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TMI Blog2011 (1) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn assessing the said amounts in his hands and pays tax, which is accepted by the Department, the payer ceases to be an assessee in default . He is not liable to pay tax under s. 201(1) of the Act. However, that does not absolve his liability to pay interest on TDS amount which he has not deducted. Therefore in order to foist the liability of payment of tax under s. 201(1A) it is not necessary that on the date when the demand is made, the assessee should be an assessee in default . As held by the apex Court, both these sections are independent and mutually exclusive. They could be operated independent of each other. In that view of the matter, the Tribunal was justified in holding that on payment of tax due by the payee, the liability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is a loss on account of sale. Therefore the assessee was directed to pay tax as well as interest on such tax under the aforesaid two provisions. In appeal, the CIT(A) held that when the payee filed a return of income and paid taxes, the liability of the assessee stood extinguished and therefore it held the provisions of s. 201(1) and 201(1A) were not applicable. The Revenue preferred an appeal against the said order before the Tribunal. The Tribunal upheld the order of the CIT(A) insofar as his finding that the payee had filed a return of income and subsequently paid tax and that there was no liability to pay tax under s. 201(1) of the Act. However, it directed the assessee to pay interest under s. 201(1A) of the Act. Aggrieved by the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability. The said liability is a vicarious liability and the principal liability is of the person who is taxable. A bare reading of s. 201(1) shows that interest under s. 201(1A) r/w s. 201(1) can only be levied when a person is declared an assessee-in-default. For computation of interest under s. 201(1A), there are three elements. One is the quantum on which interest has to be levied. The second is the rate at which interest has to be charged. The third is the period for which interest has to be charged. The rate of interest is provided in the 1961 Act. The quantum on which interest has to be paid is indicated by s. 201(1A) itself. Sub-s. (1A) specifies 'on the amount of such tax' which is mentioned in sub-s. (1), wherein, it is the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid amounts in his hands and pays tax, which is accepted by the Department, the payer ceases to be an 'assessee in default'. He is not liable to pay tax under s. 201(1) of the Act. However, that does not absolve his liability to pay interest on TDS amount which he has not deducted. Therefore in order to foist the liability of payment of tax under s. 201(1A) it is not necessary that on the date when the demand is made, the assessee should be an 'assessee in default'. As held by the apex Court, both these sections are independent and mutually exclusive. They could be operated independent of each other. In that view of the matter, the Tribunal was justified in holding that on payment of tax due by the payee, the liability of the payer under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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