TMI Blog1998 (5) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... l in five of its appeals before us. The sixth appeal filed by the assessee, i.e., ITA No. 4442/Bom/87 is for the assessment year 1983-84 pertaining to Assessing Officer s order under section 221 read with section 201(1) in as far as the Assessing Officer has directed the assessee to pay the amount of tax deductible from two payments of ₹ 7,27,823 and ₹ 1,19,974 made on 28-6-1982 and 17-6-1982 respectively. 2. The brief facts giving rise to these set of appeals are as under : The assessee is a limited company which had entered into an agreement with another limited company, viz. The Great Eastern Shipping Co. Ltd., referred to as GESCO in various parts of the orders as well as in the grounds of appeal. According to this agreement, the assessee company had purchased a ship from the other company for about ₹ 4.87 crores. Out of this, an amount of ₹ 53.07 lakhs was to be paid on signing the agreement. A further instalment of like amount was to be paid within three days after the vessel was ready for delivery. The balance amount along with interest at 15% was to be paid in twenty equal quarterly instalments as under : A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act. After discussing all the facts and circumstances of the case, the Assessing Officer ordered in his orders under section 201(1) read with section 221 that the assessee should pay tax which it was required to deduct at source amounting to ₹ 32,73,927 by 31-7-1984. He levied penalty at the rate of 10% for each of the years which is as under : A.Y. Rs. 1979-80 1,08,429 1980-81 84,985 1981-82 61,797 1982-83 48,370 1983-84 23,810 In the set of orders under section 201(1A) for these assessment years, the Assessing Officer completed the interest leviable up to 31-7-84, i.e., the date by which he had ordered the assessee to pay the tax which was to be deducted at source, as per Annexure A of his order. The interest for each of the years under consideration worked out to the following figures : A.Y. Rs. 1979-80 8,42,302 1980-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s imposed for all the five years were cancelled. This has brought the revenue in appeal before us. 5. The ld. counsel for the assessee submitted that it is a case where the propositions to whether tax was to be deducted at source was itself questioned by the assessee because the assessee entertained a belief that there was no interest payment to the GESCO and hence, no tax was to be deducted. This objection of the ld. counsel is not accepted, because the CIT(A) has very clearly mentioned that there was a clear break up of the principal amount and the interest to be paid in each instalment and hence, the assessee cannot say that it was not aware of the payment of interest from which tax had to be deducted. 6. Another argument given by the ld. counsel was that as per the letter from GESCO dated 7-3-87 filed along with assessee s letter dated 5-11-1996 before the Tribunal and the letter dated 27-4-84 from Shri J.L. Khanna, Finance Executive of the assessee company filed along with letter, it was clear that GESCO had suffered huge losses in the past and hence, that company was not liable to pay any tax and that is why the assessee company did not deduct any tax at source. He argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paying the taxes, nor the assessee could be directed to pay the tax which should have been deducted because the assessments of GESCO had been made by the time the Assessing Officer had passed the impugned orders and no interest could be charged from the assessee under section 201(1A) . In any case, since now it is clear from the letter of GESCO dated 7-3-1987 that the assessments of that company had been made either at huge losses or at nil till assessment year 1983-84, the learned counsel argued as per the ratio of decision of the Tribunal in the case of Salwan Construction Co. (supra) no action can be taken against the assessee. 9. The ld. Departmental Representative, on the other hand, drew our attention to section 190 of the Income-tax Act, according to which payment of TDS could not be postponed. Section 191 makes it direct responsibility of the person making the impugned payments to deduct the tax at source. He pointed out that the provisions of section 197 were very specific giving power only to the ITO assessing the payee and no higher or lower authority or other person could take a decision not to deduct the tax at source. Further, in a case where the payee was a limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. Fourthly, in section 221 the words any default or deemed to be in default in payment of tax. . . . . would mean that it is not the same thing as a person deemed to be in default for not deducting the tax at source. Fifthly, there is no provision in law to charge interest up to a particular date when tax is not paid at all. He submitted that all the Bombay High Court decisions on the subject, viz., the case of Benne Coleman Co. Ltd. (supra) so also the case of Pentagon Engg. (P.) Ltd. v. CIT (1995) 212 ITR 92were those where the tax had been deducted at source and had not been paid to the Government within the prescribed time. He submitted that the ratio of those cases is not applicable to assessee s case. 11. The ld. counsel finally referred to the following case law : - (i) CWT v. Kripashankar Dayashanker Worah (1971) 81 ITR 763(SC) (ii) R.B. Jodha Mal Kuthiala v. CIT (1971) 82 ITR 570at p. 575 (SC) (iii) Addl. CIT v. Surat Art Silk Cloth Mfrs. Association (1980) 