INCOME-TAX OFFICER Vs. NEW ERA ENGG CO

JUDGEMENT

(1.) These two appeals are filed by the revenue against the order of the AAC for the asst. years 1980-81 and 1982-83, cancelling the interest levied u/s. 201(1A) of the Income-tax Act, 1961 for the two years under consideration.

(2.) The assessee is stated to have credited interest of Rs. 4,40,174 and Rs. 4,85,605 to the accounts of certain parties from whom it borrowed monies for its business, during the accounting years relevant to the asst. years 1980-81 and 1982-83, which ended on 30-6-79 and 30-6-1981 respectively. The assessee deducted tax of Rs. 42,614 and Rs. 48,561 from the above amounts of interest credited to the parties account and paid to the Government on 9-12-1980 and 2-2-1981 for the asst. year 1980-81 and on 1-2-1983 for the asst. year 1982-83. On the ground that there was a delay in payment of the tax deducted at source, the ITO levied interest of Rs. 7,285 and Rs. 9,227 u/s. 201(1A), read with Rule 30(b).

(3.) Aggrieved with the alove levy of interest, the asseasee filed appeals before the AAC, who purporting to follow the orders of the Tribunal in some other similar cases, allowed the assessees appeals. The assessees claim before the first appellas auth ority was that though its accounting year ended on 30-6-79 and 30-6-1981, the accounts were actually closed much later and it was only then the interest was credited to the respective accounts of the creditors. Since the amounts of tax dedced at source was remitted to the Government within two months from the end of the month inwhich the interest was actually creadited to the accounts of the porties conorned, it was contended that no interest would be chargeable u/s 201 (1A). This argument of the assessee was accepted by the AAC for the both the year. Hence the present appeals before us by the Revenue.