TaxTMI 
TaxTMI 
1995 (6) TMI 51
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....r charged interest of Rs. 15,300 under section 201(1A) of the Act for assessment year 1983-84, for the period from 1-3-1983 to 30-9-1987. Similarly, for assessment year 1984-85, interest under section 201(1A) was charged at Rs. 15,200 for the period from 1-3-1984 to 30-9-1987 and for assessment year 1985-86 likewise interest of Rs. 12,050 under section 201(1A) was charged for the period from 1-3-1985 to 30-9-1987. The interest was charged up to 30-9-1987 because a consolidated order under section 201(1A) for all the three years under consideration was passed on 9-10-1987, i.e., immediately after 30-9-1987. 3. The assessee-company preferred appeals before the learned CIT(A) who upheld the charging of interest under section 201(1A). It was contended before the learned CIT(A) on behalf of the assessee that the payee i.e., Shri R.K. Garg had filed declarations on Form No. 15A of the Income-tax Rules as contemplated by the proviso to section 194A of the Act and in that view of the matter, the assessee-company had not deducted the tax at source. 4. The learned CIT(A), however, found that the payee had not filed declarations on Form No. 15H and since section 197A of the Act under wh....
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....rd reliance was placed on the circular of the Central Board of Direct Taxes being Circular No. 351 dated 26-11-1982, reproduced in 140 ITR (Statutes) 20. In particular, our attention was drawn to para 4 of the said circular which is reproduced hereunder : " 4. The effect of non obstante clause in section 197A of the Income-tax Act is that it supersedes the provisions of sections 193, 194 and 194A of the Act only in so far as these cast a legal obligation on the person responsible for paying the income of the nature referred to in the said sections to deduct tax at source. Thus, the provisions of sections 193, 194 and 194A which provide a facility for receiving the income referred to therein without deduction of tax at source continue to be in force and the facility provided in the new section 197A is in addition to the facility provided under the existing provisions in sections 193, 194 and 194A of the Income-tax Act. " It was, therefore, submitted that on the basis of Form No. 15A filed by the payee, the company was not obliged to deduct tax at source on the interest credited to the account of the payee and hence the assessee-company was not an assessee in default and no int....
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....Brick Works Ltd v. CIT [1984] 146 ITR 479 in which the levy of interest under section 201(1A) was held to be valid. Reliance was also placed on the following observations of the Calcutta High Court in the case of Martin & Harris (P.) Ltd v. CIT [1994] 73 Taxman 555 : " Section 201 enacts a three-fold punishment for a person including a company bound to deduct tax at source and defaulting to so deduct tax or, after having deducted, defaulting in making payment thereof to the credit of the Central Government. Firstly, the defaulter is treated as an assessee in default and is liable to pay a penalty under section 221. Secondly, he is liable to pay interest on the amount of such tax from the date on which such tax was deductible to the date when such tax is actually paid. The third consequence is that it creates a statutory charge upon all the assets of the defaulter for the amount of tax deducted and not paid plus the amount of interest leviable under section 201(1A). " It was also submitted that it would be highly discriminatory to charge interest from those who had deducted the tax at source though belatedly but not to charge interest from those who had not deducted the tax at....
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....racter are binding on the income-tax authorities. We accordingly hold that since the payee Shri R.K. Garg had admittedly filed declarations on Form No. 15A before the payer-company no tax was to be deducted at source in respect of the interest income and hence no interest could be charged under section 201(1A) of the Act. 13. We also find substantial merit in the second submission of the learned Counsel for the assessee, namely, that interest under section 201(1A) was not leviable because the date of payment of tax deducted at source being not known, the interest was incapable of calculation. in this regard, we find that the language used in section 201(1A) is different from the language used in section 220(2) and section 221 of the Act. Under section 220(2), interest is chargeable from the date immediately following the end of the period mentioned in section 220(1) and ending with the date on which the amount is paid. This shows that the concept of continuing default is in-built in the section. Similarly, in section 221(1) there is in terms a reference to a continuing default and the section empowers the Assessing Officer to levy penalty from time to time, so, however, that the....