2011 (2) TMI 1394 - AT - Income Tax

Tribunal modifies tax assessment for 2002-03, directs re-computation on correct amount.

The Tribunal partially allowed the assessee's appeal against the order confirming the levy of tax and interest under sections 201(1) and 201(1A) for ... - Issues involved: Appeal against order confirming levy of Tax & Interest u/s 201(1)/201(1A) for Assessment year 2002-03.Issue 1 - Default u/s 201(1)/201(1A):The AO found the assessee in default u/s 201(1)/201(1A) for not deducting tax at source on interest payment to M/s. Globe International. The assessee argued it was a reimbursement for utilizing L.C. limit, not interest income of M/s. Globe International. However, the AO held the assessee liable for TDS under section 194A. The ld. CIT(A) upheld this decision, emphasizing the nature of payment over nomenclature. Various case laws were cited to support the default of TDS and the mandatory nature of interest u/s 201(1A). The AR's contention on time limit under section 275 was rejected, stating no limitation for action u/s 201/201(1A).Issue 2 - Appeal and Modification:The assessee appealed, arguing the order was bad in law, barred by limitation, and the tax interest levied was excessive. After hearing both sides, it was observed that the assessee defaulted only on a portion of the amount. The Tribunal directed the AO to re-compute the tax and interest due on the correct amount of &8377; 49,20,681/- u/s 201(1) and 201(1A) respectively, allowing the appeal in part.In conclusion, the Tribunal modified the order, directing the re-computation of tax and interest due on the correct amount, thereby partially allowing the assessee's appeal.