M/s Andhra University, Visakhapatnam V. THE ACIT, Visakhapatnam

CO 36/VIZ/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2258 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D KOMALI KRISHNA
• Keywords: Rectification of order; Non-deduction of tax
• Section: 133A; 201(1); 10; 154

Judgement Text

ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.155&156/VIZAG/2014 ( / ASSESSMENT YEARS: 2010-11&2011-12) ACIT , CIRCLE - 6(1) , VISAKHAPATNAM VS. M/S. ANDHRA UNIVERSITY VISAKHAPATNAM [PAN: AAOFA 3693D ] ( / APPELLANT) ( / RESPONDENT) C.O. NOS.36&37/VIZAG/2014 (ARISING OUT OF I.T.A.NOS.155&156/VIZAG/2014) ( / ASSESSMENT YEARS: 2010-11&2011-12) M/S. ANDHRA UNIVERSITY VISAKHAPATNAM VS. ACIT , CIRCLE - 6(1) , VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SMT. D. KOMALI KRISHNA, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 18.03.2016 / DATE OF PRONOUNCEMENT : 31.03.2 016 ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 2 / O R D E R PER BENCH: THESE APPEALS FILED BY THE REVENUE AND CROSS OBJECT ION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE, BUT IDENTICAL ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS), VISAKHAPATNAM FOR THE ASST. YEAR 2010-11 AND 2011-12. SINCE, THE FACTS ARE IDEN TICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOS ED OFF, BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, ANDHRA UNIVERSITY IS ESTABLISHED UNDER AN ACT OF STATE LEG ISLATURE. A SURVEY OPERATION UNDER SEC. 133A OF THE INCOME TAX ACT, 19 61 WAS CONDUCTED ON 19-11-2011 TO EXAMINE THE ASSESSEES COMPLIANCE TO TDS PROVISIONS. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT TH E ASSESSEE HAS NOT DEDUCTED TDS ON PENSION PAYMENT TO ITS PENSIONERS. THEREAFTER, THE ASSESSING OFFICER PASSED ORDER UNDER SEC. 201(1) AN D 201(1A) ON 6-1- 2012 AND RAISED DEMAND OF TAX AND INTEREST OF RS. 6 2,36,410/-. AGAINST THE ORDER, THE ASSESSEE FILED AN APPLICATION UNDER SEC. 154 SEEKING RECTIFICATION OF MISTAKES, WHICH WAS CONSIDERED BY THE ASSESSING OFFICER AND THE DEMAND WAS REDUCED TO RS. 24,94,102/-. SUBS EQUENTLY, ANOTHER RECTIFICATION APPLICATION UNDER SEC. 154 WAS FILED, SEEKING RECTIFICATION OF ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 3 APPLICATION OF 20% RATE OF TDS FOR THE CASES, WHERE PAN NUMBER OF EMPLOYEES WERE NOT AVAILABLE, AS SUCH A PROVISION WAS APPLICABLE W.E.F. 1-4-2010 AND ALSO MISTAKES IN CALCULATION OF TAXES AND INTEREST. THE ASSESSEE ALSO FILED DETAILS OF PENSIONERS WHO HAD FILED THE RETURN ON THEIR OWN AND PAID THE TAXES AND REQUESTED TO GIVE CREDIT FOR THE TAXES ALREADY PAID BY THE PENSIONERS. THE ASSESSING OFFI CER, AFTER CONSIDERING THE REPRESENTATION AND ALSO DETAILS FILED BY THE AS SESSEE, PASSED ORDER UNDER SEC. 154 AND DETERMINED DEMAND OF RS. 12,47,4 