Lingeswara Creations Vs Principal Chief Commissioner of Income Tax (Madras High Court)
Summary: The Madras High Court considered a writ petition filed by Lingeswara Creations challenging Demand Intimation Letters dated 27.03.2019 issued under the TDS processing mechanism. The petitioner sought quashing of the demand intimations relating to assessment years 2012-13 and 2013-14, contending that late fee under Section 234E of the Income-tax Act, 1961 could not be imposed while processing TDS statements under Section 200A for those assessment years.
The Court recorded that both sides submitted that its earlier judgment in M/s. True Blue Voice India Private Ltd. and another Vs. the Chief Commissioner of Income Tax – TDS, Chennai and others, reported as 2023 (10) TMI 1141, squarely applied to the facts of the present case. The Court reproduced the relevant portion of that judgment.
In True Blue Voice India, the Court had considered whether late fee under Section 234E could be imposed while processing a TDS statement under Section 200A for the relevant assessment years. The judgment distinguished the validity of Section 234E itself from the question whether such fee could be imposed through processing under Section 200A. It recorded that Section 234E was introduced with effect from 01.07.2012, whereas Section 200A(1)(c), providing that the fee, if any, shall be computed in accordance with Section 234E, was introduced with effect from 01.06.2015.
The Court in the extracted judgment examined the objects and reasons for introducing Section 200A(1)(c). Those reasons stated, inter alia, that Section 200A originally did not provide for determination of the fee payable under Section 234E at the time of processing TDS statements and that Section 200A was therefore proposed to be amended to enable computation of such fee while processing TDS statements.
On that reasoning, the Court held in True Blue Voice India that although Section 234E had been introduced from 01.07.2012, the authorities were not empowered to impose the late fee under Section 234E while processing TDS statements under Section 200A before introduction of Section 200A(1)(c). The Court also rejected the Revenue’s submission seeking retrospective application of the enabling provision.
Applying that reasoning to the present case, the Madras High Court noted that the respondents had imposed late fee under Section 234E for assessment years 2012-13 and 2013-14. The Court observed that Section 200A was not introduced during those assessment years and that the relevant provision was introduced only with effect from 01.06.2015. Consequently, in the absence of the enabling provision under Section 200A, the respondents ought not to have imposed late fee under Section 234E while processing the TDS statements under Section 200A.
The Court accordingly held that the impugned Demand Intimation Letters were liable to be set aside. By its order dated 12.09.2024, the Court set aside the Demand Intimation Letters dated 27.03.2019 and disposed of the writ petition. No costs were awarded.
Cases Discussed
- M/s. True Blue Voice India Private Ltd. and another Vs. the Chief Commissioner of Income Tax – TDS, Chennai and others, 2023 (10) TMI 1141 — applied to the present case on the issue of imposition of late fee under Section 234E while processing TDS statements under Section 200A before the introduction of Section 200A(1)(c) with effect from 01.06.2015.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The Writ Petition has been filed challenging the impugned Demand Intimation Letters, dated 27.03.2019, passed by the third respondent and to quash the same.
2. The learned counsel appearing on either side would submit that the Judgment of this Court reported in 2023 (10) TMI 1141 [ M/s. True Blue Voice India Private Ltd., and another Vs. the Chief Commissioner of Income Tax – TDS, Chennai and others] would squarely apply to the facts of the present case.
3. The relevant portion of the said Judgment is extracted below:-
“10. There is no dispute on the aspect of validity of the Section 234E of the Act. The only issue that has to be decided in the present case is as to whether the late fee can be imposed under Section 234E of the Act, while processing the statement of TDS under Section 200A of the Act for the subject assessment years?
11. On considering the submissions of both the learned counsel and while reading Section 234E of the Act, it appears that the Department/respondents can impose the late fee for the circumstances mentioned under Section 234E of the Act with effect from 01.07.2012, but not when they process the TDS under Section 200A of the Act. In the Finance Bill, 2015, Section 200A(1)(c) of the Act was introduced, which reads as follows:
“200A. Processing of statements of tax deducted at source.—
(1) ………………….
(a)………………….
(b)……………………
(c) the fee, if any, shall be computed in accordance with the provisions of section 234E;”
12. Further, the objects and reasons for introduction of Section 200A(1)(c) of the Act are as follows:
“Rationalisation of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS)
Under Chapter XVII-B of the Act, a person is required to deduct tax on certain specified payment at the specified rate if the payment exceeds the specified threshold. The person deducting tax (‘the deductor’) is required to file a quarterly Tax Deduction at Source (TDS) statement containing the details of deduction of tax made during the quarter by the prescribed due date. Similarly, under Chapter XVII-BB of the Act, a person is required to collect tax on certain specified receipts at the specified rates. The person collecting tax (‘the collector’) also is required to file a quarterly Tax Collection at Source (TCS) statement containing the details of collection of tax made during the quarter by the prescribed due date. In order to provide effective deterrence against delay in furnishing of TDS/TCS statement, the Finance Act, 2012 inserted section 234E in the Act to provide for levy of fee for late furnishing of TDS/TCS statement. The levy of fee under section 234E of the Act has proved to be an effective tool in improving the compliance in respect of timely submission of TDS/TCS statement by the deductor or collector.
