TMI Blog1983 (9) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and having regard to the provisions of section 194A(3) of the Act, the Tribunal's view that tax is deductible at source under section 194A in the assessee's case and, therefore, there is no assessed tax as defined in section 215(5) on which interest could be levied is sustainable in law ?" The assessee in this case is the Madras Fertilisers Limited. For the assessment year 1971-72, the ITO has made an assessment on August 28, 1972, on a total income of Rs. 10,28,050. Out of this, a sum of Rs. 10,51,247 is the income by way of interest on dollar short-term deposit. The said interest has been received by the assessee on the surplus funds not immediately required which had been deposited for a short period with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that merely because the Department took another view, interest could not be levied. The assessee took the matter in appeal to the Tribunal on the question of interest to be levied under s. 215 of the Act. The Tribunal, after construing the provisions of ss. 215 and 194A, held that the levy of interest under s. 215 was not in order as the tax was deductible at source under s. 194A of the Act in respect of the items of interest which had been assessed in the assessment and, therefore, there was no deficit in terms of s. 215 of the Act in view of sub-s. (5) of that section. In that view, the Tribunal set aside the levy of interest under s. 215 of the Act. Aggrieved by the view expressed by the Tribunal, the Revenue has sought and obtained a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p in mind s. 201(1A) of the Act while construing s. 215 of the Act which deals with the interest payable by the assessee in respect of the tax assessed on him. Section 215(1) of the Act proceeds as follows: "215. Interest payable by assessee:-(1) Where, in any financial year, an assessee has paid advance tax under section 212 on the basis of his own estimate and the advance tax so paid is less than seventy-five per cent. of the assessed tax, simple interest at the rate of twelve per cent. per annum from the I St day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls Short of the assessed tax." This section prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the previous year's assessment or on the basis of the estimate given by the assessee long before the final assessment and at that stage, there is no question of actual deduction of the tax at source in respect of the interest income and the deduction at source takes place practically at the end of the year when the interest is paid and it is for this reason the statute in sub-s. (5) of s. 215 of the Act uses the expression " deductible " instead of " deducted ". Therefore, in construing sub-s. (5), it is not possible to understand the expression " deductible " occurring therein as deducted ". Further, the learned counsel for the assessee appears to be right in his submission that in cases where the tax is deductible at source, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if a person or authority who is bound to make a deduction of tax at source as contemplated by the statute does not deduct or after deducting fails to pay the tax, then such a person or authority is liable to pay simple interest on the amount of tax not deducted from the date on which such tax was deductible to the date on which the said tax was actually paid. Thus, in respect of interest income on which deduction of tax at source should have been made, the liability to pay interest is fastened on the person or authority who failed to make deduction as required under s. 194A. Therefore, in respect of the tax payable on the said interest income, the assessee also cannot be taken to be liable to pay interest. Otherwise, it will mean that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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