85/- UNDER SEC. 201(1) AND RS. 8,48,585/- UNDER SEC. 201(1A) OF THE ACT. 3. AGGRIEVED BY THE ORDER, THE ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT(A) AND CHALLENGED THE LEVY OF INTEREST UNDE R SEC. 201(1A). BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE A.O. HAD LEVIED INTEREST UNDER SEC. 201(1A) IN TWO CATEGORY OF PERS ONS (I) PENSIONERS WHO HAD FILED RETURN AND PAID TAXES; (II) OTHERS (P ENSIONERS ON WHOSE PENSION THE ASSESSEE HAS NOT DEDUCTED TDS). THE ASS ESSEE FURTHER SUBMITTED THAT IN RESPECT OF PENSIONERS WHO HAD PA ID TAXES ON THEIR OWN, THERE CANNOT BE ANY INTEREST LIABILITY UNDER S EC. 201(1A) AS THE ASSESSEE CANNOT BE HELD ASSESSEE IN DEFAULT UNDER S EC. 201(1), IN VIEW OF EXPLANATION TO SECTION 191 OF THE ACT AND RELIED UPON CBDT CIRCULAR NO. 7 OF 2003. IF AT ALL INTEREST CAN BE LEVIED, IT CAN BE LEVIED ONLY FROM THE FIRST DAY OF APRIL TO THE DATE OF PAYMENT OF TA XES BY THE PENSIONERS. ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 4 IT WAS FURTHER SUBMITTED THAT IN RESPECT OF BOTH CA TEGORIES, THE A.O. LEVIED INTEREST BY DIVIDING THE TOTAL TAXES BY 12 A ND CALCULATED THE INTEREST, WHICH IS NOT IN ACCORDANCE WITH THE PROVI SIONS OF SEC. 192(3) OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT, WITHO UT PREJUDICE TO THE ABOVE SUBMISSION, IF AT ALL INTEREST IS NOT CONSIDE RED FROM 1 ST DAY OF APRIL OF ASSESSMENT YEAR, THEN, AT BEST IT SHALL BE FROM THE MONTH WHEN THE PENSION PAYMENTS EXCEED THE BASIC EXEMPTION LIMIT. IT WAS FURTHER SUBMITTED THAT WHILE CALCULATING INTEREST UNDER SEC . 201(1A), THE PROCEDURE LAID DOWN IN RULE 119A(C) WAS NOT FOLLOWE D AND TAX AND INTEREST IN NOT ROUNDED OFF TO NEAREST RS. 100/-. 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF A SSESSEE HELD THAT INTEREST IS LEVIABLE, EVEN IN THE CASES WHERE THE D EDUCTEE HAS PAID THE TAXES AND FILED RETURN OF INCOME. WHILE DOING SO, TH E CIT(A) RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT, IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (P) LTD VS CIT, 293 ITR 226 AND BOAR D CIRCULAR NO. 275/201/95-IT(B) DT. 29-1-1997. AS REGARDS PERIOD O F COMPUTATION OF INTEREST UNDER SEC. 201(1A), THE CIT(A) HELD THAT T HE LIABILITY TO DEDUCT TDS ARISES ONLY WHEN THERE WAS TAX LIABILITY FOR TH E DEDUCTEE. THUS, THE LIABILITY WOULD ARISE ONLY WHEN THE AMOUNT OF INCOM E EXCEEDS THE TAXABLE LIMIT. THEREFORE, INTEREST LIABILITY UNDER SEC. 201(1A) SHALL BE COMPUTED FROM THE MONTH IN WHICH THE INCOME OF THE DEDUCTEE EXCEEDS ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 5 THE BASIC EXEMPTION LIMIT. WITH THESE OBSERVATIONS, THE A.O. HAS BEEN DIRECTED TO RE-COMPUTE THE INTEREST UNDER SEC. 201( 1A). AGGRIEVED BY THE CIT(A) ORDER BOTH, THE REVENUE AS WELL AS THE A SSESSEE ARE IN APPEAL BEFORE US. 5. THE