B. L. CHHIBBER, A. M. : - (1.) THE only common ground raised in these two appeals by the Revenue is in respect of charging of interest under s. 201(1A) of the IT Act, 1961.
(2.) The assessee, a private limited company engaged in the manufacture and sale of medicines and drugs on a large scale filed its annual returns in Form No. 24 in time. The AO on the basis of his going through the annual returns considering the total amount of tax deducted at source during the year, divided the amount by 12 and found out the average. Considering the average figure per month and the difference in the actual figures in monthly deductions, he levied interest under s. 201(1A) of the Act. On appeal, the learned CIT(A) deleted the amounts of interest observing as under : "A reading of s. 201 with s. 192 of the IT Act will show that the duty of the person responsible for paying any income chargeable under the head "salary" is to deduct the correct amount of tax at source on the amount payable computed on the basis of rates in force in the financial year in which the payment is made. He is also empowered to increase or reduce the amount to be deducted for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct tax during the financial year. In other words, the tax is required to be deducted on the actual amount of salary paid taking into consideration the deductions available to various employees. It is not required that the deductions should be on average basis taking the entire TDS of the year into consideration. As rightly pointed out by the learned counsel of the appellant that the amount of salary payment cannot remain constant and it will vary from month to month for various reasons. From the details filed before me, I have found that whatsoever TDS was required to be deducted, has been deducted in every month and paid in the Government Treasury as will be clear from the enclosed chart. I would, therefore, hold that the order passed by the ITO charging the interest under s. 201(1A) is not proper and is erroneous. On the facts of the case, no interest is chargeable under s. 201(1A) and, therefore, the interest charged in the asst. yr. 1988-89 and 1989-90 under s. 201(1A) is deleted hereby."
(3.) SHRI K. M. Chauhan, the learned Departmental Representative, vehemently contended that on the given facts the approach of the AO was correct and the relief wrongly came to be given by the learned CIT(A). For the respondent, SHRI M. M. Patel appeared and submitted that the approach of the AO was grossly erroneous and wholly unjustified on the facts and in the circumstances of the assessees case. The learned counsel submitted that the AO has failed to appreciate that the amount of salary payment every month in such a large organisation as that of the assessee cannot remain constant as the amount of salary vary from month to month depending upon the actual number of employees receiving actual payment of salary; the total amount of salary, arrears, allowances and special incentives received by the employees from time to time. The learned counsel drew our attention to the copies of Form No. 24 placed on record and submitted that from these monthly TDS returns, it can be seen that the tax has been deducted regularly and paid in accordance with the provisions of law and there is no default on the part of the assessee so as to attract the penal provisions of s. 201(1A) of the Act. In support of his contentions, he also placed reliance on the decisions in the cases of Executive Engineer, TLC, A. P. State Electricity Board vs. ITO (1987) 28 TTJ (Hyd) 580, ITO vs. Registrar of Guru Nanak Dev University (1994) 120 Taxation 69 (Trib) and American Spring & Pressing Works (P) Ltd. vs. Second ITO 24 Tax Magazine 261.;