Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2007 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2007 (8) TMI 395 - ITAT JODHPURChargeability of interest u/s 201(1A) - Nature of interest charged - Non-deduction of tax (TDS) - Payments of contract and interest - HELD THAT:- The interest to be charged u/s 201(1A) is not a penalty but a compensation of revenue loss for the delay in the payments of tax. Chapter XVII of the IT Act, 1961, lays down the manner in which tax has to be deducted at source from various payments and then deposited in the Government account. Sec. 192 to 196D deal with various payments on which TDS has to be deducted. Sec. 197 and 197A provide certain exceptions to the above mandatory provisions by allowing the payees/recipients to obtain certificate from the AO for non-deduction of tax or for deductions at lower rate(s) as per s. 199. All TDS deducted as above, shall be treated, as a payment of tax by the recipients and credit of the same shall be given in their respective assessments of the relevant year. In this case, as per law, the assessee was required to deduct tax at source and to pay the same to the Government upto 31st March, 1996. The recipient company did not either obtain or file the requisite certificates with the assessee. To be very straight this assessee was required to deduct tax at source at the time of payments in question, may be, by making actual payment or by passing an entry or by allowing credits, as the case may be. The assessee has clearly and admittedly not deducted the TDS in this case while making payments to all the three companies. The High Court in the case of CIT v. Rajasthan Rajya Vidyut Prasaran Nigam Ltd.[2005 (8) TMI 83 - RAJASTHAN HIGH COURT] has held that the levy of interest is mandatory, which can be charged from the relevant date of deduction till the same is subsequently paid by the payee. We are in total agreement with the above proposition. But, when the recipient did not pay such a tax as they had nothing to pay, would it mean that it would be charged infinitely. No, this cannot be the intention of the legislature. The charging of interest is only compensatory in nature and when no tax is payable, no interest can be charged. This view, analogically, finds support from the decisions of Hon'ble Gujarat, High Court in CIT v. Rishikesh Apartments Co-operative Housing Society Ltd.[2001 (6) TMI 17 - GUJARAT HIGH COURT]. Therefore, no interest u/s 201(1A) can be charged in this case. Thus, the appeal of the assessee is allowed and that of the Revenue is dismissed.
|