LD. D.R. SUBMITTED THAT THE CIT(A) WAS ERRED IN HOLDING THAT THE TDS LIABILITY WOULD ARISE ONLY WHEN AMOUNT OF I NCOME EXCEEDS THE BASIC EXEMPTION LIMIT AND SO, THE LIABILITY TO INTE REST UNDER SEC. 201(1A) IS TO BE CALCULATED ONLY FROM THE MONTH WHEN THE IN COME EXCEEDS THE BASIC EXEMPTION LIMIT IS CONTRARY TO THE PROVISIONS OF SEC. 192 OF THE ACT. THE LD. D.R. FURTHER SUBMITTED THAT, THE CIT(A) OUG HT NOT HAVE ACCEPTED THE PLEA OF THE ASSESSEE THAT COMPUTATION MADE BY T HE A.O. EVENLY FOR 12 MONTHS BY DIVIDING THE TDS BY 12 IS NOT IN ACCOR DANCE WITH THE PROVISIONS OF SEC. 192(3) OF THE ACT. THE D.R. FURT HER ARGUED THAT THE TDS LIABILITY HAS TO BE DIVIDED OVER A PERIOD OF 12 MONTHS AND TAX SHALL BE DEDUCTED AS AND WHEN SALARY IS PAID. 6. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSE E, SUBMITTED THAT THE CIT(A) WAS ERRED IN LEVY OF INTEREST UNDER SEC. 201(1A), AS THE PENSIONERS HAVE FILED RETURNS AND PAID THE TAXES. THEREFORE, THE ASSESSEE CANNOT BE HELD ASSESSEE IN DEFAULT UNDER S EC. 201(1), IN VIEW OF EXPLANATION TO SECTION 191 OF THE ACT AND RELIED UPON CBDT CIRCULAR NO. 7 OF 2003. THE LD. A.R. FURTHER SUBMITTED THAT THE CIT(A) WAS ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 6 JUSTIFIED IN HOLDING THAT THE TDS LIABILITY CANNOT BE DIVIDED BY 12 AND DISTRIBUTED EVENLY OVER THE YEAR FOR THE PURPOSE OF COMPUTATION OF INTEREST UNDER SEC. 201(1A) OF THE ACT. THE A.R. FU RTHER SUBMITTED THAT SUB SEC. (3) OF SEC. 192 PROVIDES FOR ADJUSTMENT OF TDS LIABILITY IN A CASES, WHERE ANY EXCESS OR DEFICIENCY ARISING OUT O F ANY PREVIOUS DEDUCTION OR FAILURE TO DEDUCT DURING THE FINANCIAL YEAR. THEREFORE, INTEREST FOR FAILURE TO DEDUCT TDS CAN BE LEVIED, O NLY FROM THE FIRST DAY OF APRIL OF THE ASSESSMENT YEAR. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF REVENUE AU THORITIES. THERE WAS NO DISPUTE WITH REGARD TO NON-DEDUCTION OF TDS ON PENSION PAYMENTS. THE ASSESSEE HAS ADMITTED THE DEFAULTS AN D PAID THE TDS. THE ONLY DISPUTE IS WITH REGARD TO LEVY OF INTEREST UNDER SEC. 201(1A) AND THE PERIOD OF COMPUTATION OF INTEREST. THE A.O. HAS CLASSIFIED THE DEFAULTS IN TO TWO PARTS (I) PENSIONERS WHO HAD FILED THE RETURN AND PAID THE TAXES. (II) OTHERS (PENSIONERS ON WHOSE P ENSION THE ASSESSEE HAS NOT DEDUCTED TDS). IN RESPECT OF FIRST CATEGORY , THE A.O. LEVIED INTEREST UP TO THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE. IN RESPECT OF OTHERS, THE A.O. LEVIED INTEREST UP TO THE DATE OF ORDER UNDER SEC. 201(1) OF THE ACT. THE A.O. HAS LEVIED THE INTEREST UNDER SEC. 201(1A) BY DIVIDING THE TDS LIABILITY BY 12 AND DISTRIBUTED EVENLY FOR OVER A ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 7 PERIOD OF 12 MONTHS AND COMPUTED THE INTEREST. IT W AS THE CONTENTION OF THE ASSESSEE THAT IN RESPECT OF PENSIONERS WHO HAD PAID TAXES, INTEREST UNDER SEC. 201(1A) IS NOT LEVIABLE, IN VIEW OF EXPL ANATION TO SEC. 191 OF THE ACT, AS THE ASSESSEE CANNOT BE TREATED AS ASSES SEE IN DEFAULT. 