TMI Blog2003 (12) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... hief Agricultural Officer, who had made the payments to the contractors namely, M/s Unitech Engineers, Pathankot and M/s Competent Engineers, Pathankot, in respect of installation of tubewell pump sets, etc. While making these payments, the assessee had not deducted tax at source under s. 194C of the IT Act, 1961 and when the default was noted by the ITO, TDS Circle, Amritsar, he issued a letter, in response to which the assessee agreed that no deduction of tax at source was made by his office on the payments made to the contractors. The ITO, TDS Circle, Amritsar, raised a demand of Rs. 1,55,196 @ 2 per cent on gross payment of Rs. 77,59,827 in consolidated form of the above-referred years. In the first appeal, it was contended on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars under consideration when the taxes to the extent of Rs. 1,03,000 (representing only total amount of income-tax paid by the contractor and not the interest paid under ss. 234A, 234B and 234C) had already been paid by the recipient contractor. Accordingly, assessment year-wise shortfall (TDS due minus only income-tax paid under s. 140A) was arrived at as under: Asst. yr. Total contract payments made to M/s. Competent Engineers and Unitech Engineers, Pr. Sh. Rajesh Verma, HUF (Karta) TDS due 2 per cent Less income-tax paid under s. 140A based on returns processed as per assessment record Shortfall if any 1996-97 12,47,094 24,942 16,000 8,942 1997-98 3,71,57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce at Rs. 1,55,198 on the total contract payments made to M/s Competent Engineers and M/s Unitech Engineers. It is an admitted position that both the said concerns were represented by Sh. Rajesh Verma, HUF. The AO in his report to the first appellate authority had made it clear that the said payments were included by Sh. Rajesh Verma, HUF in its business receipts and the tax was paid under s. 140A and the returns so filed were duly processed as per assessment record. These facts point out that the tax due on the contract payments was rightly recovered from the contractor, which amounted to Rs. 1,03,000. 2.4 The provisions concerning deduction of tax at source were introduced by keeping into mind the fact that the income should not go ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a particular amount which is not due to the Revenue in any case. If the order of the first appellate authority is implemented, it would amount to recovering this shortfall from the assessee in question as against no tax due. The deduction of tax at source is different from tax on total income. Any amount of TDS is liable to be adjusted against the actual demand. Since the assessments of the recipient (contractors) have been finalized and there remains no tax liability as per Revenue's own version, we are of the considered opinion that no recovery can be made from the assessee in this regard. These four appeals are, therefore, allowed. 2.5. In the result, all these four appeals are allowed. 3. ITA Nos. 6 to 9/ASR/2003 These four ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als, then there would be no question of charging interest under this section. 3.2. In the opposition, the learned Departmental Representative supported the impugned order. The learned Departmental Representative relied on the case of CIT vs. Dhanalakshmy Weaving Works (2000) 160 CTR (Ker) 374 : (2000) 245 ITR 13 (Ker) to contend that the levy of interest under s. 201(1A) was mandatory. 3.3. We have considered the rival submissions in the light of material placed before us and the precedents relied upon. Insofar as the contention of the assessee regarding non-charging of interest under s. 201(1A), we find that it is not acceptable. Though in the foregoing paras, we have held the assessee to be not in default but insofar as the charging o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m which received the interest from the assessee had paid tax on such interest) did not dilute the requirements for non-compliance of which interest is levied under s. 201(1A). For the foregoing reasons, we hold the assessee liable to interest inspite of the fact that no liability remains under s. 201(1). 3.4. Now we proceed with the determination of the amount of interest chargeable under s. 201(1A). The answer to this question can be easily found in sub-s. (1A) itself which provides that interest at the specified rate shall be charged on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. Since the necessary information is not coming up from the orders of the authorities b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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