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TMI Blog1981 (9) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... nted to Rs. 4,54,979. As the assessee-bank did not furnish the particulars, as prescribed in the Rules, the ITO asked it to do so, i.e., to give the dates of credit of interest/payment of tax to the credit of the Government in respect of each account. The assessee took objection, by its letter dated 1-7-1974, alleging that the obligation to deduct tax under section 195 of the Act arose only at the time of payment and not at the time of credit of the interest. Therefore, there was no default on its behalf. Regarding the other particulars, the assessee contended that it was physically impracticable to provide particulars in respect of each account of the non-resident customers which may embrace over five thousand accounts. The total amount of tax deducted, but not credited to the Government, as at the end of each financial year and the dates on which the tax was ultimately paid to the credit of the Government was, however, mentioned by the assessee. The ITO, on further scrutiny and test checking, found that the interest had been credited to the parties accounts on the due dates and later it was transferred to their current or savings accounts included in the fixed deposits at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, 194B, 194BB, 194C, 194D and 195 of the Act. It will be relevant to note that the liability for deduction of income-tax on the amount payable, at the average rate of income-tax computed on the basis of the rates in force in respect of salaries under section 192, arises at the time of payment. Similarly, the words used in sections 193, 194B, 194BB and 195 are "at the time of payment". As against this, the words used in section 194A are "at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier". Similarly in section 194 the words used are "at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier". Similarly, in section 194D the words used are "at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier". 4. A perusal of these provisions would unmistakably reveal that the difference between credit and actual payment was alive to the mind of the Legislature. The Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually be transmitted to the non-residents some kind of sanction or authorisation is necessary under the Foreign Exchange Regulations Act and the Reserve Bank of India Act. Therefore, the Legislature advisedly used the words "payment" and not "credit" or "payment by issue of a cheque or draft or any other mode" in this section. We are, therefore, of the opinion that prima facie the argument of the representative of the assessee that the liability under section 195 arises from the actual dates of payment to the non-residents and not from the dates from which the interest was credited to their accounts, is to be accepted. 6. This, however, would not invalidate the orders passed by the authorities below altogether. As is apparent from the relevant discussion by the ITO, the assessee-bank did not furnish the particulars prescribed in the Rules. Thereafter, he asked the assessee to furnish the particulars, i.e., the dates of credit of interest as well as payment of interest to the non-residents. While the assessee took an objection that the obligation to deduct tax under section 195 arose only at the time of payment, it also pointed out the physical impracticability of providing partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 163, it being liable to pay income-tax on the interest credited to the accounts of the non-residents as an agent, section 195 was not applicable. We are afraid, this argument has little substance. The mere fact that the assessee would fall within the ambit of "agent", as contemplated by section 163, does not necessarily mean that in all cases, the assessee must be treated as an agent. A non-resident may pay the tax payable by him on his own accord. In such a case there would be no necessity of treating any body as an agent and making an assessment upon him. According to sub-section (2) of section 163 no person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the ITO as to his liability to be treated as such. A perusal of the language of this section will show that the discretion to treat any person as the agent of a non-resident is vested in the ITO. The mere fact that he falls within the ambit of section 163 does not always mean that he is bound to be treated as such. On behalf of the assessee it was contended that whether the ITO chooses to treat him as an agent or not is immaterial. The fact remains that he is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 ITR 51 and CIT v. Dunlop Rubber Co. (India) Ltd. [1980] 121 ITR 476. Reference was also made to a view taken by the Tribunal, "A" Bench, Calcutta in IT Appeal Nos. 4061 to 4075 (Cal.) of 1977-78 decided on 7-5-1979. It was contended that, since the right to recover the original tax by treating the appellant to be an assessee in default had already become time barred, no interest on it could be recovered by the revenue. This argument again seems to lose sight of certain other salient features of the case. Firstly, section 231 only bars the remedy of recovery and does not extinguish the right. According to section 232 of the Act, the several modes of recovery specified in this Chapter shall not affect in any way any other law for the time being in force relating to the recovery of debts due to the Government, or the right of the Government to institute a suit for the recovery of the arrears due from the assessee. The ITO or the Government, as the case may be, are within their rights to have recourse to any such law or institution of suit notwithstanding that the tax due was being recovered from the assessee by any mode specified in this Chapter. Secondly, without prejudice to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made actual payment of the interest to the non-resident constituents. Therefore, we cannot say that the right to recover the original amounts has altogether been barred because the dates of actual payment had yet to be ascertained as argued by the assessee's representative himself. Moreover, the interest is to be considered up to the date of payment and obviously the limitation prescribed by the section 231 cannot be applicable to the levy of interest under section 201(1A), which only provides for the liability to pay interest, because the computation of interest could only be made after the tax itself had been deposited to the Government's credit. 10. In the result, the appeal by the assessee is dismissed subject to the observations made in para 6 above. Per Shri B.V. Venkataramiah, Accountant Member --- I agree with the conclusions reached by my learned brother, but I would like to make a few observations. 2. The assessee contended that section 195 is not applicable to persons who are liable to pay income-tax as an agent. The learned counsel for the assessee then referred to section 163(1)(c) which prescribes that a person from or through whom the non-resident is in recei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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