2016 (2) TMI 30

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....revenue has filed appeal on following grounds: "1. The Ld. CIT(A) has erred in law and on facts by allowing relief to the assessee relating to non deduction of tax at source in respect of interest on debenture without appreciating that w.e.f 01.06.1989 words 'at the time of credit' has been inserted in section 193 of the I.T. Act along with the explanation to section 193 w.e.f 01/06/1989 which casts an obligation on the assessee to deduct tax at source at the time of credit of such income. 2. The Ld. CIT(A) has erred in law and on facts by deleting the amount of tax determined on interest on debentures debited in P&L account of the assessee on the basis of his argument in para 4.20 of his order, by holding that the assessee has ....

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....ount was Rs. 6,77,24,000/- as per the annexure to the Profit & Loss Account for the current year. As a result of Survey, proceedings u/s 201 were initiated against the assessee and the assessee was asked to submit the names and addresses of the parties to whom interest was paid, along with the details of interest credited to them and TDS thereon. In response the same, the assessee submitted following details: Name of the Debenture Holders Interest debited to P&L a/c as on 31.03.2000 Total o/s principal Cl.Bal as on 31.03.2000 TDS made IL & FS 60.28 280 None LIC of India 163.97 768.47 None GIC of India 13.97 65.99 None Oriental Insurance Co. 13.24 61 None United India Insurance Co. 14.02 64 None The New India Assuran....

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....and having considered the same CIT(A) granted relief to the assessee same has been opposed on behalf of revenue inter alia submitting that CIT(A) erred on fact and law by allowing relief to the assessee. So the order of CIT(A) to be set aside and that of assessing officer be restored. On the other hand the Ld. Authorized Representative for assessee supported the order of CIT(A). 5. After going through rival submissions and material on record. We find that issue before us is of non - deduction of tax u/s 193 and consequently action u/s 201(1)/201(1A) of the Act. Assessing Officer was of the opinion that once interest liability is provided as per provisions of Section 193 of the Act, assessee under obligation to deduct the tax at source and ....

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....eir accounts. The entire liability has been finally waived off by them. The debenture holders have considered the investment in the debentures of assessee's companies and interest thereon as Non Performing Assets (NPA) and have not accounted for interest as there income of relevant order. Assessee has also not claimed interest provided in their account as deductable expenses. 5.1 Undisputedly no income has accrued to or has been received by then debenture holders under the provisions of the section 193 of the Act. At the end of tax deducting is requirement of paying any income by way of interest on security but above facts indicate that there was no such requirement at the end of the assessee for paying any income by way of interest on....