TaxTMI 
TaxTMI 
2025 (11) TMI 1773
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....LTC as regards overseas travel facility to the employees stood withdrawn. The circular was challenged before the Madras High Court at the instance of the association of the employees of the bank. The Madras High Court, by an order dated 25.04.2014, stayed the operation of the circular. Later, the stay order as above was sought to be modified/clarified at the instance of the petitioners therein complaining that the bank (appellant-assessee) was taking steps to 'deduct tax at source', treating the payments to the employees on the basis of the interim order as 'income' of the employees. The Madras High Court, therefore, issued Annexure-A interim order dated 16.02.2015 in W.P. No.11991 of 2014 clarifying the earlier order as under: - "5. There is no dispute that the Bank would be paying LTC amount to the concerned officers pursuant to the interim order granted by this Court. The Interim Order is subject to the result of the writ petition. The learned counsel for the petitioner is correct in his contention that the there is no taxable income for deduction at source. 6. The interim order granted by this Court is explained to the effect that any amount paid to the petiti....
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.... The following questions of law, as reframed by us, arise for consideration in this appeal:- i. Whether, in the facts and circumstances of the case, the appellant could be treated as an assessee in default under Section 201 of the Income Tax Act,1961? ii. Whether, in the facts and circumstances of the case; when the assessee bank, by the interim order of the High Court of Madras, was under an obligation not to deduct tax at source, could be held to be an assessee-in-default for non-deduction of tax at source on impugned LFC payments at all as the non-compliance of the orders would have tantamounted to contempt of court? 5. We have heard Sri. A. Kumar, the learned senior counsel for the appellant-assessee, and Sri. P.G. Jayashankar, the learned Standing Counsel for the respondent-revenue. 6. The factual position as noticed earlier is not in dispute. The appellant had been paying various amounts to its employees towards LTC/LFC. The appellant sought to withdraw the benefits of LTC/LFC, which involves travel to places outside India. The circular was challenged before the Madras High Court, as noticed earlier. Both the appellant as well as the income tax departm....
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....him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed: Provided further that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax. (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, and such interest shall be paid before furnishing the statement in accordance with the provisions of ....
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....Section 201 of the Act. 11. We also notice the judgment of the Madras High Court in Leema Resorts P. Ltd. and Another v. C.G. Suryakant and Others [(1995) 215 ITR 618], wherein a more or less similar issue arose for consideration. In that case, the appellants were the tenants of the premises concerned in the appeal. The appellants were found guilty of contempt of court for having wilfully disobeyed certain orders of the Court in an appeal filed against the order of the learned Single Judge. In the contempt appeal, the enforcement of the order was postponed in view of the undertaking made by the appellants to pay a certain sum of rupees ten lakhs on or before 01.08.1994. The amount of rupees ten lakhs was paid on 01.08.1994. The Division Bench recorded the payment of rupees ten lakhs on the previous day and permitted the appellants to make a deposit of rupees three lakhs in the manner stated thereunder. After payments were made as above, a notice was issued by the income tax department to the appellant in the contempt appeal, inviting attention to the provisions of Section 194-I of the Act introduced in June 1994, as per which 20% ought to have been deducted when rent exceeding R....
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....he opinion that the same is the position herein also, as the appellant, having complied with the orders of the Madras High Court, cannot be treated as an 'assessee in default' under the provisions of Section 201 of the Act. 12. The Apex Court in State of U.P. thr. Secretary and Ors. v. Prem Chopra [(2022) 2 SCR 990], considering the effect of an interim order granted by the Court, once the main matter itself is disposed of, has observed as under:- "24. From the above discussion, it is clear that imposition of a stay on the operation of an order means that the order which has been stayed would not be operative from the date of passing of the stay order. However, it does not mean that the stayed order is wiped out from the existence, unless it is quashed. Once the proceedings, wherein a stay was granted, are dismissed, any interim order granted earlier merges with the final order. In other words, the interim order comes to an end with the dismissal of the proceedings. In such a situation, it is the duty of the Court to put the parties in the same position they would have been but for the interim order of the court, unless the order granting interim stay or final order dis....