Advance Tax Delay Depends on Date of Electronic Payment, Not Credit Date: ITAT Quashes ₹1.23 Cr Interest on Dream11 Parent Co. [Read Order]
The bench noted that the assessee cannot be made liable for the credit to the department when he has discharged his duty duly, and within the prescribed time.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently clarified that for purposes of levying interest on delayed payment of advance tax, the relevant date is the date on which electronic payment is made and not the date on which the amount is credited to the Revenue or the challan is generated.
The ruling came while allowing an appeal filed by M/s Sporta Technologies Private Limited, the parent company of fantasy gaming platform Dream11. The Tribunal set aside an interest levy of ₹1,23,80,937 imposed under Section 234C of the Income Tax Act, 1961 for the Assessment Year 2024-25.
Sporta Technologies is a private limited company that had filed its return of income for the for AY 24-25 declaring a total income of ₹1,782.63 crore and claimED a refund of ₹48.24 crore.
The return was processed by the Centralised Processing Centre (CPC). However, during the process, the CPC levied interest under Section 234C on the ground that the third installment of advance tax, which was due on December 15, 2023 was allegedly paid with a delay of one day.
The interest levy was primarily based on the fact that the challan for the advance tax payment reflected a tender date of December 16, 2023, one day after the stipulated deadline.
Aggrieved, Sporta Technologies went on appeal before the Commissioner of Income Tax (Appeals) ( CIT(A) ), who upheld the decision of the CPC, leading the assessee to approach the Tribunal.
The assessee presented a two-fold appeal, with the first ground pertaining to the levy of interest on alleged delay in payment; the second ground stated that adequate opportunity of hearing was not provided to the assessee.
Before the ITAT, the assessee contended that it had initiated the payment of advance tax of ₹196 crore, being the third instalment of advance tax through electronic mode on December 15, 2023 itself, and that the amount had been debited from its bank account on the same date.
However, the challan was generated only on December 16, 2023 was due to technical or system-related issues beyond the control of the assessee.
The Bench of JudicialMember Kavitha Rajagopal and Accountant Member Omkareshwar Chidara observed that the present case was not one where the payment was made through negotiable instrument where the date of presentment of the cheque and the date of clearance would be on subsequent dates but it is clearly a case where the assessee has initiated the payment through electronic mode via net banking and the payment was made on the very same day which is duly reflected as being debited from the assessee’s bank account reflecting in the bank statement.
The bench noted that the assessee cannot be made liable for the credit to the department when he has discharged his duty duly, and within the prescribed time.
Referencing judicial precedents, the Tribunal reiterated that where there is no default on the part of the assessee and that there stood no justification for levying interest under Section 234C; the Tribunal accordingly deleted the interest of ₹1.23 crore and allowed Ground 1 and dismissed Ground 2.
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