Tribunal Upholds Dy. CIT(A)'s Order on Interest Deletion

The Tribunal upheld the Dy. CIT(A)'s order, dismissing the Revenue's appeal against the deletion of interest under section 201(1A) for assessment years 1988-89 and 1989-90. The Tribunal emphasized the Tax effect being less than Rs. 25,000, suggesting the Revenue should have refrained from filing the appeal. It cited legal precedents on City Compensatory Allowance not forming part of taxable income and the shifting of liability to deduct tax directly on the assessee under Section 191. The Tribunal concluded that the employer could not be held liable for interest under section 201(1A) based on the circumstances at the time of salary payment and upheld the Dy. CIT(A)'s order.

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Issues involved: Appeal by Revenue against deletion of interest u/s 201(1A) for assessment years 1988-89 and 1989-90.

Summary:
1. The Tribunal condoned the delay in filing the appeals by the Revenue and proceeded to decide on merits.
2. Tax effect being less than Rs. 25,000, Revenue should have refrained from filing the appeal as per CBDT circular, saving time for substantive matters.
3. The Dy. CIT(A)'s order was upheld as just and proper, quoting the Calcutta High Court's judgment on City Compensatory Allowance (CCA) not forming part of taxable income.
4. The jurisdictional High Court's decision on CCA not being taxable was crucial in determining the employer's liability to deduct tax at source.
5. The Supreme Court and High Court decisions emphasized fair administration of tax laws and excusing parties from impossible obligations.
6. The Tribunal referred to Section 191, shifting liability to deduct tax directly on the assessee if not done by the payer at the time of salary payment.
7. Interest u/s 201(1A) could not be justified due to the employer's reliance on High Court decisions and the shifting of liability to the assessee under Section 191.
8. The employer could not be held liable for interest under section 201(1A) due to the circumstances at the time of salary payment and the legal precedents cited.
9. Upholding the Dy. CIT(A)'s order, the Tribunal dismissed the appeal.

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