TaxTMI 
TaxTMI 
2006 (7) TMI 107
X X X X Extracts X X X X
X X X X Extracts X X X X
....e respondent-assessee had taken on lease a premises for the purposes of its Head Office. A separate agreement was entered into for hiring furniture and fixtures provided in the said premises. The assessee was deducting tax at source and depositing the same in respect of the rent in accordance with Section 194-I of the Act, while tax was being deducted at source (for "the short TDS") and deposited on the consideration being paid under the agreement for hire of furniture and fixtures under Section 194C of the Act. 3. The aforesaid came to light when the TDS return filed by the assessee in Form 26-J was examined and upon survey being carried out under Section 133-A of the Act on 17.1.03. Relying upon the explanation to Section 194-I read with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. The CIT (Appeals) vide order dated 16.12.2003 (in Appeal No.TR-95/2003-04) held that if tax had already been paid by the recipient/deductee, the same could not be recovered from the assessee by treating him as an "assessee in default". The CIT (Appeals) relied upon a CBDT instruction bearing No.275/201/95-IT(B) dated 29.1.1997, the relevant portion whereof reads as follows : ".... that the Board is of the view that no demand visualized under section 201(1) of the IT Act should be enforced, after the tax deduction has satisfied the officer in charge of TDS that taxes due have been paid by the deductee assessee. However, this will not alter the liability to charge interest u/s 201 (1A) of the Act till the date of payments of taxes by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 8. The ground of appeal urged by the Revenue before the Tribunal reads as follows : "On the facts and in circumstances of the case as well as in law the Ld. CIT(A) has erred in directing the Assessing Officer to charge interest under section 201(1A) from the date of deductibility of tax, (till)(sic) the payment by the deductee as explanation to section 191 inserted by Finance Act, 2003 w.e.f. 1.6.2003 is not applicable to the default committed by the assessee for earlier years." 9. The Tribunal considered the appeal in the light of a couple of decisions of its Benches and the aforesaid Central Board Direct Taxes Circular dated 29.1.1997. 10. The argument of the Revenue before the Tribunal and also before us is that the benefit of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of income in respect of which provision is not made under this Chapter for deducting income tax at the time of payment, and in any case where income tax has not been deducted in accordance with the provisions of this Chapter, income tax shall be payable by the assessee direct." 12. A perusal of Section 191 of the Act shows that where income tax has not been deducted in accordance with the provisions of Chapter XVII, income tax is to be paid by the assessee direct i.e. the payee. It is to be borne in the mind that the tax being deducted at source by the assessee is the tax on the income of the deductee and not on the income of the assessee-deductor. Therefore, what Section 191 provides for is that in case the deductor fails to make th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d deposited by the assessee. Though it is not clearly set out in the appeal, it appears that the Appellant desired to levy interest under Section 201 (1A) for the period even after the payment of tax by the deductee. In this regard we may refer to the averments contained in the synopsis filed by the appellant with its appeal, which read as follows: "The Tribunal has, however, held that after the date on which the payment has been made by the deductee, the assessee cannot be held to be an 'assessee in default' and further that interest under section 201(1A) also cannot be charged after the said date." 15. A similar averment is made in para 3(ii) which reads as follows : "The C.I.T (Appeals), therefore, held that the assessee cannot be hel....