8. THE FIRST QUESTION BEFORE US IS, WHETHER ASSESSE E IS AN ASSESSEE IN DEFAULT REFERRED TO IN SECTION 201(1) OF THE ACT, C ONSEQUENTLY LIABLE FOR INTEREST UNDER SEC. 201(1A) OF THE ACT. BEFORE, WE GO IN TO THE FACTS OF THE CASE, LET US UNDERSTAND THE PROVISIONS OF LAW E NUMERATED BY SEC. 201(1) AND 201(1A) OF THE ACT, WHICH READS AS FOLLO WS. SECTION 201(1): WHERE ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY,-- (A) WHO IS REQUIRED TO DEDUCT ANY SUM IN ACCORDANCE WIT H THE PROVISIONS OF THIS ACT; OR (B) REFERRED TO IN SUB-SECTION (1A) OF SECTION 192, BEI NG AN EMPLOYER, DOES NOT DEDUCT, OR DOES NOT PAY, OR AFTE R SO DEDUCTING FAILS TO PAY, THE WHOLE OR ANY PART OF TH E TAX, AS REQUIRED BY OR UNDER THIS ACT, THEN, SUCH PERSON, S HALL, BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX. SECTION 201(1A): WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION( 1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN T HAT SUB-SECTION DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX OR AFTER DE DUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST,- (I) AT ONE PER CENT FOR EVERY MONTH OR PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS DEDUCTE D; AND (II) AT ONE AND ONE-HALF PER CENT FOR EVERY MONTH OR PAR T OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SU CH TAX WAS DEDUCTED TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 8 A PLAIN READING OF SECTION 201(1) OF THE ACT MAKES IT CLEAR THAT IF A PERSON FAILS TO DEDUCT TAX, OR AFTER SO DEDUCTION F AILS TO PAY THE TAX AS REQUIRED UNDER THIS ACT, THEN, SUCH PERSON SHALL BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX. THE PROVISO PROVIDE D TO SECTION 201(1) W.E.F. 1-7-2012, MAKES IT CLEAR THAT IF ANY PERSON FAILS TO DEDUCT TAX ON SUM PAID TO A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX, IF SUCH PERSON FURNISHED HI S RETURN UNDER SEC. 139, HAS TAKEN INTO ACCOUNT SUCH SUM ON COMPUTING T HE INCOME AND HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN S UCH RETURN OF INCOME AND ALSO FURNISHED A CERTIFICATE TO THIS EFF ECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED. THEREFORE, BEFOR E INSERTION OF PROVISO TO SECTION 201(1) W.E.F. 1-7-2012, IF ANY P ERSON FAILS TO DEDUCT OR AFTER SUCH DEDUCTION FAILS TO PAY SUCH TAX, THEN , SUCH PERSON SHALL BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF S UCH TAX. