2011 (9) TMI 637

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....(four wheelers) as an authorised dealer of Maruthi Udyog Limited. A TDS survey was conducted on 22.02.2007 under Section 133A at the business premises of the assessee and his sworn statement was recorded. Thereafter, he issued summons to the assessee under Section 131 of the Act on 23.02.2007 to produce books of account and other documents. Thereafter, a show cause notice came to be issued on 27.08.2007 calling upon him to show cause as to why interest should not be levied under Section 201 and 201(1A) for the assessment years 2004-05, 2005-06 and 2006-07. The assesses gave his reply. On receipt of the said reply, a further show cause notice was issued on 01.11.2007. To the second notice also, the assessee replied giving the clarifications.....

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....tood on the date of the relevant assessment year, Section 201 was applicable only to persons referred to in Section 200 of the Act. As the case of the assessee does not fall both under Section 200 and 194 and it falls under section 194(1) for not deducting and not paying tax, the assessee cannot be deemed as a defaulter. Section 201(1A) applies to the cases where Section 201 was attracted. That is the provision, which imposes a liability to pay interest on the amount deducted or not deducted and paid to the creditors. Therefore, there was no liability to pay interest. Though by Act of 2008, which came into effect from 01.06.2002 retrospectively, the liability to pay interest being a substantial provision, it is settled law that it cannot be....

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....nbsp;1.  Whether in the facts and circumstances of the case, the authorities were justified in levying interest under Section 201 read with Section 201(A) of the Act?  2.  Whether the levy of interest from the date of default till the date of the impugned order is valid and legal? 6. Chapter 17 of the Act deals with the collection and recovery of tax. Section 190 deals with deduction at source and advance payment. Section 194(A) provides for interest other than "Interest on securities", where any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income [by way of interest on securities], shall, at the time of credit of such incom....

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....see in default in respect of the tax. Section 201(A) provides that such person/assessee in default shall pay simple interest as mentioned in the said section. Therefore in Section 201 prior to amendment only persons referred to in Section 200 and 194 were treated as assessee in default which were liable to pay the interest. The said provision has no application to Section 194(A). When the said provision did not cover a failure to deduct at source in a case falling under Section 194A, as such a person has no liability to pay interest. The said provision came to be amended. Though this amendment was brought by Finance Act, 2008, it was given retrospective effect from 01.06.2002. Therefore, even though prior to this amendment in 2008, there wa....