121 ITR 1at p. 17/(1979) 2 Taxman 501(SC) (iv) CIT v. National Taj Traders (1980) 121 ITR 535at p. 542/(1979) 2 Taxman 546(SC) (v) K.P. Varghese v. ITO (1981) 131 ITR 597at pp. 605-6/7 Taxman 13( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India v. Ameena Bi (1978) 112 ITR 863(Mad.), Raja Yuveraj Dutt Singh v. Dy. Commissioner (1970) 78 ITR 252(SC), Lal Bhan Pratap Narain Bahadur Pal v. State of UP (1962) 46 ITR 247(All.), Mohammed v. Collector of Calicut (1967) 66 ITR 113(Ker.) and Kashiram Agarwalla v. Collector of 24-Parganas (1958) 33 ITR 800(Cal.), sum and substance of which was that the date of commencement of recovery proceedings was the date when the Assessing Officer sends certificate of recovery to the Tax Recovery Officer. In this view of the matter, the provisions of section 201 were outside the purview of the recovery proceedings. He submitted that as against the decision of the Calcutta High Court in the case of Dunlop Robber Co. (India) Ltd. (supra) on which the ld. CIT(A) has relied, the decisions in the cases of B.D. Khaitan (supra) and Shyam Sundar Tea Co. (P.) Ltd. (supra) and Anandram Gajadhar v. CIT (1978) 113 ITR 566 (Cal.) at page 568, were rendered prior to the decision in the case of Dunlop Rubber Co. (India) Ltd. (supra) but had not been referred to by the Calcutta High Court although two of them were of the same High Court. He pleaded that in these circumstances we should rather foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the provisions of section 197 totally non est. He referred to the decision in the case of M.S. Ranganayakamma v. M.G. Bhashyam (1992) 198 ITR 157at page 168 (Kar.) where it was held that an interpretation of statute which does not advance the object of the Act but nullifies the provisions of Act, cannot be accepted. He also referred to the decision in the case of ITO v. Girivanvasi Pragati Mandal (1992) 198 ITR 157 (Delhi) (SB) (AT) where it was held that the courts should not interpret the Statute to render any provision redundant. He submitted that the ld. counsel for the assessee had emphasised and urged as to how justice can be extracted from provisions of the Act but he did not address us on interpretations making provisions of Act redundant. He submitted that there could be no good and sufficient reason in the case of the assessee before us for not deducting the tax at source and not paying it to the Government as prescribed under the Act. According to the ld. Departmental Representative law did not give the assessee company a right to usurp the powers of the Assessing Officer for allowing a person not to deduct tax at source, which is given to the ITO/AO only in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head Interest on securities , shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct Income-tax thereon at the rates in force : Provided that no such deduction shall be made in a case where the person (not being a company or a registered firm) entitled to receive such income furnishes to the person responsible for making the payment - (a) an affidavit, or (b) a statement in writing, declaring that his estimated total income assessable for the assessment year next following the financial year in which the income is credited or paid will be less than the minimum liable to income-tax. (2) The statement in writing referred to in sub-section (1) shall also contain such other particulars as may be prescribed, be verified in the prescribed manner, (be signed in the presence of - (a) a Member of Parliament or a State Legislature; or (b) a Member of a District Council or a Metropolitan Council, a Municipal Corporation or Municipal Committee; or (c) a Gazetted Officer of the Central or a State Government; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957) or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974) . (4) The person responsible for making the payment referred to sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year. Explanation: In this section, Gazetted Officer includes a Tehsildar or a Mamlatdar of a Taluka or Tehsil or any other officer performing functions similar to those of a Tehsildar or Mamlatdar. 16. We may further mention that in order to ensure that the various provisions for deduction of tax at source were duly complied with and did not cause unnecessary harassment to a person who was not liable to pay income-tax some exceptions were made in section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting in duplicate in the prescribed form and verified in the prescribed manner to the effect that his estimated total income of the previous year in which such income is to included in computing his total income will be less than the minimum liable to income-tax. (2) The person responsible for paying any income of the nature referred to in sub-section (1) shall deliver or cause to be delivered to the Commissioner one copy of the declaration referred to in sub-section (1) on or before the seventh day of the month next following the month in which the declaration is furnished to him. 18. Section 199 of the Income-tax Act provide that credit for the tax deducted at source shall be given in the assessment of the payee, including provisional assessment under section 141A, provided a certificate as required under section 203 was furnished by the payee to this effect. Section 200 of the Income-tax Act made it mandatory by laying down that the person deducting tax at source shall pay within the prescribed time the sum so deducted to the credit of the Central Government or as the Board Directs . According to Rule 30(1) (b) (i) (2) the tax required to be deducted according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not be called upon to pay the tax himself to the extent to which tax has been deducted from that income [Emphasis Supplied]. At this point we may clarify that Shri Vyas wanted us to infer from this section that it provided that tax is not to be realised twice in respect of same income, first by deducting tax at source and again at the time of making assessment. 