Little Servants of Divine Providence Providence Charitable Trust vs. ITO (ITAT Cochin)

(i) The Finance Act, 2015 has amended section 200A of the Act with effect from 1.6.2015. The amendment is as follows:

In section 200A(1) of the Act, for clause (c) to (e), the following clauses were substituted with effect from the 1st day of June 2015, namely:-

(c) the fee, if any, shall be computed in accordance with the provisions of section 234E.

(d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c ) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee;

(e) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and

(f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor.”

(ii) Thus, post 1st June 2015, in the course of processing of a TDS statement and issuance of intimation u/s 200A in respect thereof, an adjustment could also be made in respect of the ‘fee’, if any, shall be computed in accordance with the provisions of section234E”. Prior to 1st June 2015, there was no enabling provision therein for raising a demand in respect of levy of fees u/s 234E of the Act.

(iii) This issue has been elaborately considered by the Amritsar Bench of the Tribunal in the case of Sibia Healthcare (P) Limited Vs. Deputy Commissioner of Income Tax (2015) 61 Taxmann.com 70 and held that levy of fee u/s. 234E is beyond the scope of permissible adjustments contemplated u/s.200A. The relevant portion of the order of the Amritsar Bench of the Tribunal reads as follows:

“In view of the above discussions, in our considered view, the adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. This intimation is an appealable order under section 246A(1)(a), and, therefore, the CIT(A) ought to have examined legality of the adjustment made under this intimation in the light of the scope of the section 200A. Leamed CIT(A) has not done so. He has justified the levy of fees on the basis of the provisions of Section 234E. That is not the issue here. The issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from he end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act ……”.

(iv) The Ahmedabad Bench of the Tribunal, in the case of Lions Club of North Surat Charitable Trust Vs. Income Tax Officer, (TOS)-II 2015(9) TMI 1231 and the Chennai Bench of the Tribunal in the case of Smt. G. Indhrani Vs. Deputy Commissioner of Income Tax, Centralized Processing Cell(TDS) (2015) 60 Taxmann.com 312 have followed the views taken by the Amritsar Bench of the Tribunal and decided the issue in favour of the assessee.

(v) In view of the aforesaid reasoning and respectfully following the orders of the coordinate benches of the Tribunal, we delete the levy of late filing fee u/s 234E of the Act. It is ordered accordingly.