TMI Blog2011 (2) TMI 1394X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 201(1)/201(1A) is bad in law, barred by limitation, null void and against the principle of natural justice. 2. That no interest has been paid to M/s. Globe International, and no loan has been taken from the aforesaid Firm, Section 194A is not applicable and no T.D.S. is not required to be deducted at source and without prejudice to above the Tax and interest as levied is excessive. 3. That the appellant craves leave to urge the additional grounds of appeal at the time of hearing. 3. The brief facts of this issue are that the AO stated that the assessee is in default u/s 201(1)/201(1A). In respect of default by the assessee during the financial year 2001-02 and worked out that is taxable and the interest at ₹ 12,35,077/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have paid interest of ₹ 49,20,681/- to M/s. Globe International. In order to verify the correctness of figure, the matter was referred to the assessing officer having jurisdiction over the case regarding assessment. The AO confirmed the figure to be ₹ 60,54,301/- vide it s letter dated 05.03.2008. The assessee s contention is duly considered but it devoid of any merit. Assessee s contention of non deduction of tax at source against the payment of interest made to M/s.Globe International doesn t hold good. TDS provision u/s 194A provides that at the time of credit of interest to the account of the payee, the payer should deduct tax at source. In the instant case the assessee paid interest to M/s.Globe International for utilizi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the interest is credited to the account of M/s. Globe International and not to the bank. Hence the appellant is liable to deduct tax on interest payment as per provisions of section 1 94A. As regards the argument that the interest income is not the income of M/s. Globe International and income of the bank, the nature of receipt in the hands of recipient is not relevant as far as the appellant is concerned. The appellant is bound to act as per its own records. It is also to be mentioned here that nomenclature is not important, it is the nature of payment that is relevant. The appellant also contended that the interest payment is only reimbursement in nature and for this contention the appellant relied on decision of ITAT, Pune Bench in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after deduction the deducted amount is not deposited with the Government. It does not admit of any discretion even where such omission or such shortfall in deduction or deposit arises for bona fide reasons. It was so held in Kanoi Industries P. Ltd. V. Asst. CIT (2003) 261 ITR 488 (Cal) following its own earlier decision in Grindlays Bank Ltd. Vs CIT (1992) 193 ITR 457 (Cal) and (1993) 200 ITR 441 (Cal). The other High Courts in the following cases have held the action of the Assessing Officer justified u/s. 201/201(1A) in case of failure of deduction of tax at source. 1. CIT Vs. Prem Nath Motors (Pvt.) Ltd. (2002) 253 ITR 705, 708-09 (Del). 2. Viswapriya Financial Services Securities Ltd. Vs. CIT (2002) 258 ITR 496, 502(Mad) 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atute On careful reading of the above decisions, it is a clear that none.of the decisions has taken into account the quantum of escapement of income or tax. The same parameter cannot be laid down for escapement of tax of ₹ 10000/- and ₹ 10,00,000/-. The Income Tax Act has distinguished the time limit for initiating action with reference to quantum of income escaped. Sec. 148/149 prescribed the time limit of four years where income has escaped assessment amounting to Rupees less them 100000/-, where as the time limit will be six years where escapement of income is ₹ 1,00,000/- or more. In the present case the tax and interest u/s. 201/201(1A) is ₹ 21,64,472/-. The time limit for initiating action for this amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. However, based on the information of the AO of M/s.Globe International who confirmed the figure of ₹ 60,54,301/- the AO computed the tax due on ₹ 60,54,301/- and consequential interest and the ld. CIT(A) also confirmed the same. 6.1. Keeping in view of the above observations, we are of the view that the assessee is default only on amount of ₹ 49,20,681/- for non-recovery of TDS. We are of the considered opinion that the orders of the Revenue authorities require modification. Therefore, we direct the AO to re-compute the tax to be deducted on ₹ 49,20,681/- u/s 201(1) and consequential interest due u/s 201(1A). We order accordingly. 7. In the result the appeal of the assessee is allowed in part. Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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