22. Section 206A prescribes as under : Any person responsible for paying any income referred to in section 194A shall prepare, and within thirty days from the 31st day of March in each year, deliver or cause to be delivered to the Income-tax Officer in the prescribed form and verified in the prescribed manner, a return in writing showing - (a) the name and address of every person who has furnished to him an affidavit or a statement under the proviso to sub-section (1) of section 194A ; (b) the amount of the income credited or paid during the financial year to each such person and the time or times at which the same was credited or paid, as the case may be ; and (c) such other particulars as may be prescribed. 23. Section 221 of the Income-tax Act prescribes that when an assessee is in default o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of law with which we are concerned, are very clear and obvious, the question of two interpretations or the provisions being doubtful may not arise. 26. Another principle which has been laid down by the Hon ble Supreme Court following various principles laid down by the House of Lords, is to the effect, that the courts should not assume that any words or provisions in a statute are redundant or superfluous. It is only when a literal application of the language of a statute or provision of law produces a wholly unreasonable result, the courts may do some violence to the words and so achieve that obvious intention and produce a rational construction (refer to National Taj Traders case (supra) at pp. 541 542) . In this particular case, viz., National Taj Traders, the Tribunal had set aside a revisional order of CIT under section 33B of the Old Income-tax Act. According to the provisions of law existing at that time, the CIT was empowered to pass a revision order under section 33B of Income-tax Act, 1922, within two years from the date of ITO s order which was regarded as erroneous by the CIT. Since, by the time the Tribunal set aside that order of the CIT those two years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. counsel for the assessee. The observation of the court at page 17 is to the effect : It is true that the consequences of a suggested construction cannot alter the meaning of a statutory provision where such meaning is plain and unambiguous, but they can certainly help to fix its meaning in case of doubt or ambiguity. . . . . In continuation with the same discussion the Hon ble Court observes on page 19 of the report that - The construction contended for on behalf of the revenue would thus have the effect of rendering section 11, sub-section (4), totally redundant after the enactment of section 13(1) (bb) . We do not think we can accept such construction which renders a provision of the Act superfluous and reduces it to silence. If there is one rule of interpretation more well settled than any other, it is that if the language of a statutory provision is ambiguous and capable of two constructions, that construction must be adopted which will give meaning and effect to the other provisions of the enactment rather than that which will give none. 29. When we apply the above-mentioned principles of interpretation of statute to the provisions contained in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate for not deducting the tax at source or for deducting it at a lower rate. However, if the contentions of the ld. counsel for the assessee are accepted, it would mean that at the time of making payment of interest or crediting interest to the account of a company, the payer is at liberty to determine for himself whether the company to whom he is making the payment would have a taxable income or would have the benefit of brought forward losses, etc., and then may decide not to deduct the tax at source and claim that this defiance of specific provisions of section 197(1) and (2) was bona fide and in good faith. If that were so, there was no necessity at all to bring provisions of section 197(1) and (2) on the statute book. It need not be mentioned that automatically sub-section (3) of section 197 also becomes redundant. Further, the interpretation given by the ld. counsel for the assessee would lead to the inference that the introduction of section 197A w.e.f. 1-6-1982 was a superfluous exercise done by the Legislature. We noticed from those provisions that section 197A relieves the hardships in the case of individuals only and those too who were residents in India and only if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant for assessment year 1979-80 in the case of GESCO in respect of interest from which tax should have been deducted at source was about ₹ 52.89 lakhs from which tax of about ₹ 10.84 lakhs should have been deducted. For the assessment year 1980-81 it was about ₹ 41.45 lakhs from which tax at about ₹ 8.49 lakhs should have been deducted. Further for the assessment year 1981-82 the deductions were made from 26-9-1979 to 26-6-1980. The returns were filed by GESCO on 26-6-1981. The assessment was made at nil after allowing the benefit of carrying forward of losses on 20-4-1984. We