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TMI Blog1990 (3) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,285 and Rs. 9,227 u/s 201 (1A), read with Rule 30(b). 3. Aggrieved with the above levy of interest, the assessee filed appeals before the AAC, who purporting to follow the orders of the Tribunal in some other similar cases, allowed the assessee's appeals. The assessee's claim before, the first appellate authority was that though its accounting year ended on 30-6-79 and 30-6-1981, the accounts were actually closed much later and it was only then the interest was credited to the respective accounts of the creditors. Since the amounts of tax deducted at source was remitted to the Government within two months from the end of the month in which the interest was actually credited to the accounts of the parties concerned, it was contended that no interest would be chargeable u/s 201(1A). This argument of the assessee was accepted by the AAC for the both the years. Hence the present appeals before us by the Revenue. 4. It is contended by the learned Departmental representative that interest is charged u/s 201 (1A) as a compensation for the delay in payment of tax, which the assessee ought to have deducted and paid to the Government. Under sec. 194A of the Income-tax Act, 1961, any pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative for the assessee, on the other hand, claims that the liability to deduct tax arises only as and when the interest is credited to the creditor's account. If the assessee does not pay or choose to credit any interest to the creditor's account, there will be no liability to deduct any tax. Thus, the liability to deduct tax arises only as and when the amount of interest is paid or credited to the creditors' account. In this case no interest payment was made to the creditors. Though it is true that the interest is credited as on 30th June, 1979 and 1981. According to Shri Kumbhat though such interest was credited to the parties' account as on the last date of the respective accounting years, physically such credit was given much later. According to him, the process of closing the accounts and passing the adjustment entries takes quite some time and it is only in the course of such passing of adjustment entries that interest is credited to the creditors' account. If that date is taken into account, according to Shri Kumbhat, there will be no delay in the payment of tax to the Government. He relies in this connection on the decision of the Tribunal in the case of Todi Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The date up to which the accounts of the business are made is the last date of the previous year because it is on that day books are closed and accounts are made up. He brings to our notice in this connection the definition of the term " previous year " given in sec.3 of the Income-tax Act, in which it is stated that " previous year " means if the accounts of the assessee have been made up to a date within a financial year, then, at the option of the assessee, the twelve months ending on such date. On the basis of the above definition it is stated that the accounts of the assessee having been made up on 30th June, 1979 and 1981 in the present case and as the credit of interest has been given to the payee's account on the said dates, the assessee will have to pay the amount so deducted within two months of the expiration of the month in which that date, i.e., the date upto which accounts are made up falls. In this case, as the accounts have been made up to 30th June 1979 and 1981, the amounts of tax deducted have to be paid before 31st August of 1979 and 1981 respectively. Since this has not been done, it is stated that the lower authorities are correct in charging interest. It may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the parties and it is only then that there is a liability to deduct tax. According to him, since the assessee had filed returns of income for these two years much later, i.e., on 30th Dec. 1980 and 21 st January 1983, respectively and since the assessee was seeking for time to file the returns on the ground that the accounts were not yet ready, it is to be presumed that the credit entries crediting interest to the accounts of the parties have actually been made nearabout the above dates and not on 30th June 1979 and 1981 as recorded in the books of account. 8. We are not in a position to agree with these representations of Shri Kumbhat. Firstly, the books of accounts show that the interest to the accounts of the parties are credited as on 30th June of the respective accounting years. The claim of the assessee that credit was actually given in the account much later is not supported by any material whatsoever. The fact that the returns were filed much later does not ipso facto mean that the credit of interest to the account of the parties is also given much later. There may be any number of reasons why the accounts could not be finalised in time. It may be due to lethargy or ill ..... X X X X Extracts X X X X X X X X Extracts X X X X
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