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TMI Blog1995 (2) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... educt Rs. 2,97,989 as TDS which he failed to deduct and deposit with the Central Government. Therefore, the Assessing Officer charged interest on the above amount from 1st Jan., 1986 to 28th March, 1990 (i.e., the date of regular assessment) amounting to Rs. 1,88,270 vide his order under s. 201(1A) dt.20th Jan., 1992. The CIT(A) upheld the order of the Assessing Officer. Hence, this appeal by the assessee. 2.1 At the time of hearing, the learned counsel for the assessee vehemently contended that no interest under s. 201(1A) was at all chargeable, in this case. He argued the case at length. His arguments were five-fold as under: (a) There was no tax payable by the so called sub-contractors (the assessee has used the expression 'so called' because he is denying that they are sub-contractors. However, hereinafter we shall refer them as 'payees'), hence, there was no liability of the assessee to deduct the tax. He has pointed out that the income of the first payee, namely, Salwan Construction Co. Pvt. Ltd. was loss in asst. yrs. 1986-87 and 1987-88. The assessment of second payee, namely, Shri Amarjit Singh, HUF has resulted in refund for asst. yrs. 1986-87 and 1987-88 both. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) interest was charged upto regular assessment while as per the language of the statute it has to be charged upto the date of deposit. When the amount was not deposited at all by the assessee the interest cannot be obviously charged upto the date of deposit. Thus, when the computation of interest cannot be made the interest could not have been charged. In this respect he relied upon the decision of CIT vs. B.C. Srinivasa Setty (1981) 21 CTR (SC) 138 : (1981) 128 ITR 294 (SC). (ii) The TDS was to be deducted on the net receipt and not on the gross receipt. The Assessing Officer has worked out the interest considering the gross receipt by the assessee. (iii) The Assessing Officer has charged the interest in one year only while the receipt by the assessee pertained to more than one years. In view of the above, he submitted that the order charging interest under s. 201(1A) be quashed. 2.2 The learned Departmental Representative supported the orders of the authorities below. She submitted that the order of the Tribunal in the case of Sood Enterprises was based upon the decision of the Hon'ble Madhya Pradesh High Court in the case of M.P. State Co-op. Dev. Bank Ltd. She submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was on account of bona fide belief or not is an irrelevant consideration because the levy of interest is mandatory. She also submitted that the order passed by the Assessing Officer was not barred by limitation. In this respect, she relied upon the various decisions of the Tribunal reported in Jitan Clinical Thermometer vs. ITO (1991) 40 TTJ (Ahd) 484 : (1991) 38 ITD 105 (Ahd), ITO vs. Marshal Sons Co. (I) Ltd. (1992) 42 ITD 496 (Cal), ITO vs. Om Prakash Co. (1982) 1 ITD 992 (Del) and Grindlays Bank Ltd. vs. ITO (1982) 1 ITD 1100 (Cal). 3. We have carefully considered the arguments of both the sides. The substance of the argument of the learned senior Departmental Representative is that the liability to deduct tax at source arose at the time of payment by the assessee. Whether there was income or not in the hands of the payees is an irrelevant consideration. Since, the assessee has failed to deduct the tax the default occurred and the assessee became liable for the payment of interest as per s. 201(1A). The substance of the assessee's counsel's arguments is that on completion of assessment of payees there was no tax payable by them and, therefore, there was no liability of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the employees on the salary income honestly estimated by it and had also paid the tax as required by s. 200. It could not be held to be an assessee in default in respect of the tax. Therefore, the provisions under s. 201(1A) also were not attracted." The learned senior Departmental Representative has relied upon the decision of the Calcutta High Court in the case of Grindlays Bank Ltd. vs. CIT. In this case, their Lordships have upheld the validity of charging of interest under s. 201(1A) holding as under: "That if the tax has been realised once from the employees, it cannot be realised once again but that does not mean that the assessee will not be liable for payment of interest or any legal consequence for their failure to deduct or to pay in accordance with law to the Revenue." The Tribunal in the case of ITO vs. Sood Enterprises, following the decision of the Hon'ble Madhya Pradesh High Court, referred to above, has held that interest under s. 201(1A) is not chargeable where the payee has already paid the tax. The same view was reiterated by the Tribunal (Ahmedabad Bench) in the case of N.K. Patel Co. vs. ITO. In view of the above decisions, there is unanimity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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