2007 (3) TMI 796 - HC - Income Tax

Summary

Issues involved:
Appeal against the order of the Tribunal regarding short deduction of tax under section 201 of the Income-tax Act, 1961 and interest thereon for assessment years 1990-91 to 1999-2000.

Summary:

Issue 1: Short deduction of tax under section 201 of the Act for assessment years 1990-91 to 1998-99

The appeals arose from a consolidated order passed by the Income-tax Appellate Tribunal concerning the short deduction of tax by the assessee. The Assessing Officer held that the price difference between items sold to employees and their written down value was a perquisite in the employees' hands, leading to short deduction of tax under section 201 of the Act. The Commissioner of Income-tax (Appeals) upheld this decision, but the Tribunal set it aside, ruling in favor of the assessee. The revenue contended that the assessee sold assets below market price, while the assessee argued that no perquisite was involved as market prices were not proven to be lower. The Court agreed with the Tribunal, stating that without evidence of items being sold below market price, no default in TDS deduction existed under section 201.

Issue 2: Short deduction of tax under section 201 of the Act for assessment year 1999-2000

Similarly, for the assessment year 1999-2000, the Assessing Officer found a shortfall in tax deduction and imposed interest under section 201(1A) of the Act. The Tribunal reversed the decision, prompting the revenue to appeal. The revenue claimed the assessee sold assets below market value, but the assessee argued against the existence of a perquisite due to lack of evidence on market prices. The Court concurred with the Tribunal's findings, stating that no default in TDS deduction was established.

Conclusion:

The Court dismissed the appeals filed by the revenue, upholding the Tribunal's decision that the assessee was not in default of short deduction of TDS under section 201 of the Act. Consequently, no penalty under section 271C for tax deduction was applicable, and the Tribunal's cancellation of the penalty was deemed appropriate. The Court found no substantial question of law to entertain the appeals, leading to the dismissal of the revenue's appeals.

This summary provides a detailed breakdown of the judgment, addressing each issue involved in the case regarding the short deduction of tax under section 201 of the Income-tax Act, 1961.