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Issues:
1. Liability under section 201(1) for alleged non-deduction of tax at source. 2. Interest liability under section 201(1A) for alleged non-deduction of tax at source. 3. Interpretation of provisions of section 194B and section 2(24)(ix) of the Act. 4. Bar on limitation for passing orders under the statute. Issue 1: Liability under section 201(1) for alleged non-deduction of tax at source: The appellant contested the liability under section 201(1) of the Act, arguing that there was no obligation to deduct tax at source as section 194B was not applicable to the case. The appellant further contended that the order was time-barred, and the lower authorities had not considered the explanations and evidence properly, breaching Principles of Natural Justice. The Tribunal held that the appellant was not liable for TDS as the provisions of section 194B were not attracted to the case, thereby allowing the appeals. Issue 2: Interest liability under section 201(1A) for alleged non-deduction of tax at source: The appellant challenged the interest liability under section 201(1A) by arguing that the distribution of gift articles was not a lottery scheme as per section 194B. The Assessing Officer treated the distribution as a lottery, leading to the demand for TDS and interest. The Tribunal, after considering the arguments, held that the distribution did not fall under the definition of a lottery before the relevant amendment, thus dismissing the interest liability. Issue 3: Interpretation of provisions of section 194B and section 2(24)(ix) of the Act: The appellant relied on the pre-amendment definition of "lottery" under section 2(24)(ix) to contest the applicability of section 194B. The Tribunal analyzed the legislative intent behind the amendment and concluded that the winning of prizes by lots was included in the definition of lottery post-amendment. Since the appellant's case was before the amendment, the provisions of section 2(24)(ix) and section 194B were not applicable, leading to the allowance of the appeals. Issue 4: Bar on limitation for passing orders under the statute: The appellant raised the issue of the order being time-barred due to the delay in enforcement of TDS. The Tribunal considered the principle of natural justice and ruled that the action for recovery of TDS was initiated after an inordinate delay, making it time-barred. The absence of a prescribed time limit for TDS recovery actions supported the Tribunal's decision to allow the appeals. In summary, the Tribunal ruled in favor of the appellant, holding that there was no liability for TDS or interest under sections 201(1) and 201(1A) respectively. The interpretation of section 194B and section 2(24)(ix) favored the appellant as the provisions were deemed inapplicable to the case before the relevant amendment. Additionally, the Tribunal considered the delay in enforcing TDS and concluded that the action was time-barred, aligning with the principle of natural justice. Consequently, the appeals of the appellant were allowed based on these findings.
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