1989 (5) TMI 86

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....er of the CIT (Appeals) is a consolidated one for all the five years and common questions are involved in these appeals hence, they are disposed of by a consolidated order for the sake of convenience. The following grounds had been taken by the assessee : 1. That the order of the Learned Commissioner of Income-tax (Appeals) is bad in law as well as in facts. 2. That the Commissioner of Income-tax (Appeals) was wrong in confirming the order of the Income-tax Officer levying interest u/s. 201(1A) of the Income-tax Act, 1961. 2. The brief facts are that the assessee is a limited company. It had received loans from various parties including directors of the company and as such interest was payable on such loans. During all these assessment y....

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....eof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : Provided that no such deduction shall be made in a case where the person (not being a company or a registered firm) entitled to receive such income furnishes to the person responsible for making the payment." It has been pointed out in the appeal that the assessee was to deduct tax at source only when the amount of interest was paid or credited in the account of the payee. As he has not shown either of the two alternatives i.e., he has neither paid in cash and nor credited in the account and had also not paid by any other mode to the payee, he was not bound to deduct tax at source and all what he had d....

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....ther manner to indicate his immediate intention to effect the transfer of the amount of interest to the payee. The mere fact of posting the entry in the Interest Payable Account or the 'Liability for Expenses Account' does not amount to crediting the entry in the account of the payee, even though it would be indicative of an acknowledgement of the liability to the creditors with respect to that amount of interest. As such the obligation to deduct the tax could not arise at that time but would arise when subsequently, the payment of interest is made to the payee or it is credited to his account." 4. The learned D.R. has relied on the order passed by the learned CIT (Appeals) and stressed that the words "by any other mode" should be interpre....