- (1.) THIS matter arises out of the order of the Income-tax Appellate Tribunal, dated January 28, 1983, in respect of the assessment year 1977-78. The Tribunal has referred the following two questions of law arising out of the said order for opinion of this court : " 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that Section 199 of the Income-tax Act, 1961, admits of only one interpretation that the credit for tax deducted -at source is to be given for the assessment year relevant to the previous year in which such tax was deducted at source and, consequently, the Inspecting Assistant Commissioner (Assessment) was competent to invoke jurisdiction under Section 154 and withdrawing credit for tax deducted at source ?
(2.) WHETHER; on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in confirming the order of the Income-tax Officer withdrawing interest originally allowed under Section 214 and charging interest under Section 215 originally not charged ?" 2. The facts of the case are that while making the assessment for the assessment year 1977-78, the tax of Rs. 30,100 was deducted by Surana Enterprises and certificate of such deduction of tax dated December 13, 1976, and February 28, 1977, were produced by the assessee in the assessment proceedings. The assessee is maintaining the accounts according to Diwali year and, therefore, in the original assessment order the tax so deducted was adjusted in the assessment year 1977-78. The payer, Surana Enterprises, had maintained the books of account according to the year ending on June 30. After the assessment order under Section 143(3) was framed the Income-tax Officer was of the view that the deduction of the tax which has been given in the year 1977-78 should have been given in the year 1978-79 on the basis of the accounts maintained by the payer and accordingly an order under Section 154 of the Income-tax Act was passed. The assessee submitted the reply dated May 4, 1981, which was taken into consideration and thereafter, the Inspecting Assistant Commissioner (assessing authority) came to the conclusion that there is a mistake apparent on record and, therefore, the credit which was given in the assessment year 1977-78 should have been given in the assessment year 1978-79. The credit already given in the year 1977-78 was withdrawn and was directed to be allowed in the assessment year 1978-79. The interest under Section 214 which was allowed was also withdrawn. In the appeal before the Commissioner of Income-tax, it was observed that in accordance with the provisions of Section 199 of the Income-tax Act what is required to see is that the tax has been deducted and deposited and credit has to be given in the year in which the income from which such deduction has been made is being taxed which would be the year following the accounting year in which such tax was deducted. The order of the Inspecting Assistant Commissioner was accordingly set aside and it was observed that the tax in respect of the assessment year 1977-78 was rightly allowed in the original assessment order. The order of withdrawal of interest under Section 214 was also found not in accordance with law. In the second appeal before the Tribunal the provisions of Sections 194A, 200 and 199 were taken into consideration. It was observed that under Section 194A any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income chargeable under the head "Interest on securities" shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. Section 200 provides that any person deducting any sum in accordance with the provisions of Sections 192 to 194 (section 194A included) shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. Rule 30(1)(b)(i)(1) of the Income-tax Rules, 1962, provides that the sum deducted from income by way of interest under Section 194A of the Income-tax Act shall be paid to the credit of the Central Government within two months of the expiration of the month in which the date up to which the account of such business are made up falls.
(3.) THE provisions of Section 199 of the Income-tax Act as amended by the Act No. 11 of 1987 are as under : "Any deduction made in accordance with the provisions of Sections 192 to 194, Section 194A, Section 194B, Section 194BB, Section 194C, Section 194D, Section 194E, Section 194EE, Section 194F, Section 194G, Section 194H, Section 194-I, Section 195, Section 196A, Section 196B, Section 196C and Section 196D, and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate furnished under Section 203 in the assessment made under this Act for the assessment year for which such income is assessable." The Income-tax Appellate Tribunal found that in the present case the tax was required to be deposited after the closure of the accounting year by Surana Enterprises in respect of the previous year 1977-78, the tax was neither deducted nor deposited. It was deducted on December 13, 1976, and February 28, 1977, and was required to be deposited within two months after the close of the accounting year which falls within the year 1978-79. Therefore, the assessee was not entitled to claim deduction in the assessment year 1977-78. The arguments of learned counsel for the parties have been heard. Section 199 as it stood at the relevant time read as under : " Any deduction made in accordance with the provisions of Sections 192 to 194, Section 194A, Section 194B, Section. 194BB, Section 194C, Section 194D, and Section 195 and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate furnished under Section 203 in the assessment (including a provisional assessment under Section 141A), if any, made for the immediately following assessment year under this Act." ;