TMI Blog1992 (3) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1986-87 under appeals, on the ground that the assessee firm paid interest of Rs. 1,69,000, Rs. 1,74,960, Rs. 1,75,990 and Rs. 1,78,010 for the aforesaid assessment years respectively to M/s. Bhopatkar Finance Corporation. He further found that the assessee had deducted only Rs. 3,200 at source for each of the assessment years under appeals and the assessee had failed to deduct the interest at source in accordance with the provisions of section 194A of the Income-tax Act, 1961. 2. Therefore, the ITO issued a show-cause notice to the assessee. The assessee stated that the income of M/s. Bhopatkar Finance Corporation was all along below Rs. 50,000 and the said M/s. Bhopatkar Finance Corporation had applied for lower deduction of tax to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate from the ITO 'T' Ward, Pune. It is a different point why the ITO 'T' Ward, Pune, did not issue a certificate to the said firm and why the said firm of M/s. Bhopatkar Finance Corporation did not insist upon the ITO 'T' Ward, Pune to issue a certificate for less deduction of a tax on the interest income at source. But the assessee was not entitled to follow the oral instructions or a request from M/s. Bhopatkar Finance Corpn. on the due dates of either crediting the interest for each year to the account of M/s. Bhopatkar Finance Corporation or of making the actual payment of the said interest. Once having been credited either to the account of the creditor or having paid the interest due to the creditor the assessee's duty on suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue a certificate on the application dated 14-7-1982 then there was a remedy open for the assessee to approach the superior Officer in that respect. The honest impression held by the assessee is also not pressed before us. The assessee was not expected to know on the dates of either crediting the interest to the account of the creditor or making the payment of interest that the lesser deduction of tax at source was sufficient to meet the final income-tax liability of the creditor. This again gives an impression that the assessee was much more interested in not deducting the actual tax at source. The deduction of tax at source as given in the chart reproduced by the CIT (Appeals) does not mean it was a proper deduction of tax on the dates of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod up to 31-12-1974, and interest has to be calculated for that period as if the rule was not in existence. Rule 40 of the Income-tax Rules, 1962 does not contemplate the waiver of interest payable under section 201(1) of the Act." Secondly, the CIT (Appeals) neither made any mention of this decision nor distinguished it, nor followed the same. As seen from the arguments of the learned departmental representative as well as the grounds of appeal, it is quite clear that this decision was cited and relied upon before him. Thirdly, he held that there are various decisions regarding deduction of tax at source and the payment of tax so deducted to the revenue laid down only a mode of recovering tax due from the person to whom the income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint in question, side-tracking the said decision on one hand and following the other decision on the other hand, was also unwarranted. 8. Shri Khaladkar, the learned departmental representative while arguing on the chargeability of the interest urged that section 194A fixes an independent liability on the assessee. The interest is not by way of penalty as held by the Bombay High Court in Bennet Coleman Co. Ltd.'s case. Why the ITO did not inform, does not become a good ground for the assessee to deduct the lesser tax at source. The assessee was not issued any directions to deduct the lesser tax in writing. Shri Khaladkar further relied on the decision of the Supreme Court in the case of Ganesh Dass Sreeram v. ITO [1988] 169 ITR 221, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Development Bank Ltd. [1982] 137 ITR 230. The first decision in Guvaiiar Rayon Silk Co. Ltd.'s case is regarding the deduction between the employer and employee and the same point is again involved in Manager. Madhya Pradesh Co-operative Development Bank Ltd's case. He has again stressed on the point that the assessment s have already been made on the creditor and tax demand was found to be much less. He has also relied on the decision of the Kerala High Court in the case of CIT v. Kannan Devi Hill Produce Co. Ltd. [1986] 161 ITR 477 again between the employer and employee. He has also relied on three more decisions of M.P. High Court i.e., CIT v. Divisional Manager, New India Assurance Co. Ltd. [1983] 140 ITR 818, CIT v. Life Insiranc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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