Standard Chartered Bank v. DCIT [ITA Nos. 2153 to
2156/Mum/2018, dt. 21-8-2020] : 2020 TaxPub(DT) 3327 (Mum-Trib)
Due date of payment of TDS whether it relates to the date
of credit or date of deposition
Facts:
Assessee bank was slapped interest under section 201(1A)
for delayed deposition of TDS which was upheld by the lower authorities. On
appeal the plea of the assessee was that the deposition of the cheque for TDS
happened on or before the due date viz. 7th of the subsequent month. It was the
credit to the department which happened on a later date due to apparent
clearing time and delays in the banking process. Thus once the cheque was
deposited for discharge of TDS obligations had got honoured it relates back to
the date it was deposited in the bank and the date of actual credit cannot be
construed as the date of payment. Accordingly no levy of interest under section
201(1A) can be levied.
Held in favour of the assessee that once the cheque was
deposited on or before 7th of the month and got honoured it relates to the date
it was deposited which was on or before the 7th of the month. Hence interest
under section 201(1A) cannot be levied.
Editorial Note: The
prime reliance of the assessee stems on CBDT Circular No. 261, dt. 8-8-1979 which
was issued in the realm of then applicable rule 80 of Treasury rules
related to payments to Govt. The said rules have now been replaced by Central
Government (receipt and payment) Rules, 1983 of which per rule 20 the date of
receipt would be construed as the date of payment made to the Government.
Unfortunately the Circular No. 261 has not been withdrawn and the same
was also discussed in the other bench decisions cited in this case. This worked
to the benefit of the assessee. The fall out of the decision is, cases where the
department might want to levy interest under section 201(1A) or under any other
section an option exists for the assessee to plead on the grounds of Circular
No. 261 of 1979 that the payment should date back to the actual date of
deposition if the cheque was honoured and not on the actual date of credit.
Until withdrawal of this circular this position or plea will remain good.