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2006 (6) TMI 104 - HC - Income TaxFailure to deduct tax at source u/s 194A of the Income-tax Act, 1961 - Assessee in default in terms of section 201(1) of the Act for the financial years 1994-95 to 2001-02 - whether the payments made to TFCI towards interest were immune from any deduction at source in terms of section 194A(3)(iii)(b) of the Act? - HELD THAT:- There is no escape from the liability arising from section 201(1A) in a case where the assessee does not deduct or does not pay after deduction the amount deducted. Interest at the stipulated rate is inevitable and can be legitimately recovered from the assessee in default. If tax has been paid by the deductee as is the position in the instant case, there is no question of the assessee paying the same over again either in full or part. Tax could be recovered from the assessee only once. If that be so, interest must stop accruing, the moment, the amount of tax is paid to the Revenue. It is immaterial whether the tax is paid by the deductee or the assessee who had made the deduction. What is significant is that the interest which is compensatory in character is paid to the Revenue till the date the amount of tax is actually deposited. That is precisely what has been done in the instant case. The question framed earlier is answered accordingly. Appeal allowed.
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