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Tax Publishers 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 The said rules have now been replaced by Central Government (receipt and payment) Rules, 1983 of which per rule 20 the date of receipt would be construed as the date of payment made to the Government. Unfortunately the Circular No. 261 has not been withdrawn and the same was also discussed in the other bench decisions cited in this case.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.

Tax Publishers

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.