PENTAGON ENGINEERING P LTD Vs. FIRST INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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D.V. Junnarkar, Accountant Member -
(1.) THE assessee has filed these appeals against the orders of the Commissioner (Appeals) upholding the levy of interest by the ITO under Section 201(1A) of the Income-tax Act, 1961 ('the Act'), for the delayed payment of tax into the Government treasury.
(2.) The assessee is a private limited company. During the years under consideration, the ITO was of the opinion that the assessee had delayed the payment of tax into the Government treasury which the assessee had deducted from the salaries paid to its employees. He, therefore, proceeded to calculate interest under Section 201(1A) from the date on which the salaries were payable to the employees to the date on which the tax was actually paid by the assessee into the Government treasury, on each occasion and demanded the same from the assessee.
The assessee appealed before the Commissioner (Appeals) in respect of the interest levied by the ITO for the years under consideration. The main ground on which the assessee objected to the levy was that it was in extreme financial difficulties and, therefore, was not in a position to pay the taxes into the Government treasury as and when due under Section 192 of the Act. The Commissioner (Appeals), however, was of the opinion that the causes for the delay in the payment of taxes under Section 192 and, therefore, the reasonableness of the levy under Section 201(1A) were not justiciable. The Commissioner (Appeals), however, expressed no opinion on the assessee's alternative plea that if the interest was to be levied under Section 201(1A) it should be levied from the date on which the salaries were actually paid to the employees and thus the assessee became liable to pay the tax thereon into the Government treasury under Section 192.
(3.) THE assessee is, therefore, in appeal before the Tribunal against the orders of the Commissioner (Appeals) on these issues. THE learned counsel for the assessee has proceeded to argue that the order under Section 201(1A) is an appealable order and, therefore, the appellate authority had enough justification for going into the reasonableness of the causes which prevented the assessee from paying the taxes into the Government treasury under Section 192. In support of this plea, the learned counsel has relied on the Tribunal decision dated 3-2-1981 in IT Appeal Nos. 193 to 196 (Bom.) of 1980. In support of his alternative plea, the learned counsel has invited our attention to the provisions of Section 192, whereunder the assessee is liable to deduct income-tax. According to the counsel, the deduction has to be made at the time of the 'payment' of the salary. THE learned counsel has proceeded to invite our attention to the provisions of Section 194A of the Act, whereunder any person, who is responsible for paying to a resident any income by way of interest other than income chargeable under the head 'interest on securities' is obliged at the time of credit of such amount to the account of the payee or at the time of payment thereof in cash or in any other manner, deduct income-tax thereon at the rates in force. According to the learned counsel, under Section 192, the tax has to be deducted at the time of actual payment, whereas under Section 194A, the tax has to be deducted even when the amount of interest is credited to the payee's account. In the absence of such a specific provision, the ITO cannot proceed to levy interest from the date on which the salary was payable or was credited to the account of the employees. He has furnished before us the details of the actual payments of salaries to the various employees and the dates on which the taxes have been paid into the Government treasury, which were deductible from those salaries. This statement is also supplemented by production of the relevant cash book, ledger and personal accounts.;
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