are supposed to believe that as on 26-9-1979 while the assessee was required to deduct tax at about ₹ 1.76 lakhs and pay the Government account within about seven days, the assessee knew that GESCO will file its return of income within the time allowed under section 139, i.e., by 26-6-1981 and that when the assessment is framed on 30-4-1984 the income shall be assessed at nil by giving the payee the benefit of carried forward loss. It is obvious that this would be a more absurd interpretation of these provisions than the one which is canvassed on behalf of the assessee to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of section 201(1A) which, as interpreted by the Hon ble Bombay High Court in the case of Bennet Coleman Co. Ltd. (supra) come into force and the liability arises immediately upon each default and has to be computed with reference to the law. Further that the provisions are mandatory and that they are not penal provisions. Again when we consider the arguments of the ld. counsel for the assessee to the effect that the interest under section 201(1A) has to be computed from the date when the tax was deducted to the date when the tax was actually paid and that since the assessee did not deduct and pay the tax at all, no interest can be computed as per the ratio of decision of the Hon ble Supreme Court in the case of B.C. Srinivasa Setty (supra), we find that it would be leading to very unfair and unreasonable results. Its results would be that a person who fails to deduct the tax in time or after deducting it fails to pay the tax so deducted in the prescribed time but deducts and pays it after a little over two months after the prescribed time to the Government treasury, shall be liable to pay interest under section 201(1A) for this period of two months. On the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the regular assessment in respect of any income is to be made at a later assessment year, the tax on such income shall be payable by deduction at source or by advance payment, as the case may be, in accordance with the provisions of this Chapter. (2) Nothing in this section shall prejudice the charge of tax on such income under the provisions of sub-section (1) of section 4. 191. In case of income in respect of which provision is not made under this Chapter for deducting income-tax at the time of payment, and in any case where income-tax has not been deducted in accordance with the provisions of this Chapter, Income-tax shall be payable by the assessee direct. A bare reading of these sections makes it clear that irrespective of the fact that a regular assessment in respect of the payee is to be made for a later assessment year, the tax shall be deducted at source in accordance with the provisions of Chapter XVII which contains sections 192 to 195. Further, these provisions clarify that deduction of tax at source does not absolve the person from his liability of paying income-tax directly on the assessment of his income. 33. All these discussions make it abu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand was raised the Assessing Officer could not direct the assessee to pay the tax which was to be deducted at source. Although we find force in the submissions of the ld. Departmental Representative that in view of several decisions cited by him, those were not recovery proceedings and hence were not barred by limitation, we have to uphold the order of the ld. CIT(A) on another ground. It has been brought on record that assessments of the GESCO have been completed up to assessment year 1983-84 by 24-3-1987. According to section 191 - . . . . in any case where income-tax has not been deducted in accordance with the provisions of this Chapter, income-tax shall be payable by the assessee direct. [Emphasis Supplied] As pointed out by the ld. counsel various High Courts have held that after an assessment order in the case of the payee has been made, the person who was to deduct tax at source, would not be liable to pay the tax and that it shall be payable by that assessee. Since by now all the assessments of GESCO for the assessment years under appeal have been completed, in spite of the fact that the order of the Assessing Officer dated 17-7-1984 was valid for payments perta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, if some demand was raised against that assessee although adjusted against any taxes paid by it, in any one of these assessment years, then Assessing Officer shall be entitled to impose penalty with respect to the demand in that particular assessment year or in those particular assessment years. Therefore, all these appeals, viz., IT Appeal Nos. 5551, 5553, 5555, 5557 and 5559/Bom/87 may be treated as partly allowed. 38. Before we part, we shall like to mention that we are conscious of the observations of the Hon ble Madras High Court in the case of CIT v. L.G. Ramamurthi (1977) 110 ITR 453 at 462 and H.A. Shah Co. v. CIT (1956) 30 ITR 618(Bom.) which lay down that Tribunal should be slow in changing the decision taken by it on same issue earlier or by other Benches. However, we find support from the principles laid down by the Hon ble Supreme Court regarding interpretation of law, which appears to have escaped the attention of some of the benches of the Tribunal, whose orders we are cited before us by the ld. counsel for the assessee. Moreover, in the case of H.A. Shah Co. (supra) itself, so also in the cases of Raja Bahadur Visheshwar Singh v. Seth Mathuradas 44 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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