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS, WE F IND THAT THE PERIOD INVOLVED IN THIS APPEAL IS BEFORE INSERTION OF PROV ISO TO SEC. 201(1) OF THE ACT. THEREFORE, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE CONTENTION OF ASSESSEE FOR THE REASON THAT EXPLANAT ION TO SEC. 191 INSERTED W.E.F. 1-6-2003, SPEAKS ABOUT DEFAULTS REF ERRED TO IN SEC. 201(1) AND IT DOES NOT SPEAK ABOUT SEC. 201(1A). TH E PROVISO IS VERY CLEAR TO THE EXTENT OF LEVY OF INTEREST UNDER SEC. 201(1A) AND WHICH WAS ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 9 SUPPORTED BY THE DECISION RENDERED BY HONBLE SUPRE ME COURT, IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES (P) LTD VS. C IT 293 ITR 226(SC) AND FURTHER SUPPORTED BY BOARD CIRCULAR NO. 275/201 /95-IT(B) DT 29-1- 1997, WHEREIN IT WAS CLARIFIED THAT NO DEMAND VISUA LIZED UNDER SEC. 201(1) OF THE ACT, SHOULD BE ENFORCED AFTER THE TAX DETECTOR HAS SATISFIED THE OFFICER-IN-CHARGE OF TDS, THAT TAXES DUE HAVE B EEN PAID BY THE DEDUCTEE-ASSESSEE. HOWEVER, THIS WILL NOT ALTER THE LIABILITY TO CHARGE INTEREST UNDER SEC. 201(1A) OF THE ACT. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEE IS LIABLE TO PAY INTEREST UNDER S EC. 201(1A) OF THE ACT. 9. HAVING SAID THAT, LET US EXAMINE THE PERIOD OF C OMPUTATION OF INTEREST. THE A.O. HELD THAT THE ASSESSEE IS LIABLE TO PAY INTEREST ON EVERY MONTH FOR FAILURE TO DEDUCT AND PAY TDS. ACCO RDING TO A.O. THE ASSESSEE HAS TO DEDUCT TDS UNDER SEC. 192(1) ON EQU ALLY ON EVERY MONTH, THEREFORE, DIVIDED THE TDS AMOUNT BY 12 AND DISTRIBUTED EVENLY FOR 12 MONTHS AND COMPUTED THE INTEREST. IT WAS THE CONTENTION OF A.O. THAT IN VIEW OF SEC. 192(3), INTEREST CAN BE LEVIED ONLY FROM 1 ST DAY OF APRIL OF ASSESSMENT YEAR. BEFORE, WE GO INTO THE FA CTS OF THE CASE, LET US UNDERSTAND RELEVANT PROVISIONS OF SEC. 192(1) AND 1 92(3) OF THE INCOME TAX ACT, 1961 WHICH READS AS FOLLOWS. ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 10 SECTION 192(1) OF THE ACT: ANY PERSON RESPONSIBLE FOR PAYING ANY INCOME CHARGE ABLE UNDER THE HEAD SALARIES SHALL, AT THE TIME OF PAYMENT, DEDUCT INCOME-TAX ON THE AMOUNT PAYABLE AT THE AVERAGE RATE OF INCOME-TA X COMPUTED ON THE BASIS OF THE [RATES IN FORCE] FOR THE FINANCIAL YEA R IN WHICH THE PAYMENT IS MADE, ON THE ESTIMATED INCOME OF THE ASSESSEE UNDER THIS HEAD FOR THAT FINANCIAL YEAR. SECTION 192(3) OF THE ACT: THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT REFE RRED TO IN SUB- SECTION (1) [OR SUB-SECTION(1A)] [OR SUB-SECTION(2) OR SUB-SECTION(2A) OR SUB-SECTION(2B)] MAY, AT THE TIME OF MAKING ANY DED UCTION, INCREASE OR REDUCE THE AMOUNT TO BE DEDUCTED UNDER THIS SECTION FOR THE PURPOSE OF ADJUSTING ANY EXCESS OR DEFICIENCY ARISING OUT OF A NY PREVIOUS DEDUCTION OR FAILURE TO DEDUCT DURING THE FINANCIAL YEAR. A PLAIN READING OF SEC. 192(1) MAKES IT CLEAR THAT ANY PERSON RESPONSIBLE FOR PAYING ANY INCOME CHARGEABLE UNDER THE HEAD SALARIES SHALL, AT THE TIME OF PAYMENT, DEDUCT INCOME TAX ON THE AMOUNT