- (1.) The revenue has claimed the following substantial question of law in this appeal filed under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 28.8.2002 (Annexure A- 2) passed by the Income Tax Appellate Tribunal, Chandigarh Bench "B", Chandigarh (hereinafter referred to as "the Tribunal") in ITA Nos. 1276, 1277 and 1278/Chandi/1995 for the assessment years 1988-89, 1989-90 and 1990-91:- (i) Whether on the facts and in the circumstances of the case, the ITAT was right in law in directing the AO to charge interest u/s 201(1A) of the Income Tax Act, 1961 from the due date to the date of actual payment of tax/surcharge either by the person responsible to deduct tax or by the recipient of income, whichever is earlier (ii) Whether on the facts and in the circumstances of the case, the ITAT is right in law in directing the AO that the tax paid by the recipient during the previous year, if any, on such income be treated as payment of tax/surcharge under Section 193 of the Income Tax Act, 1961 for calculating interest under Section 201(1A) of the Act. (iii) Whether on the facts and in the circumstances of the case, the ITAT is right in law in issuing directions as per question No.2 which are contrary to the provisions of Section 209(1)(d) of the Income Tax, 1961, the amount of tax/ surcharge deductible u/s 193 of the Income Tax Act, is required to be excluded from the amount of advance tax calculated under Section 209 and the same is not payable as Advance Tax
(2.) Briefly stated, the facts necessary for disposal of the present appeal are that the assessee issued 'securities' as interest bearing bonds on which the interest was to be paid half yearly and was liable to deduct the tax at source on interest payable under Section 193 of the Act. The said bonds were subscribed by the Financial Institutions, Government Corporations and Public Sector Banks etc. The assessee deducted the tax at source on the amount of interest paid under Section 193 of the Act but failed to deduct surcharge on the amount of income tax. The Assessing Officer vide order dated 30.11.1994 (Annexure A) created demand of surcharge and also charged interest under Section 201(1A) of the Act as under:- JUDGEMENT_429_LAWS(P&H)3_2016_1.html
(3.) Feeling aggrieved by the order, Annexure A, the assessee filed three appeals before the Commissioner of Income Tax (Appeals) [for brevity, "the CIT(A)"]. The CIT(A) vide a common order dated 3.8.1995 (Annexure A-1) following its order for the assessment years 1990-91 to 1992-93 in appeal Nos. 180 to 182/IT/93-94 allowed the appeals and directed the Assessing Officer to recalculate the interest charged under Section 201(1A) of the Act upto the end of the respective financial years after necessary verification from the payees regarding payment of tax due on such interest, i.e., interest on bonds issued by the assessee. Being dissatisfied with the order, Annexure A-1, the revenue filed appeals before the Tribunal who vide order dated 28.8.2002 (Annexure A-2) modified the order of the CIT(A) on the question of interest payable under Section 201(1A) of the Act holding that the Assessing Officer should allow benefit of payment on proportionate/rational basis having regard to the fact that the entire liability was cleared in the financial year. The Assessing Officer was directed to revise his orders accordingly. Hence, the present appeal by the revenue.;