TMI Blog2004 (3) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... (1), 201(1A) and 271C relating to the assessment years 1992-93 to 1996-97. 2 The respondent-assessee is a company incorporated under the Companies Act, 1956, engaged in the business of real estate and construction. A survey was conducted under section 133A of the Act and certain cheque receipts registers and cheque payment registers were found in the business premises of the company. Examination of those books disclosed that loans were taken by the directors and managing director in their individual capacities from private lenders in the name of the assessee-company. The loan amounts received byway of cheques in the name of the assessee were deposited in the bank account of the assessee and immediately transferred to the accounts of direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company to the creditor/lender, tax was not deducted at source by the assessee-company on the interest payments, as required under sub-section (1) of section 194A of the Act. As a consequence, the provisions of sections 201(1) and 201(1A) of the Act were applied. The Assessing Officer passed five orders in regard to the five assessment years under section 201(1) of the Act, deeming the company to be an assessee in default in respect of the tax and claiming the tax from the assessee. Five orders were also passed by the Assessing Officer under section 201 (1A) of the Act making the assessee liable for payment of simple interest as specified (on the ground that tax which ought to have been deducted was not deducted) from the date on which such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1993-94 201(1) 68,384 3. 201/02 621/Bang/1996 1994-95 201(1) 19,467 4. 203/02 623/Bang/1996 1995-96 201(1) 70,071 5. 205/02 625/Bang/1996 1996-97 201(1) 63,215 6. 197/02 618/Bang/1996 1992-93 201(1A) 14,285 7. 196/02 620/Bang/1996 1993-94 201(1A) 32,747 8. 198/02 622/Bang/1996 1994-95 201(1A) 7,130 9. 199/02 624/Bang/1996 1995-96 201(1A) 14,332 10. 200/02 626/Bang/1996 1996-97 201(1A) 4,344 11. 195/02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the company, loan amount received was immediately transferred to the respective account of the director/managing director. Similarly when the director or managing director repaid their loans, they used to issue cheques in favour of the company and the company in turn issued cheques to the creditors of directors/managing director. Even in regard to interest payable on such loans, the same procedure was followed. The books of account of the assessee-company did not reflect any of these transactions, as loans obtained by it or repaid by it. On the other hand, directors/managing director showed the respective loans as their loan transactions in their accounts. Even payment of interest on these loans were reflected only in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, as held by the Tribunal Section 194A of the Act requires any person (not being an individual or HUF) who is responsible for paying to a resident any income by way of interest, to deduct income-tax thereon at the rates in force, at the time of payment (either by crediting such interest income to the account of the payee or at the time of payment of any such interest or cash or by cheque/draft or any other mode). What is significant is, section 194A requires only a "person who is responsible for paying interest", to deduct income-tax at the rates in force, when paying the interest. The finding of fact recorded by the appellate authority and the Tribunal makes it clear that the assessee-company was not responsible for paying interest as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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