1991 (3) TMI 178 - AT - Income Tax

Summary

Issues:
1. Applicability of section 194C of the Income-tax Act, 1961 for non-deduction of tax at source.
2. Levy of interest under section 201(1A) of the Act for failure to deduct tax at source.
3. Additional ground raised regarding limitation under section 231 of the Act.

Analysis:

Issue 1: Applicability of section 194C
The appeal involved the question of whether the assessee was liable to deduct tax at source under section 194C of the Income-tax Act, 1961 for payments made to two parties for job works. The Income Tax Officer (ITO) contended that as the amounts exceeded Rs. 5,000 and there was an agreement regarding rates, section 194C was applicable. The assessee argued that there was no express or implied contract with the parties. However, the Tribunal held that job work was done, payments were made at particular rates, indicating a contract existed, thus attracting the provisions of section 194C.

Issue 2: Levy of Interest under section 201(1A)
The ITO initiated proceedings for charging interest under section 201(1A) of the Act for the assessee's failure to deduct tax at source. The CIT(A) upheld the levy of interest, which led to the appeal before the Tribunal. The Tribunal affirmed the decisions of the lower authorities, stating that the assessee was liable to deduct tax at source and pay it to the Central Govt. The Tribunal dismissed the main argument of the assessee, upholding the levy of interest under section 201(1A).

Issue 3: Additional Ground on Limitation under section 231
During the appeal, the assessee raised an additional ground related to limitation under section 231 of the Act, arguing that the order for interest levy was barred by time. The Department opposed the admission of this ground, contending it was not raised before the lower authorities. However, the Tribunal allowed the additional ground, citing legal principles that a legal plea on existing facts could be raised at the Tribunal stage. The Tribunal analyzed the applicability of section 231 regarding the limitation for commencing recovery proceedings, concluding that the order for interest levy was not barred by time and dismissed the additional ground raised by the assessee.

In conclusion, the Tribunal dismissed the appeal, affirming the applicability of section 194C for tax deduction, upholding the levy of interest under section 201(1A), and rejecting the additional ground on limitation under section 231. The judgment provides a detailed analysis of the legal provisions and precedents governing the issues raised in the appeal, ensuring a comprehensive understanding of the decision.