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TMI Blog2014 (1) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... le making payment of interest to M/s Software Technology Parks of India, Lucknow, a society registered under the Societies Registration Act, 1860. 2. On the facts and circumstances of the case and in law, the Ld. Lower Authorities erred on facts and in law in holding the appellant l iable for interest on late deposit of the amount of tax deducted at source while making payment of interest to various deductees as per the provisions of section 194A of the Income Tax Act, 1961 read with, rule 30(1)(b) (i)(1) of the In come T ax Rule s, 1962 respectively." 2. Briefly stated the relevant material facts are l ike this. It is a case of short deduction of tax at source inasmuch as whi le the assessee tax deducter has dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have heard the DR, perused the material on record and duly considered facts of the case in the light of the applicable legal posit ion. 5. We find that as the amount of interest payment exceeded Rs.10 lakhs, the assessee was required to deduct surcharge @ 10%, in addition to the prescribed rate of tax, as well. The appel lant did not dispute so before any of the authori ties below, or in the documents filed before us. In this view of the matter there was indeed a short deduction of tax at source. To that extent, authorities below are indeed correct. 6. It is, however, important to bear in mind the set tled legal position that a short deduction of tax at source, by i tself does not result in a legally sustainable demand u/s 201(1) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only when the primary liability is not discharged that vicarious recovery liabi lity can be invoked. Once all the detai ls of the persons to whom payments have been made are on record, it is for the Assessing Of ficer, who has al l the powers to requisition the information from such payers and from the income tax authorities, to ascertain whether or not taxes have been paid by the persons in receipt of the amounts from which taxes have not been wit hhe l d. As a res ul t of the ju d gme nt o f Hon'b le A lla haba d High Co u rt in Jagran Prakashan's case (supra), there is a paradigm shi ft in the manner in which recovery provisions under section 201(1) can be invoked. As observed by Their Lordships, the provisions of Section 201(1) cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned, these provisions are set out in Section 201(1) which seeks to make good any loss to revenue on account of lapse by the assessee tax deductor. However, the question of making good the loss of revenue arises only when there is indeed a loss of revenue and the loss of revenue can be there only when recipient of income has not paid tax. Therefore, recover y provisions under section 201(1) can be invoked only when loss to revenue is established, and that can only be established when i t is demonstrated that the recipient of income has not paid due taxes thereon. In the absence of the statutory powers to requisition any information from the recipient of income, the assessee is indeed not always able to obtain the same. The provisions to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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