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TMI Blog1995 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ments account, a sum of Rs. 4,17,96,663 on account of interest on registration deposits and on account of interest on the deposits from the SFS allottees. For assessment year 1991-92, the amount so debited was Rs. 4,59,81,656. Since the Assessing Officer was of the view that provisions of section 194A(3)(i) of the Income-tax Act, 1961 were attracted in this case and that assessee was liable to deduct tax in respect of the interest adjusted, paid or credited to the depositors under various schemes, the Assessing Officer issued a show-cause notice to the DDA as to why action under section 201(1) and 201(1A) may not be taken. 2. Assessee claimed that provisions of section 194A(3)(i) were not attracted for two reasons. Firstly, the interest p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 194A were not attracted in the case of interest paid to the flat owners. The learned D.R. contended that the issue involved in the present appeals was entirely different insofar as the interest has been paid on the registration amounts which in the event of a depositor not succeeding in the draw of lots for allotment of flats, is refundable. The learned D.R. accordingly wanted to argue on merits so as to distinguish the decision of the Tribunal for earlier years on facts. At this stage, the learned counsel Shri G.C. Sharma suggested that it would not be necessary for the Tribunal to go into the nature of the payments as the amount paid to each person did not exceed Rs. 2,500 per annum. In such eventuality even if the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trant withdraws and cancels his registration. The said interest is credited at the rate of 7 per cent per annum in respect of the deposits annually and the amount is credited to the " interest on registration deposits accrued/adjusted account ". As and when any refund is granted to any registrant cancelling the registration and also where the registration amount is adjusted against the payment of instalments/cost of the flat, the amount of interest is adjusted and debited to the " interest on registration deposits accrued/adjusted account " (hereinafter referred to as RDAA account). As per the balance sheet ending March 1990, the interest accrued in respect of the deposits which stood credited to the interest on RDAA account was Rs.28,87,15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on accrual basis in respect of the registration deposits under various schemes. This interest is credited to the RDAA account each year. Since it is not disputed that the maximum deposit in each case does not exceed Rs. 15,000 and the interest is calculated at the rate of 7 per cent, the annual interest accruing to each depositor would not exceed Rs. 2,500. That being so, provisions of section 194A would not be attracted. Section 194A reads as under : " 194A(1) Any person, not being an individual or a Hindu Undivided Family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the revenue would have some substance for consideration but for the Explanation to section 194A(1) which we have reproduced above. When the amount is credited to interest payable account or suspense account or any account called by any other name, in the books of account of the person liable to pay such interest, such credit is deemed to be the credit of such income to the account of the payee. Therefore, when the assessee credited the interest accrued in respect of the registration deposits under various scheme to the RDAA account each year, as per the explanation the amount is deemed to have been credited in the account of the payees. Thus the crucial stage for the purposes of provisions of section 194A is the crediting of the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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