9911796707
TMI Blog2007 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... he income-tax Appellate Tribunal was right in holding that there was no obligation on the part of the assessee-company to comply with the statutory requirements of section 194A of the Income-tax Act, 1961 (for short, "the Act") by deducting tax deductible at source (TDS) on interest paid by it for loans availed of by the assessee and repaid by it with interest on the ground that the loans were meant for the directors of the assessee-company and not for the assessee-company and after recording a finding that the directors had misused the name of the company to avail of the loan. 2 The facts giving rise to these civil appeals are as follows 3 The assessee (sole respondent in all the civil appeals) is a company incorporated under the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he directors in the books of the assessee-company. 4 The Assessing Officer found that, when interest was paid by cheques issued by the company to the creditors, TDS was not deducted at source by the assessee on the interest payments, as required under section 194A(1) of the Act and, therefore, the Assessing Officer applied the provisions of section 201(1) of the Act by declaring the assessee-company an assessee-in default and also applied section 201 (1A) of the Act imposing interest for not deducting TDS at source. The order passed by the Assessing Officer was confirmed by the appellate authority. Before the Tribunal the assessee contended that the borrowings were routed through the company; that the company was merely a medium through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a loan to the individual directors and not to the company and that the company was merely a conduit. In reply, the director of the assessee-company further stated that the name of the company was lent, borrowings were routed through the company and that in substance the loans were in fact given to the directors of the company. One more aspect needs to be mentioned, even according to the impugned decision of the Tribunal the directors had misused the name of the company to avail of the loans and even with this finding the Tribunal has held that there was no obligation on the part of the assessee to comply with the statutory requirements of section 194A of the Act by deducting TDS on the interest paid by the assessee to the creditors. The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section. Explanation.— For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called 'Interest payable account' or 'Suspense account' or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (2) [Omitted by the Finance Act, 1992, with effect from June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the business of insurance, or (f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette; (iv) to such income credited or paid by a firm to a partner of the firm; (v) to such income credited or paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees; (x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company in relation to a zero coupon bond issued on or after the 1st day of June, 2005 by such company or fund or public sector company. Explanation 1.— For the purposes of clauses (i), (vii) and (viia), 'time deposits' means deposits (excluding recurring deposits) repay able on the expiry of fixed periods. Explanation. 2.— Omitted. (4) The person respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