AT THE AVERAGE RATE OF INCOME TAX, COMPUTED ON THE BASIS O F THE RATES IN FORCE, FOR THE FINANCIAL YEAR ON THE ESTIMATED INCOME OF T HE ASSESSEE UNDER THIS HEAD. SUB SEC. (3) OF SEC. 192 PROVIDES FOR ADJUSTM ENT OF EXCESS OR DEFICIENCY ARISING OUT OF ANY PREVIOUS DEDUCTION OR FAILURE TO DEDUCT ANY TDS DURING THE FINANCIAL YEAR. SIMILARLY, SEC. 201( 1A) PROVIDES FOR LIABILITY TO PAY INTEREST, IN CASE ANY PERSON FAILS TO DEDUCT OR AFTER SUCH DEDUCTION FAILS TO PAY THE TAXES AS REQUIRED BY OR UNDER THIS ACT AT THE SPECIFIED RATES, FROM THE DATE ON WHICH SUCH TAX WA S DEDUCTIBLE TO THE DATE OF SUCH TAX WAS DEDUCTED OR PAID AS THE CASE M AY BE. THE PROVISO PROVIDED TO SEC. 201(1A), W.E.F. 1-7-2012, PROVIDES FOR LIABILITY TO PAY ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 11 INTEREST, IN A SITUATION WHERE THE DEDUCTEE ASSESSE E HAVE PAID THE TAXES ON SUCH INCOME ON THEIR OWN. 10. A SIMPLE READING OF SEC. 192(1) MAKES IT CLEAR THAT IT SPECIFIED THE MANNER AND RATES AT WHICH TAX SHALL BE DEDUCTED. SU B SEC. (3) OF SEC. 192 PROVIDES FOR ADJUSTMENT OF EXCESS OR DEFICIENCY WITHIN THE FINANCIAL YEAR, NOT ONLY IN THE CASES OF SHORT DEDUCTION AND ALSO FOR FAILURE TO DEDUCT DURING THE FINANCIAL YEAR. THE OBJECT AND PU RPOSE OF SUB SECTION (3) IS TO PERMIT THE DEDUCTOR TO ADJUST THE SHORT O R EXCESS DEDUCTION IN THE FINANCIAL YEAR. THEREFORE, SUB SEC. (3) ABUNDAN TLY MAKES IT CLEAR THAT IF FAILURE TO DEDUCT TAX, THE SAME CAN BE DEDUCTED BY WAY OF ADJUSTMENT DURING THE FINANCIAL YEAR. SIMILARLY, SECTION 201(1 A) PROVIDES FOR COMPUTATION OF INCOME FROM THE DATE IT WAS DEDUCTIB LE TO THE DATE OF SUCH DEDUCTION OR PAYMENT AS THE CASE MAY BE. A CON JOINT READING OF SEC. 192(1) AND 192(3) ALONG WITH SECTION 201(1A) M AKES IT CLEAR THAT LIABILITY TO INTEREST ARISES ONLY, WHEN SUCH TAX WA S DEDUCTIBLE AS PER SUB SEC. (3) OF SECTION 192 AND NOT AS PER SUB SEC. (1) OF SEC. 192 OF THE ACT. THEREFORE, WE ARE OF THE OPINION THAT, INTERE ST U/S 201(1A) IS PAYABLE FROM THE 1 ST DAY OF APRIL OF ASSESSMENT YEAR. 11. NOW IT IS PERTINENT TO DISCUSS THE CASE LAWS RE LIED UPON BY THE ASSESSEE. THE ASSESSEE RELIED UPON HONBLE HIGH COU RT OF UTTARAKHAND DECISION, IN THE CASE OF CIT VS. ENRON EXPAT SERVIC ES (2011) 330 ITR ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 12 496, WHEREIN THE HONBLE HIGH COURT, HELD THAT SHOR T FALL IN DEDUCTION OF TDS AND FAILURE TO DEDUCT TDS CAN BE DEDUCTED BY WA Y OF ADJUSTMENT DURING THE FINANCIAL YEAR. THE RELEVANT PORTION IS REPRODUCED HEREUNDER. IT IS TRUE THAT SUB-S. (1) OF S. 192 CONTEMPLATES DEDUCTION OF INCOME-TAX AT THE TIME OF PAYMENT AND AT THE SAME T IME, S.201(1A) DEALS WITH A SITUATION WHEN TAX IS NOT DEDUCTED, BUT SUB- S. (3) OF S. 192 IS A PART OF S. 192 REQUIRED TO BE READ WITH