ITAT: No Interest if TDS Paid by Cheque Before Due Date, Even if Realised Later

The assessee, M/s. Mumbai Metropolitan Region Development Authority, was subjected to interest under Section 201(1A) on alleged delay in deposit of TDS for March 2022. The tax was required to be deposited by 30.04.2022. The assessee issued and tendered a cheque to the bank on 29.04.2022, which was duly acknowledged by the bank on the same day. However, due to a bank holiday on 01.05.2022 and processing timelines, the cheque was cleared on 02.05.2022.

The Assessing Officer treated the date of realization (02.05.2022) as the date of payment and levied interest for delay.

CIT(A) Held: ThTo Read Full Judgment, Download PDF Given Belowe CIT(A) upheld the action. The assessee contended that there was no delay since the cheque was tendered within the due date and relied on judicial precedents and CBDT circulars supporting that the date of presentation of cheque should be considered as the date of payment.

Issue Raised: Whether interest under Section 201(1A) is leviable when TDS is deposited through cheque before the due date, but realized after the due date.

ITAT Held: The Tribunal ruled in favour of the assessee and deleted the interest liability. It held that once the cheque is tendered to the bank within the prescribed due date and is thereafter honoured, the date of tender must be treated as the date of payment. The delay in realization due to banking procedures or holidays cannot be attributed to the assessee.

Relying on settled legal principles and CBDT Circular No. 261, the Tribunal reiterated that payment through cheque relates back to the date of its presentation, provided it is not dishonoured. Since the assessee had deposited the cheque on time and there was no default on its part, levy of interest under Section 201(1A) was held to be unsustainable. Therefore, both appeals were allowed.

To Read Full Judgment, Download PDF Given Below