TaxTMI 
TaxTMI 
2014 (4) TMI 1015
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....te assisted by Sri Wasiquddin Ahmad, learned counsel for the respondent. These are the appeals filed under Section 260-A of the Income Tax Act, 1961 against the judgment and order dated 19.1.2005, passed by the Income Tax Appellate Tribunal, Lucknow Bench, Lucknow. These appeals relate to the financial years 1992-93,1993-94, 1994-95, 1995-96, 1996-97, 1997-98 and 1999-2000. A bare perusal of the records shows that different appeals were preferred before the Income Tax Appellate Tribunal for the different financial years. All the appeals have been decided by common judgment and order dated 19.1.2005 which is under challenge before this Court. The appeals have been admitted on the following substantial questions of law; 1.Wheth....
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....led to deduct tax at source at the time of crediting the interest to the account of payee in violation of provision of Section 191 A as well as the Board's Circular No.643 dated 22.1.1993? The facts in brief as exposited are that the respondent M/S Sahara India Mutual Befit Co. Ltd. runs several deposits scheme on which depositors are paid interest as per the terms and conditions of the scheme. In order to determine the mode of payment of interest to the depositors the Assessing Officer discussed various schemes and for instance it referred one of the schemes ,i.e, Golden Fixed Deposit Account ( GFDA). Clause nos. 5 and 6 of this scheme deal with the account statement chart and mutual interest withdrawal respectively for which two op....
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.... as accruing on the deposit scheme. It shows that from financial year 1992-93 onwards accrued interest is being accounted in the balance sheet but the assessee failed to deduct the T.D.S. at the time of accrual as per provisions of Section 194- A of the Act. Therefore, the Assessing Officer imposed penalty under Section 271 C for violating the provisions of Section 194- A read with Rule 37 of the Income Tax Rules. Aggrieved assessee filed appeals before the Commissioner of Income Tax ( Appeals), Lucknow. The Appellate Authority after considering the submissions of Assessing Officer as well as the assessee observed that the appellant is maintaining his books of account on the basis of mercantile system of accounting and interest is accrue....
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....n 194- A is not attracted. He also considered the explanation to Section 194-A which provides that where any income by way of interest is credited to any account,whether called " interest payable account" or " suspense account" or by any other name, such crediting shall be deemed to be the credit of such income to the account of payee and the provisions of this Section shall apply accordingly and further held that admittedly in the instant case the amount has been credited to a separate account. The Tribunal observed that the deduction of tax at source is one of the modes of recovery of the collection of tax. In some cases the tax has to be deducted at source irrespective of the fact whether paid amount was the income of the payee whereas i....
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...." Interest payable account" or " Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly". "271 C (1) If any person fails to- (a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII- B; or (b) pay the whole or any part of the tax as required by or understand(i) sub-section (2) of section 115-O or (ii)the second proviso to section 194 B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid. (2)an....
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.... of tax is that the provisions of Section 194 A shall be applicable at the time of credit entry made of interest in the account of payee. The Assessing Officer has considered the deposit schemes floated by the respondent which provides the mode of withdrawal of interest. Two modes have been provided. One is that account holder would receive six monthly interest payment at the rate of 15 % per annum from the concerned branch office. Second option is that in case the account holder does not wish to withdraw the half yearly interest payment the cumulative interest amount can be withdrawn as per table given therein. In the table as per the rate of interest the amount has been accumulated. Admittedly, the assessee deducted TDS at the time of ....