax Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect.
Parithivel, the counsel for the department relied on the decisions made by the lower authorities and the levy of interest under section 234E of the Income Tax Act was as per the law and liable to be sustained.
The Bench observed that in the case of Fatehraj Singhvi v. UOI, Karnataka High Court held that amendment made under section 200A of the Income Tax Act providing that fee under section 234E of the Income Tax Act could be computed at the time of processing of return and issue of intimation has come into effect only from 1.6.2015 and had only prospective effect and therefore, no computation of fee under section 234E of the Income Tax Act for delayed filing of return of TDS while processing a return of TDS could have been made for tax deducted at source for the assessment years before 1.6.2015.
The two-member bench comprising Beena Pillai (Judicial) and Laxmi Prasad Sahu (Accountant) held that the interest under section 234E of the Income Tax Act cannot be sustained and is liable to be deleted.
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