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TMI Blog2014 (12) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... m its associate companies of the UB Group. For some period, it was paying interest. When it started incurring losses, the respondent is said to have requested the creditors to waive the interest. Stating that the loanees have waived the interest, it did not make any deduction of tax at source on the component of interest for the assessment years 1989-90, 1990-91 and 1991-92. An audit report under Section 44AB of the Act was obtained in the assessment year 1991-92. The assessing officer took the view that amounts of Rs. 1,88,301, Rs. 6,15,208 and Rs. 1,57,563 for the three assessment years referred to above ought to have been paid as interest and since the tax at source on the said interest was not deducted or paid as required under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt years, non-deduction of tax at source was not found fault with. It was only at a subsequent stage that a notice was issued proposing action under Section 201 of the Act. The defence of the respondent was that it did not effect deduction since the creditors have acceded to its request to waive interest on the ground that it incurred losses. The assessing officer did not accept the contention of the respondent, and so did the Commissioner. The Tribunal however examined the matter from the point of view of limitation. It did take note of the fact that Section 201 of the Act or other analogous provisions did not prescribe any limitation for recovery of the amount representing deduction of tax at source. However, it treated four years period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the preceding one or two years is fastened, there can be scope for making adjustment thereof in the activities of the subsequent years. However, if fairly long gap intervenes, it becomes difficult for making such adjustments, particularly when the activity is commercial in nature. In the instant case, the assessment years are 1989-90, 1990-91 and 1991-92. It was nearly seven years thereafter that a notice was issued. For an assessee to be required to pay the amount, even if due five or six years preceding the demand, would be a serious problem. Several developments take place over the period, and the nature of relations undergoes change. Obviously, because there was no precedent handed out by any High Court or Supreme Court, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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