Case Law Details
Ready Roti India Pvt Ltd Vs CPC-TDS/ACIT/DCIT (ITAT Jaipur)
Facts – The assessee company was engaged in business of trading and manufacturing of Bakery items. It filed its return on 12.03.2022 declaring total income of Rs. 14,22,15,640/-. During the year under consideration, assessee has made payment of Rs. 15,22,68,970/- on 16.02.2021 to M/s Everfoods Asia Pvt. Ltd. on which TDS of Rs. 1,66,27,770/- was deducted but deposited on 01.07.2021. Accordingly, assessee paid interest @ 1.5% P.M. for delay of 5 months in deposition of TDS of Rs. 12,47,085/-. In course of assessment proceedings, the ld. AO, TDS(CPC) in intimation dated 16.09.2021 calculated the interest for 6 months and thus worked out liability of interest at Rs. 14,96,493/- and raised demand of Rs. 2,47,843/-. Aggrieved by the order of the AO, the assessee carried the matter before the ld CIT(A) with the submission that the month for the purpose of calculation of interest is to be calculated by taking the period of 30 days in a month and not the British calendar month as defined under sec. 3(35) of the General Clauses Act.
Conclusion – Held that it may be noted that the definition of month in not defined anywhere in Income tax Act. The definition of the term month is to be taken from section 3(35) of the General Clause Act which prescribes that the calculation of the month is to be taken as calendar wise. However it is held in various cases that if the month for the purpose of calculation of interest is taken as calendar wise then it would lead to anomalous situation as even the delay by single day would lead to charging interest for the whole month. Hence interest is to be calculated by taking a period of 30 days in a month.
Relaying on the judgment of CIT Vs. Arvind Mills Ltd. (2012) 204 Taxman 38 (Guj.) (HC) which says it is provided that every month or part of a month comprised in a period, fraction of a month shall be deemed to be a full month. Therefore, in order to ascertain for how many months assessee would be entitled to receive interest, the number of months comprised in the period shall have to be found out. In this context, the term ‘month’ in our opinion, must be given the ordinary sense of the term i.e. 30th days of period and not the British calender month as defined under s. 3(35) of the General Clauses Act.
Held that the fraction of 4 months 15 days should be taken as 05 months instead of 06 months as calculated by the AO which is not in consonance with the judicial precedence decided by the Gujarat High Court in the case of CIT Vs. Arvind Mills Ltd. (2012) Accordingly the AO CPC was directed to revise the levy of interest and the appeal was allowed.
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