Interest Charged u/s 201(1A) of Income Tax Act on ground of Delay in Remittance of TDS : ITAT Directs to Delete Interest [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to delete the interest charged under section 201(1A) of the Income Tax Act,1961 on the ground of delay in remittance of Tax Deducted at source (TDS). 

New Delhi Television Ltd, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the levy of interest under section 201(1A) of the Income Tax Act in respect of the remittance of tax deducted at source with a delay of one day on two occasions by the assessing officer. 

Shantanu Devansh and Tanya, the counsels for the assessee contended that the assessee had never defaulted in remittance of TDS except for October and November, wherein there was a delay by 1 day in each of the months. 

It was further submitted that the TDS was remitted to the account of the Central Government and the delay in remittance of TDS by one day was due to technical glitches or reasons beyond the control of the assessee and thus the assessee cannot be penalized by way of interest under section 201(1A) of the Income Tax Act for the same. 

Raja Rajeshwari R, the counsel for the revenue contended that there was no provision in the Act to waive the said interest under section 201(1A) of the Income Tax Act. 

It was also submitted that the said interest was compensatory and the Government was deprived of its legitimate dues in time hence the said charging of interest under section 201(1A) of the Income Tax Act had to be upheld and consequentially interest under section 220(2) of the Income Tax Act also would be liable on the assessee for not paying the demand raised. 

The two-member bench comprising C.M. Garg (Judicial) and M. Balaganesh (Accountant) held that the reason stated by the assessee was not false and the changeability of interest under section 201(1A) of the Income Tax Act, as rightly pointed out by the revenue was automatic, still the same cannot be levied on the assessee in the peculiar facts and circumstances of the instant case, as the interest liability had been fastened on the assessee for reasons beyond the control of the assessee. 

The bench also directed the assessing officer to delete the interest charged under section 201(1A) of the Income Tax Act for the alleged default while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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