COMMISSIONER OF INCOME-TAX vs. AJOD INVESTMENTS PVT LTD

ITR/197/1991HC GujaratGJHC24013430199125 June 2003Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE A.M.KAPADIA3 pages
AI SummaryAllowed

What were the facts?

This case involves an Income Tax Reference filed by the revenue against an order of the Income-tax Appellate Tribunal, Ahmedabad Bench-A. The assessment year(s) are not explicitly stated. The dispute concerns the cancellation of interest charged under Section 201(1A) of the Income-tax Act, 1961. The assessee, Ajod Investments Pvt Ltd, argued that no liability arose to deduct tax on interest payable to creditors because the interest was neither paid nor credited to their accounts during the relevant period. The revenue challenged the Tribunal's decision to cancel this interest.

What did the High Court hold?

The High Court, in respectful agreement with its previous judgment in I.T.R. No. 223/1991, decided the referred question in the affirmative, in favour of the assessee and against the revenue. The reasoning was based on the undisputed fact that the interest amount payable by the assessee to its creditors was neither paid nor credited to their accounts during the relevant assessment year. Consequently, the assessee had no liability to deduct tax on such interest as per Section 194A(1) of the Income-tax Act, 1961. Since there was no default in deducting tax, the charging of interest under Section 201(1A) was deemed incorrect. The Reference was disposed of with no order as to costs.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in cancelling the interest charged under Section 201(1A) of the Income-tax Act, 1961? (Question of law and fact, concerning Section 201(1A) and Section 194A(1) of the Act). Assessee's contention: The assessee contended that there was no liability to deduct tax on the interest amount as per Section 194A(1) of the Act because the interest was neither paid nor credited to the creditors' accounts. Therefore, the charging of interest under Section 201(1A) was incorrect. Revenue's contention: The revenue challenged the Tribunal's order cancelling the interest charged under Section 201(1A). No specific authorities, circulars, or precedents were recorded as relied upon by the revenue in the judgment.

Which sections of the Income-tax Act were involved?

Section 201(1A),Section 256(1),Section 194A(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 197 of 1991

For Approval and Signature:

Hon'ble MR.JUSTICE A.R.DAVE and Hon'ble MR.JUSTICE A.M.KAPADIA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the concerned : NO Ma

The order continues below.

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