2014 (9) TMI 132 - HC - Income Tax

Deduction of TDS on city compensatory allowance Interest payable on failure to pay dues Held that - The income tax authorities are guided by the provisions of the Act - The Act does not require any amount to be claimed from the assessee merely because he may have admitted the claim which was not contemplated by the statute - The principle is that consent cannot confer jurisdiction - Merely on the basis of consent of the assessee, the claim could not have been lawfully raised - Consent cannot give jurisdiction to the authorities to realise tax which is not payable Decided against Revenue.

Summary

Issues:
1. Whether the assessee was liable to deduct tax upon city compensatory allowance.
2. Whether interest is automatically payable on a failure to pay dues on the due date.
3. Whether the law was subsequently amended with retrospective effect.

Analysis:
1. The appeal was against a judgment where the Tribunal agreed that the assessee was not required to deduct tax upon city compensatory allowance based on a previous court judgment. The Commissioner of Appeal and the Tribunal both dismissed the appeal of the revenue, leading to the appeal before the High Court. The revenue contended that the assessee admitted fault and deposited the TDS amount, but the dispute was regarding interest.

2. The revenue argued that interest becomes payable automatically on a failure to pay dues on the due date, citing a Supreme Court judgment. However, the High Court was not convinced by this argument. The Court emphasized that income tax authorities are bound by the provisions of the Act, and the Act does not require any amount to be claimed from the assessee based on mere admission by the assessee. The Court held that consent cannot confer jurisdiction, and authorities cannot realize tax not payable solely based on consent.

3. The revenue further argued that the law was subsequently amended with retrospective effect. However, the High Court opined that retrospective effect can be given in cases where taxes are yet to be deducted, but not in the current case. The Court concluded that the revenue's contention could not be upheld, and subsequently dismissed the appeal.