Interest on tds after disallowance

This query is : Resolved

Ganesh Tkb (Querist)
Follow

01 May 2019 An assessee has not deducted TDS on certain expenditure. Consequently, the expenditure has been disallowed and the assessment has been closed. Now the assessee received a notice from IT (TDS) dept. asking him to pay interest up to the date u/s. 201 on the TDS amount which would have been deducted.

My question is
The assessee has already been penalized for non deduction of TDS in the form of disallowance. The interest will be an additional liability for him. And even if so, the interest needs to be paid only till the date of filing of return of income. Whether the contention is correct?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
Follow

02 May 2019 * Interest can be charged u/s 201(1), even if the underlying sum is disallowed
u/s 40(ia).

* Interest shall be payable to the date of furnishing of the return of income vide
proviso to section 201(1A).