Finance (No.2) Act, 2009 inserted section 200A in the Act which provides for processing of TDS statements for determining the amount payable or refundable to the deductor. However, as section 243E was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not provide for determination of fee payable under section 234E of the Act at the time of processing of TDS statements. It is, therefore, proposed to amend the provisions of section 200A of the Act so as to enable computation of fee payable under section 234E of the Act at the time of processing of TDS statement under section 200A of the Act.
Currently, the provisions of sub-section (3) of section 200 of the Act enable the deductor to furnish TDS correction statement and consequently, section 200A of the Act allows processing of the TDS correction statement. However, currently, there does not exist any provision for allowing a collector to file correction statement in respect of TCS statement which has been furnished. It is, therefore, proposed to amend the provisions of section 206C of the Act so as to allow the collector to furnish TCS correction statement. Currently, there does not exist any provision in the Act to enable processing of the TCS statement filed by the collector as available for processing of TDS statement. As the mechanism of TCS statement is similar to TDS statement, it is proposed to insert a provision in the Act for processing of TCS statements on the line of existing provisions for processing of TDS statement contained in section 200A of the Act. The proposed provision shall also incorporate the mechanism for computation of fee payable under section 234E of the Act.”
13. A reading of the above makes it clear that since no mechanism was available for determination of late fee payable under Section 234E of the Act at the time of processing TDS statements. Thus it was proposed to amend the provisions of Section 200A of the Act, so as to enable the computation of fee payable under Section 234E of the Act at the time of processing of TDS statement under Section 200A of he Act. Thus, the said sub-Section 200A(1)(c) of the Act was came to be inserted with effect from 01.06.2015.
14. Now the dispute is with regard to the assessment years 2012- 13, 2013-14, 2014-15 and the applicability of Section 200A(1)(c) of the Act for relevant assessment years. There is no dispute on the aspect that the TDS statement was filed under Section 200A of the Act and the respondent had also issued the intimation under Section 200A of the Act, which means the respondents have processed the returns under Section 200A of the Act. When the respondent had started to process the returns of the petitioner under Section 200A of the Act, obviously they have to follow the requirements under Section 200A of the Act. Section 200A(1)(c) of the Act was introduced with effect from 01.06.2015. A reading of the objects and reasons of the same makes it clear that since no mechanism was available, Section 200A(1)(c) of the Act was introduced for imposing late fee for the delay in filing statement of TDS. Therefore, from the introduction of the said Sub-Section it is clear that prior to the same, though Section 234E of the Act was introduced with effect from 01.07.2012, the Authorities were not empowered to impose the late fee while processing the statement of TDS under Section 200A of the Act.
15. The learned counsel for the respondent advanced his arguments on the aspect of the imposition of late fee by applying Section 200A(1)(c) of the Act retrospectively. This Court is not in agreement with the said submissions of the respondent. Since, there was no provision for imposing the late fee under Section 234E of the Act while filing and processing the TDS returns under Section 200A of the Act, clause (c) to Sub-Section (1) to Section 200A was introduced with effect from 01.07.2012. Therefore, the aforesaid submission made by the learned counsel for the respondent is rejected by this Court.
16. Further it was stated by the respondent that they have no power to waive the late fee and only the Commissioner of Income Tax is empowered to pass the revised order by proper application of provision of Section 264C of the Act.
17. In view of the above, it is made clear that the respondent had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 2013-2014, 2015-2015. However, Section 200A(1)(c) of the Act was not introduced during the said assessment years. In the absence of any provisions under Section 200A of the Act, when they have processed the application for TDS under Section 200A, no late fee can be imposed under Section 234E. Hence, in such view of the matter, this Court feels that the impugned orders are liable to be set aside.
18. Accordingly, the impugned orders dated 24.09.2021 are set aside and the Department is directed to consider the reply of the petitioner dated 16.04.2019 as a revision application, which was earlier considered as a waiver application, and pass appropriate orders by taking into consideration of the order passed by this Court within a period of eight weeks from the date of receipt of copy of this order.”
4. In the present case, the respondent had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 2013-2014. However, Section 200A of the Act was not introduced during the said assessment years and it was introduced only with effect from 01.06.2015. Therefore, in the absence of any provisions under Section 200A of the Act, the respondents ought not to have imposed late fee under Section 234E while processing the applications for TDS under Section 200A. Hence, in such view of the matter, this Court is of the opinion that the impugned Demand Intimation Letters are liable to be set aside.
5. Accordingly, the impugned demand Intimation Letters dated 27.03.2019 are set aside and the Writ Petition stands disposed of. No costs.
