1992 (4) TMI 16

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....AL C. J.-This application under section 256(2) of the Income-tax Act, 1961, has been filed by the Commissioner of Income-tax, Rajasthan, Jaipur, for making a reference of the following question : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not under obligation to deduct tax at source under section 194A and consequently err....

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....parties and, as such, the provision of section 194A was not applicable. The appellate authority did not accept the plea of the assessee and rejected the same. Against the said order, the assessee preferred second appeal before the Income-tax Appellate Tribunal, and it was allowed on the ground that there was no obligation on the assessee to deposit interest inasmuch as it was maintaining accounts ....

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....account", it would not be required to make any deduction. Learned counsel for the assessee urged that since the interest was not credited to the account of the payee nor paid to him, the question of deduction of tax at source or consequent default for incurring of liability for levy of interest, did not arise. For the submission made, learned counsel for the assessee referred to the decision of....

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....what was implied in section 194A. We are unable to accept the submission. The explanatory note regarding the amendment states that section 194A has been amended to provide that the tax will be deducted at source on accrual of interest at the end of the accounting year or at the time of crediting it to the account of the payee or at the time of payment, whichever is earlier, and it further states t....