1990 (10) TMI 100

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..... interest income. While computing the advance tax payable on the basis of said estimated income, the assessee had reduced the total tax payable by amounting representing tax deductible at source during the financial year from said interest income as per provisions in sec. 194-A of the Act. 2.2 According to the ITO, who initiated proceedings u/s 273(2)(a) of the Act, the assessee should not have reduced the income-tax calculated on estimated income by the amount representing tax deductible at source u/s. 194-A on interest income because the companies who had incurred liability to pay interest to the assessee-company had not in fact deducted the tax at source in the relevant financial year but had done so in the next financial year. Accordi .....

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..... e since it was not actually deducted at source in the relevant financial year. 4. We are unable to accept these submissions. We find that legal obligation of the assessee at the time of filing of estimate was to make estimate of income of the current year and calculate the advance-tax payable thereon and file the said estimate and pay the advance-tax accordingly. The advance tax was required to be computed by the assessee in the manner laid down in sec. 209 of the Act. Under that provision, the assessee had to calculate income-tax on current estimated income at the rates in force in the financial year and income-tax so calculated is to be reduced by the amount of Income-tax which would be deductible at source during the said financial ye .....

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..... the estimate of current income, the matter would have been different. If the payer company had committed any default, appropriate action relatable to such default could very well be taken against payer company. As far as assessee-company was concerned, when it was including interest income in the estimate of current income, it was entitled to reduce the tax payable on current estimated income by the tax deductible at source on interest income. That computation is not dependent on what happens subsequently in the course of the year to the tax deductible at source, namely whether it was in fact paid to the credit of Central Government in the financial year or not. In any case, it can not be said that at the time assessee filed estimate of in .....

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