2014 (9) TMI 583

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....d as Public Limited Company. It is further stated in the petition that Industrial Finance Corporation of India advanced huge amounts to the said Company with a view to look after the financial interest of the Industrial Finance Corporation of India. The brief facts are that earlier the petitioner as Asstt. Manager of the said Corporation was appointed as a nominee Director on the Board of the Directors of M/s Sukhna Paper Mills Limited with effect from 30.06.1980. By letter dated 09.11.1984, Sh.J.C.Malhotra was appointed as a Member of the Board of Directors. By another letter dated 15.01.1987, the nomination of Sh.J.C.Malhotra from the Board of Directors of M/s Sukhna Paper Mills was withdrawn by the Industrial Finance Corporation of India. M/s Sukhna Paper Mills had deposits with its various parties and while making the payment of interest to the depositors, it was required to deposit tax at source for the accounting year 1984-85 amounting to Rs. 44,036/- within specified time in Government account. However, the said amount was not deposited in time and consequently, Income Tax Officer gave a notice to the Company. Reply was given by the Company that, as no interest was paid to ....

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....nsel for the parties. First of all, as regarding the summoning order, I find that as the complaint has been filed by a public servant acting or purporting to act in the discharge of his official duties, therefore, there is no necessity to examine the complainant or the witnesses in the preliminary evidence as per the proviso attached to Section 200 Cr.P.C. Therefore, the order passed by learned CJM, Chandigarh summoning the accused vide order dated 26.03.1987, cannot be held as a non-speaking order or illegal being without recording preliminary evidence. Learned counsel for the petitioner argued that S.C.Kumar was only a nominee Director and he was not at all concerned with day-to-day work or affairs of the company, therefore, he cannot be held as Incharge for the conduct and affairs of the Company. The general averment in the complaint that accused No.2 to 8 are its Directors including Chairman and Managing Director and as such, these are persons Incharge of and responsible to the Company for the conduct of affairs of the company, is not sufficient. The petitioner was only a nominee Director of M/s Sukhna Paper Mills Limited with effect from 30.06.1980. Learned counsel for the p....

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....that a person appointed as a Director on behalf of the corporation will not be liable to incur any obligation or liability. Provision of Section 194-A of the Income Tax Act reads as under:- "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 income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct incometax thereon at the rates in force : Provided that an individual or a Hindu Undivided Family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause A or clause B) of Section 44A during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section. Explanation-For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called "Interest payable account" or &n....

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....imit 1. 2. 3. Divident (Section (194) Interest Other than interest on securities (section 194A) Insurance Commission (section 194D) (Rs.) 1,000 1,000 Nil (Rs.) 2,500 2,500 5,000 38.2 Under the existing provisions, deduction of tax at source from interest is to be made at the time of payment or credit to the account of the payee. With a view to prevent postponement of liability relating to such deduction of tax at source, Section 194A has been amended to provide that tax will be deducted at source, on accrual of interest at the end of the accounting year or at the time of credit to the account of a payee or at the time of payment whichever is earlier. Similarly, Section 195 has been amended to ensure that deduction of tax at source from payments to non-residents will have to be made at the time of payment or at the time of giving credit to the account of the non-resident, whichever is earlier. Any sum credited to 'suspense account' or 'interest payable account" shall be deemed to be credited for the purpose of tax deduction at source." A bare glance through the above referred notes leaves no doubt that Section 194A has been amended to provide that the tax will be de....