1991 (6) TMI 109 - AT - Income Tax

Tribunal Upholds Appellate Decision on Interest and Donations

The Tribunal dismissed the Revenue's appeals, upholding the Appellate Commissioner's decision that no interest was payable by the company and supporting ... - Issues:- Deletion of interest charged under s. 201(1A)- Addl. demand raised under s. 201(1)Analysis:1. The appeals were filed by the Revenue against the deletion of interest charged under s. 201(1A) and against the additional demand raised under s. 201(1). The assessing officer found discrepancies in the amount of tax deducted at source for 11 employees of a limited company running a hotel. The officer also noted differences in the deduction amounts for certain months, leading to interest charges for short deductions and payments.2. The Appellate Tribunal considered the Form No. 24 filed by the company, which detailed employee-wise salaries, deductions, and tax amounts. The assessing officer disputed the deduction allowed by the company for donations under s. 80G, claiming it was impermissible for the employer to provide such deductions. Additionally, the officer insisted on uniform monthly tax deductions throughout the year.3. The Appellate Commissioner (AAC) reviewed the case, including relevant Board Circulars permitting various exemptions and deductions in tax calculations. The AAC supported the company's deduction for donations and concluded that no interest was payable by the company. The Revenue challenged these decisions on appeal.4. The Revenue contended that deductions under s. 80G were not typically permitted in tax calculations by employers, as specified in Form No. 24. They also argued for uniform monthly tax deductions as per s. 192 of the Income Tax Act.5. The company's counsel argued that although the Circular did not explicitly allow deductions for donations, the presence of a specific column in Form No. 24 for such deductions justified the company's actions. Regarding interest charges, they claimed the assessing officer's basis for calculation was flawed and that employers could revise salary amounts for tax deductions.6. The Tribunal carefully considered both arguments. It noted that Form No. 24 explicitly included a column for deductions under s. 80G, indicating the employer's authority to allow such deductions. The Tribunal upheld the AAC's decision on correct tax deductions. Regarding interest charges, the Tribunal interpreted s. 192 to allow for adjustments based on excess or deficiency in previous deductions, negating the need for uniform monthly deductions. Consequently, the Tribunal upheld the AAC's decision that no interest was payable.7. Ultimately, the Tribunal dismissed the Revenue's appeals, affirming the AAC's rulings on deductions and interest charges.