2014 (9) TMI 2

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 1996 and batch. The assessee is the appellant. The appellant was functioning as a Managing Director of M/s. A.P. Tanneries Limited (for short, the 1st company). He gave loan of certain amounts to the said company as well as to another company by name M/s. Associated Tanners (for short, the 2nd company). The latter was paying interest on the amount advanced by him regularly, whereas the former was just showing the accumulated interest, in its account books without making actual payment. It was also his case that even while showing the interest payable to him in the account books, the 1st company deducted tax at source (TDS) on the amount of interest payable and issued certificates, in relation thereto. In the returns filed by him, the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ithholding the payment of the corresponding amount, the appellant was entitled to claim the benefit thereof. Sri S.R. Ashok, learned Senior Counsel for the Income Tax Department submits that though it is permissible for an assessee to adopt dual method for the same returns, the appellant cannot claim the benefit of TDS in its entirety and at the same time, refuse to pay tax on the corresponding interest. Learned Senior Counsel submits that the appellant acquired a right to receive interest from the 1st company once it was shown in the account books of that organization; and that is sufficient to levy tax upon the appellant, particularly when he is taking full advantage of the amount recovered as TDS. The assessee has option to file re....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....by the 1st company, on the ground that the amount has not been paid at all. If that were to have been all, there would not have been any controversy. The reason is that under the cash system, the liability to pay tax arises only when the concerned amount is received as income. The 1st company made TDS in respect of the amount payable to the appellant as interest and issued certificate. The appellant wanted to use the certificate in its entirety. In other words, the amount reflected in the TDS certificate was being shown as tax already paid. This would have devastating effect. The amount covered by the certificate would take care of the interest payable on other income of the appellant. For example, if the amount reflected in TDS constitutes....