AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 154
X X X X Extracts X X X X
X X X X Extracts X X X X
....n pension payment to its pensioner's. Thereafter, the Assessing Officer passed order under sec. 201(1) and 201(1A) on 6-1- 2012 and raised demand of tax and interest of Rs. 62,36,410/-. Against the order, the assessee filed an application under sec. 154 seeking rectification of mistakes, which was considered by the Assessing Officer and the demand was reduced to Rs. 24,94,102/-. Subsequently, another rectification application under sec. 154 was filed, seeking rectification of application of 20% rate of TDS for the cases, where PAN number of employee's were not available, as such a provision was applicable w.e.f. 1-4-2010 and also mistakes in calculation of taxes and interest. The assessee also filed details of pensioner's who had filed the return on their own and paid the taxes and requested to give credit for the taxes already paid by the pensioner's. The Assessing officer, after considering the representation and also details filed by the assessee, passed order under sec. 154 and determined demand of Rs. 12,47,485/- under sec. 201(1) and Rs. 8,48,585/- under sec. 201(1A) of the Act. 3. Aggrieved by the order, the assessee preferred an appeal before the CIT(A) and challenged the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppeal before us. 5. The Ld. D.R. submitted that the CIT(A) was erred in holding that the TDS liability would arise only when amount of income exceeds the basic exemption limit and so, the liability to interest under sec. 201(1A) is to be calculated only from the month when the income exceeds the basic exemption limit is contrary to the provisions of sec. 192 of the Act. The Ld. D.R. further submitted that, the CIT(A) ought not have accepted the plea of the assessee that computation made by the A.O. evenly for 12 months by dividing the TDS by 12 is not in accordance with the provisions of sec. 192(3) of the Act. The D.R. further argued that the TDS liability has to be divided over a period of 12 months and tax shall be deducted as and when salary is paid. 6. The Ld. Authorised Representative of the assessee, submitted that the CIT(A) was erred in levy of interest under sec. 201(1A), as the pensioner's have filed returns and paid the taxes. Therefore, the assessee cannot be held assessee in default under sec. 201(1), in view of Explanation to section 191 of the Act and relied upon CBDT circular No. 7 of 2003. The Ld. A.R. further submitted that the CIT(A) was justified in holding t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by or under this Act, then, such person, shall, be an assessee in default in respect of such tax. Section 201(1A): Without prejudice to the provisions of sub-section(1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,- (i) At one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) At one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. A Plain reading of section 201(1) of the Act makes it clear that if a person fails to deduct tax, or after so deduction fails to pay the tax as required under this Act, then, such person shall be an assessee in default in respect of such tax. The proviso provided to section 201(1) w.e.f. 1-7-2012, makes it clear that if any person fails to deduct tax on sum paid to a resident shall not be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 192(1) of the Act: Any person responsible for paying any income chargeable under the head "Salaries" shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the [rates in force] for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year." Section 192(3) of the Act: The person responsible for making the payment referred to in subsection (1) [or sub-section(1A)] [or sub-section(2) or sub-section(2A) or sub-section(2B)] may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year." A plain reading of sec. 192(1) makes it clear that any person responsible for paying any income chargeable under the head "Salaries" shall, at the time of payment, deduct income tax on the amount at the average rate of income tax, computed on the basis of the rates in force, for the financial year on the estimated income of the assessee under this head. Sub sec. (....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... s. 192 is a part of s. 192 required to be read with sub-s. (1) thereof, for nothing has been expressed in the Act to treat sub-s. (3) as a separate provision. The object and purpose of sub-s. (3) is to permit the person obliged to deduct to make adjustments. Sub-s. (3) does not stop while authorizing adjustment in case of excess or deficient deduction, but also authorizes adjustment in case of total failure to deduct during the financial year. Sub-s. (3), therefore, makes it abundantly clear that if there is a failure to deduct in a financial year, the same can be deducted by way of adjustment during the financial year. In those circumstances, the obligation to deduct at the time of payment, which is the mandate of subs. (1) of s. 192, stands extended upto the end of the financial year by virtue of the provisions contained in sub-s. (3) of s. 192. The right to adjust, granted by sub-s. (3), does not extend beyond the financial yar. Sec. 201(1A) applies only when during the financial year whole or any part of the tax deductible has not been deducted. Therefore, the Tribunal was correct in law in holding that the assessee company had committed no default by not deducting tax at sour....