2008 (10) TMI 268 - AT - Income Tax

Summary

Issues Involved:
The issues involved in the judgment are the treatment of the assessee company as assessee in default under section 201(1) for alleged TDS on deemed dividend and the confirmation of the levy of interest under section 201(1A)/194 of the IT Act 1961.

Treatment of Assessee as Assessee in Default:
The case involved a survey under section 133A of the Act, where it was found that the assessee had not deducted TDS under section 194 of the Act on certain payments and had also not deposited the TDS deducted in the Government account within the specified time. The Assessing Officer (AO) determined the tax liability of the assessee under section 201(1) for non-deduction of TDS and also calculated the interest payable under section 201(1A). The learned CIT(A) confirmed the AO's action. However, the Tribunal allowed the appeal of the assessee, stating that there was no requirement of TDS under section 194 in the present case as the payments were made to non-shareholders, and therefore, the assessee could not be held as assessee in default under section 201.

Levy of Interest:
Regarding the levy of interest under section 201(1A)/194 of the IT Act 1961, the Tribunal held that since there was no requirement of TDS under section 194, the assessee could not be treated as assessee in default under section 201. Consequently, the Tribunal allowed the appeal of the assessee, quashing the levy of interest under section 201(1A).

In conclusion, the Tribunal allowed the appeal of the assessee, stating that there was no requirement of TDS under section 194 for the payments made to non-shareholders, and therefore, the assessee could not be considered as assessee in default under section 201. Additionally, the Tribunal quashed the levy of interest under section 201(1A), resulting in the appeal of the assessee being allowed.