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TMI Blog2008 (5) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly that the order of the Tribunal may be amended to hold that (i) with regard to interest on the accumulated balance representing employer's contribution to the fund, income-tax was deductible under s. 192 of the Act at the time of payment thereof and not under s. 194A as held by the Tribunal and (ii) consequently the assessee cannot be regarded to be in default under s. 201 for not deducting tax at source on the amount of such interest credited to the account of ex-employees of ONGC. 2. Before dealing with the rival contentions, the difference between ss. 192 and 194A needs to be noticed. Sec. 192 provides for deduction of tax at source when salaries are paid. The tax has to be deducted only at the time of payment of the salary and not when it is credited. On the other hand under s. 194A, tax has to be deducted from interest (other than interest on securities) at the time of the credit of the interest to the account of the payee or at the time of payment thereof, whichever is earlier. In the present case, the Tribunal has brought the case under s. 194A which means that the assessee ought to have deducted tax at the time of crediting the accounts of the payees with the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esult that the payment would fall to be considered as salary payment attracting s. 192 and it will not be considered as interest payment attracting s. 194A. The further contention is that since s. 192 obliges the assessee to deduct tax only at the time of actual payment of the interest and there being no liability to deduct tax at the time when the interest is credited to the accounts of the former employees, to that extent the assessee should not be held to be in default for not deducting tax at the time of the credit of the interest. It is the case of the assessee in the present applications that s. 17(3)(ii) is applicable to the facts of the case and if that is so then there is no liability upon the assessee fund to deduct tax when the interest is credited, since s. 194A would not be applicable, and that the liability on the assessee fund is only to deduct tax at the time of payment of the interest under s. 192 on the footing that the interest would form part of the salary of the ex-employees. 4. Mr. Vohra, the learned counsel for the assessee, does not dispute that when the appeals were heard by the Tribunal its attention was not brought to the provisions of s. 17(3)(ii) but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons even though they were not cited before it and in support of this contention has relied heavily on the judgment of the Kerala High Court cited above and also on the judgment of the Calcutta High Court where general principles have been laid down. In the judgment of the Kerala High Court, the question referred was as under: "Whether the Tribunal is bound to consider all the provisions of s. 214 including s. 214(1A) when the assessee did not refer to s. 214(1A) in the course of the argument and the case proceeded only on the provisions of s. 214(1) of the IT Act, 1961?" The Tribunal had rejected the application filed by the assessee under s. 254(2) holding that no reference was made to s. 214(1A) in the course of the hearing of the appeal. In the application, the assessee had contended that it was the duty of the Tribunal to make a reference to s. 214(1A), though not referred to at the time of the hearing of the appeal. When the matter reached the High Court on the basis of the above question of law, the High Court held that it was the duty of the Tribunal, as is the duty of the ITO, to notice a provision of law and decide the issue accordingly, even though it was not brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in L. Hirday Narain vs. CIT (1970) 78 ITR 26 (SC) rejected the argument that the power conferred under s. 35 of the 1922 Act (forerunner of s. 154 of the 1961 Act) upon the ITO to rectify his order is a discretionary power-a discretion to exercise or not to exercise the power to rectify and made the following powerful observations: "Sec. 35 enacts that the AAC or the ITO may rectify any mistake apparent from the record. If a statute invests a public officer with authority to do an act in a specified set of circumstances, it is imperative upon him to exercise his authority in a manner appropriate to the case when a party interested and having a right to apply moves in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the statute are prima facie enabling the Courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right-public or private-of a citizen." At p. 32 of the said judgment, his Lordship went on to observe further: "Exercise of power to rectify an error apparent from the record is conferred upon the ITO in aid of enforcement of a right. The ITO is an officer concerned with as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress (Madurai) (P) Ltd. (1983) 33 CTR (Mad) 314 : (1983) 140 ITR 705 (Mad) pithily observed as under: "The primary purpose of the statute is to levy and collect the income-tax. This is based on the cardinal principle, which has been incorporated as a veritable constitutional provision, that no tax can be levied or collected save under authority of law. The task of an appellate authority under the taxing statute, especially a non-Departmental authority like the Tribunal, is to address its mind to the factual and legal basis of an assessment for the purpose of properly adjusting the taxpayer's liability to make it accord with the legal provision governing his assessment. Since the be-all and end-all of the statutory provisions, especially those relating to the administration and management of income-tax, is to ascertain the taxpayer's liability correctly, to the last pie, if it were possible, the various provisions relating to appeal, second appeal, reference and the like can hardly be equated to a lis or dispute as arises between the two parties in a civil litigation. Although the income-tax statute makes the Department or its officers figure as parties in appeal proceedings, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity". In the same page, his Lordship preferred to view the Tribunal as an "institution of correction" rather than as an appellate body containing the cognates of appeal or aCivil Court. If these principles are borne in mind, even making allowance for the fact that both the Madras judgments were rendered in the context of the power of the Tribunal to admit and adjudicate a point that was not raised before the assessing authority or the first appellate authority, it seems to us that a procedure for correction of an error in the order of the Tribunal in such circumstances as in the present case-whoever be responsible for it-must be viewed as a step to bring the order in conformity with the statute and setting right of an erroneous adjustment of the tax liability of the assessee. 6. In some of the decided cases, correction of an order of the Tribunal to bring it in conformity with the judgment of the jurisdictional High Court rendered later has been upheld though there is a divergence of judicial opinion on the question. The protagonists of this view have put forward the argument based on the binding nature of the judgment of the jurisdictional High Court, whereas the opposite view s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier or subsequent to the order of the Tribunal but it is based on a statutory provision which had been present, in the Act when the appeals were decided by the Tribunal. If there is no dispute about the existence of the necessary facts to attract s. 17(3)(ii), and we did not hear the Departmental Representative put forth any such dispute, then the order of the Tribunal must be brought in conformity with the section by amending the same under s. 254(2). To ask the assessee to take up the order of the Tribunal in appeal to the High Court under s. 260A even where there is no dispute that s. 17(3)(ii) governs the case would be to multiply proceedings involving time and energy of both the assessee and the Revenue authorities, besides avoidable expenditure. It is further pertinent to note that though s. 17(3)(ii) was not specifically referred to before the Tribunal when the appeals were heard, para 7 of its order shows that the assessee did take the alternative contention that at best it was only a case for the applicability of s. 192 treating the payment made to the ex-employees as part of their salaries. 7. It is now time to enter the caveat. The procedure prescribed by s. 254(2) has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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