TaxTMI 
TaxTMI 
1999 (11) TMI 100
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.... It required the assessees to deduct Income-tax at source from the amount of commission. This provision is reproduced below: "194H-(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying on or after the 1st day of October, 1991 (but before the 1st day of June, 1992), to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct Income-tax thereon at the rate of ten per can. (2) The provisions of sub-section (1) shall not apply-- (a) to such persons or class or classes of persons as the Central Government may, having regard to the extent of inconvenience caused or likely to be caused to them and being satisfied that it will not be prejudicial to the interests of the revenue, by notification in the Official Gazette, specify in this behalf; (b) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or like....
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....y the plea of the assessee cancelled the interests imposed under section 201(1A). 7. The department has challenged the order of the ld. CIT(A) before us in this appeal. 8. The ld. D.R. emphatically argued that in view of the mandatory provisions of section 194H, the ACIT(TDS) was fully justified in levying the interest under section 201(1A) of the Income-tax Act and that the ld. CIT(A) has committed a legal error in cancelling the levy of interest. In support of his contention, the ld. D.R. has made reference to the following decisions: 1. ITO v. Khushi Ram & Sons [1989] 31 ITD 151 (Asr.). 2. ITO v. Das Biri Mfg. Co. (P.) Ltd. [1984] 10 ITD 35 (Cal.). 3. Cawnpore Sugar Works Ltd. v. IAC [1982] 2 ITD 654 (All.). 4. ITO v. Marshall Sons & Co. (I) Ltd. [1992] 42 ITD 496 (Cal.). 9. Shri, S.K. Garg, ld. counsel for the assessee-company submitted detailed arguments for supporting the order of ld. CIT(A). He raised following specific pleas: (i) In view of the provisions contained under section 194H which came into effect from 1-10-1991, the relevant date for ascertaining the liability is the date on which the liability crystallised. (ii) As section 194H(2) itsel....
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....elhi) a copy of which has been filed on the paper book at pages 104 to 109. 11. In reply, the ld, D.R., Shri B.P. Singh submitted that no credit can be given to the assessee on account of the fact that payees had made the payment of tax by way of advance tax. He also submitted that so far as the exemption provided under section 194(2) is concerned, remedy was available to the assessee before 31-3-1991 and, in any case, on that account, the obligation cannot be held to be discharged. He also submitted that the language of section 194H and that of 201(1A) is very plain and there is no scope for introducing the scope of 'reasonable cause' for not deducting tax at source under, section 194H. 12. We have carefully considered the facts and circumstances relating to this matter, the material to which our attention was invited and the rival submissions. The ld. counsel for the assessee took extraordinary pains to demonstrate that the assessee had taken all care to comply with the provisions of section 194H. Referring to the sequence of events relating as described on pages 1 and 2 of the paper book, he submitted that the assessee has moved representation to the Central Government on ....
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....er than from any notions which may be entertained by the court as to what is just and expedient. The express intention must guide the court. In the case of CED v. R. Kanakasabai [1973] 89 ITR 251 it was observed by the Supreme Court that if taxing provision is ambiguous and is reasonably capable of more than one interpretation, that interpretation which is beneficial to the subject must be adopted. It is not permissible for the court to read into a taxing provision any, words which are not there or exclude words which are there. According to Hon'ble Court, the words found in the provision must be given their natural meaning. 16. Viewed in the above perspective and settled legal position, the words "reasonable cause", "sufficient cause," "reasonable belief", "bona fide conduct", "without negligence" etc., cannot be introduced in the provisions contained under section 194H(1) or under section 201(1A) of the I.T. Act. The language of the provisions is plain and clear and there is no ambiguity so far as the understanding of these provisions are concerned. These provisions cast an absolute obligation on the part of the assessee who is obligated to deduct income-tax at the rate prescr....
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....resentation for exemption. If this approach is accepted, then it will be very easy for the assessees to flout the provisions of section 194H just by making or sending representations and not deducting tax under the Act on the pretext that they are waiting for the result of their representations. The remedy for seeking exemption is no doubt available and in case the remedy is granted, then consequent effect can be given to the orders passed by the CBDT on the representations made for seeking relief. 20. So far as the order of the ITAT 'B' Bench dated 12-4-1999 is concerned, the matter before the Bench in that case related to the penalty under section 271C. In the matters relating to penalty, the 'reasonable cause' or 'bona fide belief' entertained by the assessee has to be considered and entertained. However, so far as the levy of interest is concerned, the scheme and intent of these provisions is different from those provisions which relate to penalty. In the case of Marshall Sons & Co. (I) Ltd. the Calcutta Bench 'A' of ITAT has considered this defence and has observed that the penalty and interest operate in different fields. The observations of the Bench are reproduced below:....