2013 (10) TMI 104 - HC - Income Tax

High Court affirms Tribunal decision on Income Tax Act interpretation

The High Court upheld the Tribunal's decision, citing precedents from the Uttarakhand High Court and a Tribunal Bench. It concluded that there was no ... Shortfall to deduct tax at the time of making payment under Section 192 – Held that:- Reliance has been placed upon the Uttarakhand High Court in the case of C.I.T. vs. Enron Expat Services Inc., reported in [2010 (8) TMI 201 - UTTARAKHAND HIGH COURT] - The provisions of Sub-section (1) and Sub-Section (3) of Section 192 have to be read together and if the same are read carefully, then it would appear that the payment of deducted tax shall be extended upto the end of the relevant financial year irrespective of the fact whether the deduction has been made at the time of payment or not – In the present case, shortfall of TDS was adjusted and made good and followed up in the relevant financial year – Decided against the Revenue. Issues: Appeal against Tribunal's judgment on questions of law related to Income Tax Act provisions - Section 201(1), Section 192, and applicability of interest under Section 201(1A).Analysis:The appeal sought against the Tribunal's judgment regarding the assessment year 2009-2010 raised several questions of law. The first issue questioned whether the initiation of action under Section 201(1) of the Income Tax Act should be determined based on the provisions of Section 201 rather than solely on the interpretation of Section 192. The second issue inquired about the circumstances under which action under Section 201(1) lies, specifically when tax deductible under the Act was not deducted either wholly or partially. The third issue revolved around the interpretation of Section 192(3) and whether the Tribunal was correct in relieving the assessee of the obligation to pay interest under Section 201(1A) merely because the shortfall in tax deduction was rectified before the end of the financial year.The judgment referred to decisions by the Uttarakhand High Court and the Hyderabad Bench of the Tribunal to provide clarity on the issues raised in the appeal. The Uttarakhand High Court's decision in the case of C.I.T. vs. Enron Expat Services Inc. emphasized that Sections 192(1) and 192(3) must be read together. It highlighted that the payment of deducted tax can be extended until the end of the relevant financial year, regardless of whether the deduction was made at the time of payment. The Hyderabad Bench of the Tribunal also addressed a similar issue in the case of Hyderabad Metropolitan Water Supply & Sewerage Board vs. A.C.I.T., supporting the interpretation provided by the Uttarakhand High Court.The High Court, in its judgment, concluded that since the Tribunal had based its decision on the precedents set by the Uttarakhand High Court and a coordinate Bench of the Tribunal, there was no legal error in the Tribunal's judgment. Therefore, the High Court declined to interfere with the Tribunal's decision and dismissed the appeal.In essence, the High Court's judgment upheld the interpretation of the relevant provisions of the Income Tax Act as outlined in the decisions of the Uttarakhand High Court and the Hyderabad Tribunal. The judgment emphasized the importance of reading Sections 192(1) and 192(3) in conjunction and clarified that the obligation to pay deducted tax extends until the end of the financial year, irrespective of the timing of the deduction.