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TMI Blog1999 (11) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in law and fact in deleting the interest levied under section 201(1A) of the Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in applying the decision in 151 ITR 477 rendered under section 201 to the case concerned with the levy of interest under section 201(1A) of the Act ?" The factual position, as set out in the statement of case, is as follows : The assessee is a partnership firm carrying on business in manufacture of handloom cloth. During the previous year ending on June 30, 1984, relevant to assessment year 1985-86, the assessee paid a sum of Rs. 2,85,980 to Sangi and Co., as interest, without deducting tax at source. The assessee produced before the Assessing Officer eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d pay over the tax to the Revenue is not independent of the liability of the employee to pay tax. If, on the estimated income of the employee, no tax is due, the employer has no liability to deduct tax at source. The liability of the employer and the employee is interconnected and not independent of each other. The Tribunal felt that though the decision was rendered by this court in connection with the failure to deduct tax on payment of salary, the ratio would apply to the deduction of tax at source on payment of interest. The Tribunal found that there was no infirmity in the order of the Commissioner of Income-tax (Appeals) in deciding the issue in, favour of the assessee following the decision of this court. The Tribunal accordingly dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default in respect of the tax : Provided that no penalty shall be charged under section 221 from such person, principal officer or company unless the Income-tax Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax. (1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at fifteen percent per annum on the amount of such tax from the date on which, such tax was deductible to the date on which such tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature by carefully attending to the real scope of statute. In considering whether a statute is imperative, a balance may be struck between the inconvenience of sometimes rigidly adhering to it and the convenience of sometimes departing from its terms. For ascertaining the real intention of the Legislature, the court may consider, inter alia, the nature and design of the statute and the consequences which would follow from construing it one way or the other ; the impact of other provisions whereby the necessity of complying with the provisions in question is avoided ; the circumstances, namely, that the statute provides for a contingency of the non-compliance with the provisions ; the fact that the noncompliance with the provisions is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Interest" is a consideration paid either for use of money or for forbearance in demanding it after it has fallen due. It is a compensation allowed by law or fixed by parties or permitted by custom or usage for use of money belonging to another or for the delay in paying the money after it has become payable. It can be said to be the cost of using credit or funds of another. The liability for payment of interest at the rate stipulated accrues automatically on a failure to pay the amount of tax by the due date. This is so because such a provision is not a claim for any tax, but is a procedural matter providing machinery for recovery of tax which is compensatory in nature (see Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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