TMI Blog1992 (3) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 194A of the Income-tax Act, 1961. For this default interest under section 201(1A) was charged by the Income-tax Officer of Rs. 7,750 for the assessment year 1985-86 and of Rs. 8,556 for the assessment year 1986-87. Aggrieved by the levy of this interest the assessee preferred appeals to the Deputy Commissioner of Income-tax (Appeals), who by his order dated 4th August, 1988 reduced the levy of interest to Rs. 1,444 in the assessment year 1985-86 and Rs. 3,198 in the assessment year 1986-87. He found that the payee M/s United Rosin Industries had already paid advance tax on this interest on different dates of Rs. 18,000 for the assessment year 1985-86 and of Rs. 5,350 for the assessment year 1986-87 and that the requirement of dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime and since the tax due to the State had already reached the State, there cannot be said to be any default committed by the payer except a technical default and for that technical and venial default no interest need be charged. This is the view Laken by the High Courts consistently, particularly by the Madhya Pradesh High Court on which the Deputy Commissioner of Income-tax (Appeals) relied on in reducing the rate of interest. 5. Chapter XVII of the Income-tax Act provided for the collection and recovery of tax. Section 190 provided for the general clause that notwithstanding that the regular assessment in respect of any income is to be made in a later year, the tax on such income shall be payable by deduction at source or by advance pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed, section 198 provided that all sums deducted in accordance with the provisions of sections 192 to 195 shall for the purpose of computing the income of an assessee be deemed to be income received. Pausing here for a moment, the provisions made in section 198 shows that it is out of the income of the payee assessee that tax is being deducted at source by the payer, on whom the responsibility for deducting the tax at source was placed under the Statute. Then section 199 provided that any deduction made in accordance with the provisions of sections 192 to 195 and paid to the Central Government shall be treated as a payment of the tax on behalf of the person from whose income the deduction was made or of the owner of the security or of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the tax paid by the payee is the tax paid not only on his behalf but also in discharge of the obligation cast upon the payer. Therefore if section 201(1A) provided for the payment of interest for commission of default in not deducting the tax or after deducting fails to pay the tax as required, simple interest has to be paid on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid, it is only to compensate the Govt. for deprivation of the use of money. The crucial words in this section are the period for which the interest is to be computed. The interest is to be computed on the amount of tax which is required to deduct from the date on which such tax was deductible to the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be deducted relating to such employee. In coming to this conclusion the High Court discussed the scheme of Chapter XVII and held that when there is no liability by the employee and when the employee discharges the liability of paying the tax, the employer need not be called upon to pay the tax and consequently the penal interest also. It is also brought to our notice by the learned advocate for the assessee that S. L. P. filed against this decision was also rejected by the Supreme Court, which was reported in 151 I. T. R. Statutes. Having regard to the scheme of the Act when the Deputy Commissioner of Income-tax (Appeals) found that the payee, namely, theCalcuttacompany had paid advance tax on this interest, to that extent the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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