SUB-S. (1) THEREOF, FOR NOTHING HAS BEEN EXPRESSED IN THE ACT TO TREAT SUB-S. (3) AS A SEPARATE PROVISION. THE OBJECT AND PURPOSE OF SUB-S. (3) IS TO PERMIT THE P ERSON OBLIGED TO DEDUCT TO MAKE ADJUSTMENTS. SUB-S. (3) DOES NOT STOP WHIL E AUTHORIZING ADJUSTMENT IN CASE OF EXCESS OR DEFICIENT DEDUCTION , BUT ALSO AUTHORIZES ADJUSTMENT IN CASE OF TOTAL FAILURE TO DEDUCT DURIN G THE FINANCIAL YEAR. SUB-S. (3), THEREFORE, MAKES IT ABUNDANTLY CLEAR TH AT IF THERE IS A FAILURE TO DEDUCT IN A FINANCIAL YEAR, THE SAME CAN BE DEDUCTE D BY WAY OF ADJUSTMENT DURING THE FINANCIAL YEAR. IN THOSE CIRC UMSTANCES, THE OBLIGATION TO DEDUCT AT THE TIME OF PAYMENT, WHICH IS THE MANDATE OF SUB- S. (1) OF S. 192, STANDS EXTENDED UPTO THE END OF T HE FINANCIAL YEAR BY VIRTUE OF THE PROVISIONS CONTAINED IN SUB-S. (3) OF S. 192. THE RIGHT TO ADJUST, GRANTED BY SUB-S. (3), DOES NOT EXTEND BEYO ND THE FINANCIAL YAR. SEC. 201(1A) APPLIES ONLY WHEN DURING THE FINANCIAL YEAR WHOLE OR ANY PART OF THE TAX DEDUCTIBLE HAS NOT BEEN DEDUCTED. THEREFORE, THE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THAT THE ASSESSEE COM PANY HAD COMMITTED NO DEFAULT BY NOT DEDUCTING TAX AT SOURCE ON SALARY PAYMENTS AT THE AVERAGE TAX AS PER PROVISIONS OF S. 192(1) AND DELE TING THE INTEREST CHARGES UNDER S. 201(1A) BY RELYING ON S. 192(3). 12. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ANY SHORT FALL IN DEDUCTION OF TDS OR TOTAL FAILURE TO DEDUCT TDS, CAN BE DEDUCTED AT THE END OF THE FINANCIAL YE AR, IN VIEW OF SECTION 192(3) OF THE ACT. THE LIABILITY TO PAY INTEREST UN DER SEC. 201(1A) ARISES ONLY, WHEN SUCH TAX IS DEDUCTIBLE TO THE DATE OF SU CH TAX DEDUCTION OR PAID AS THE CASE MAY BE. THEREFORE, WE ARE OF THE OPINION THAT INTEREST ON FAILURE TO DEDUCT TDS UNDER SEC. 192(1) IS PAYAB LE FROM THE FIRST DAY OF APRIL OF SUBSEQUENT YEAR. ACCORDINGLY, WE DIRECT THE A.O. ITA NOS.155&156/VIZAG/2014 & CO 36&37/VIZAG/2014 M/S. ANDHRA UNIVERSITY, VISAKHAPATNAM 13 TO COMPUTE THE INTEREST FROM THE FIRST DAY OF APRIL TO THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE-ASSESSEE IN CASES, WHERE THE DEDUCTEES HAVE PAID THE TAXES. IN CASE OF OTHER DE DUCTEES, THE INTEREST LIABILITY SHALL BE COMPUTED FROM 1 ST DAY OF APRIL TO THE DATE OF ORDER UNDER SECTION 201(1) OF THE ACT. 13. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA. NO. 155 & 156/V/2014 ARE DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO. 36 & 37/V/2014 ARE PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31 ST MAR16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 31.03.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT CIRCLE-6(1), VISAKHAPAT NAM 2. / THE RESPONDENT ANDHRA UNIVERSITY, WALTAIR, VIS AKHAPATNAM 3. + / THE CIT, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM