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2014 (4) TMI 1015 - ALLAHABAD HIGH COURTWaiver of penalty u/s 273B – Cancellation of penalty u/s 271C of the Act – TDS at the time of credit of interest or at the time of actual payment – Held that:- The Tribunal rightly held that the tax has been deducted at source at the time of actual payment - the amount has also not been credited of the account of the payee prior to its maturity - main provision of Section 194A is not attracted - the amount has been credited to a separate account - the deduction of tax at source is one of the modes of recovery of the collection of tax - In some cases the tax has to be deducted at source irrespective of the fact whether paid amount was the income of the payee whereas in other cases, the taxes have to be deducted at source for paying the amount as income - the tax was deducted but at the time of actual credit entry made of amount to the account of payee - there was no default on the part of assessee for which he could be made liable for payment of penalty u/s 271(C) of the Act. The account holder was given option to withdraw the interest half yearly but it is not the case of the revenue that any of the account holders exercised this option - the assessee credited the interest in its own account at the end of financial year and on the event of credit of amount of interest in in account of payee (the assessee) it deducted TDS - the AO has given finding that in the entire deposit scheme the interest was being credited on quarterly basis - there is no observation of the AO that in the balance sheet the entries of interest were made on quarterly basis rather the balance sheet shows the credit of interest on annual basis – thus, the assessee cannot be said to be in default in deduction of TDS – thus, the provisions of Section 271 C which make liable for payment of penalty on the event of failure of any deduction of tax are not attracted – the order of the Tribunal upheld - Decided against Revenue.
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