1989 (5) TMI 86

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..... nds had been taken by the assessee : 1. That the order of the Learned Commissioner of Income-tax (Appeals) is bad in law as well as in facts. 2. That the Commissioner of Income-tax (Appeals) was wrong in confirming the order of the Income-tax Officer levying interest u/s. 201(1A) of the Income-tax Act, 1961. 2. The brief facts are that the assessee is a limited company. It had received loans from various parties including directors of the company and as such interest was payable on such loans. During all these assessment years, the assessee had neither paid the interest to the creditors nor credited the interest to the account of the payees and consequently, it had also not deducted any tax at source from the amount of interest payabl .....

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..... (not being a company or a registered firm) entitled to receive such income furnishes to the person responsible for making the payment." It has been pointed out in the appeal that the assessee was to deduct tax at source only when the amount of interest was paid or credited in the account of the payee. As he has not shown either of the two alternatives i.e., he has neither paid in cash and nor credited in the account and had also not paid by any other mode to the payee, he was not bound to deduct tax at source and all what he had done was that he had made a provision for the liability of the interest in his account and was to deduct that tax only when the question of payment was to be raised. He has further stressed that the CBDT had also .....

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..... Account' does not amount to crediting the entry in the account of the payee, even though it would be indicative of an acknowledgement of the liability to the creditors with respect to that amount of interest. As such the obligation to deduct the tax could not arise at that time but would arise when subsequently, the payment of interest is made to the payee or it is credited to his account." 4. The learned D.R. has relied on the order passed by the learned CIT (Appeals) and stressed that the words "by any other mode" should be interpreted as if the payment of interest has been made by mere providing the liability in the interest payable account. 5. We have carefully perused the entire facts on record and also heard the learned D.R. in d .....

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