2006 (10) TMI 449 - HC - Income Tax

Summary

Issues involved: Appeals under Section 260A of the IT Act pertaining to assessment years 1995-96, 1996-97, 1998-99, 1999-2000, 2000-01, 2001-02, regarding the deduction of tax at source, interest under Section 201(1A), and penalty proceedings.

Issue 1 - Deduction of Tax at Source:
The duty is cast under Section 201(1) of the IT Act to deduct tax at source within the prescribed time and rate. Failure to do so makes the assessed liable to pay income tax, interest, and penalties if found to be an "assessed-in-default." In this case, the deductee had paid the income tax which the assessed was supposed to deduct under Section 201(1) of the Act.

Issue 2 - Interest under Section 201(1A):
The principal question raised by the Revenue was regarding the direction to charge interest under Section 201(1A) from the date of deductibility of tax till the payment by the deductee. The Tribunal, citing relevant case law, clarified that interest can only be claimed until the date on which the tax is actually paid, whether by the assessed or the deductee. The issue of interest beyond the date of actual payment was not raised before the Tribunal.

Separate Judgment by T.S. Thakur and Shiv Narayan Dhingra, JJ.:
The decision in CIT v. Majestic Hotel Ltd. emphasized that interest under Section 201(1A) is inevitable if the assessed fails to deduct or pay the deducted amount. The payment of tax by the deductee absolves the assessed from paying it again, and interest ceases once the tax amount is deposited with the Revenue.

Issue 3 - Penalty Proceedings:
The Revenue contended that penalty proceedings can still be initiated even after the payment of tax and interest by the deductee, based on the declaration that the assessed is an "assessed-in-default." However, this specific question was not raised before the Tribunal, and therefore, was not considered in the present proceedings under Section 260A of the IT Act.

Conclusion:
In this case, no substantial question of law arises for consideration as the issues raised were already covered by previous decisions. The appeals were dismissed accordingly.