TaxTMI 
TaxTMI 
1983 (2) TMI 30
X X X X Extracts X X X X
X X X X Extracts X X X X
....p; Rs. 31-3-1968 27,630 31-3-1969 26,075 31-7-1969 8,075 31-3-1972 72,213 31-3-1973 26,112 31-3-1974 26,114 31-5-1974 4,701 The ITO found that the assessee had not deducted tax on the amount of interest credited on various dates mentioned above in terms of s. 194A of the Act. Therefore, he charged interest under s. 201(1A) of the Act from the date on which the tax was deductible (August 16, 1974), to the date on which the said tax was actually paid. The total amount of interest thus charged came to Rs. 12,818. Aggrieved by the order of the ITO, the assessee took the matter in appeal to the AAC contending that the financial position of the assessee as well as t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... deducted the aggregate amount of the dividends in its profit and loss account and credited the moiety postponed for payment to the dividend account. The question arose whether the other moiety of the dividend which was credited to the dividend account is properly includible in the total income of the assessee even before the amount was received from Pakistan. The court held that the moiety of the dividend that was postponed for payment after monies were remitted from Pakistan could not be included in the total income of the assessee as it was neither paid nor credited to the assessee and that in order that dividend may be said to be credited within the meaning of s. 16(2) of the Indian I.T. Act, 1922, the credit must be in such form that the dividend is unconditionally available to the member. We do not see how the said decision helps the assessee. In that case the assessee-company credited the amounts only in the dividend account and not in the accounts of the shareholders. In addition, even in the resolution declaring dividend, it has been specifically stated that the other moiety of the dividend will be paid within two months from the date of its receipt from Pakistan. It was i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the learned counsel for the assessee that the liability to deduct tax from the interest and to pay the same to the Revenue arises only on actual payment of interest and not on the date when the amount is credited to the creditor's account. The said contention of the assessee overlooks the provisions in s. 194A which clearly indicates that the liability to deduct the tax arises at the time the credit is made in the account of the payee or at the time of the actual payment thereof in cash or by the issue of a cheque or draft or in any other mode, whichever is earlier. Here, though the actual payment in cash was at later point of time, there has been a credit entry in favour of the creditor in the accounts of the assessee and, therefore, the occasion for deducting tax has occurred earlier. The learned counsel for the assessee then contends that the book entries are of no consequence in tax matters and, therefore, it is only the actual payment of interest that should be taken into account. We do not see how we can ignore the provision in s. 194A which provides that making credit entries in favour of the creditor in relation to interest is one of the modes of payment of inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be arrived at without taking into account the amount forgone by the assessee and that in ascertaining the real income the fact that the assessee followed the mercantile system of accounting did not have any bearing and that though the amount of commission has been credited in the accounts, the real income has to be determined after taking into account the amount forgone by the assessee. The facts of this case also are entirely different from the facts of the case before us. In the Bombay case there was a difference between the income credited in the books of account and the real income which the assessee got after forgoing a portion of the commission and it is for that reason the court held that it is the real income that should be taken into account and not the amount as shown credited in the accounts. On the facts before us there is no room for applying the notion of real income. CIT v. Shoorji Vallabhdas and Co. [1962]46 ITR 144 (SC), is a case where, by a subsequent agreement, the rate of commission payable to the managing agent stood altered in such a way as to make the income which really accrued to the assessee under the original agreement different from what has been ent....