Commissioner Of Income Tax vs Ginni International Ltd.
2005 Latest Caselaw 1449 Del

ORDER

1. The assessed had credited a sum of Rs.26,35,746 as interest payable to M/s Ginni Filaments Ltd. on 31st March, 1995. On 10th March, 1995, the said company had intimated the assessed that being a 100 per cent EOU, it was exempted from payment of income-tax and that it was applying to the competent authority for an exemption certificate for tax deduction at source. It was on the basis of the above intimation that the assessed credited to the account of the payee the aforementioned amount on 31st March, 1995, without making any tax deduction at source.

2. It is common ground that the assessed had two months time available to it to pay the tax, if any, deducted at source. This time would have expired on 31st May, 1995. On 10th May, 1995, however, the competent authority had issued an order granting exemption to the assessed from deduction of tax at source. The AO, all the same held the assessed to be in default under Section 194A of the Act. In appeal, the CIT(A) took a contrary view and held that there was no default on the part of the assessed. The Tribunal has, by the order impugned in this appeal, concurred with that view, inter alia, holding that the assessed was entitled to take cognizance of the information pertaining to an accounting period received by it after the expiry of accounting period but before the closure of the accounts. The Tribunal further held that the assessed having informed the payee on 10th May, 1995, regarding the issue of exemption order and the said intimation being within the period of two months available to the assessed, there was no default in making the tax deduction at source.

3. Having heard Mr. Jolly, learned Counsel for the appellant, we see no reason to take a different view. The assessed admittedly had a period of two months available to it to make the deposit of tax deducted at source. Even assuming that any such deduction had been made at the time of credit of the interest amount to the account of the payee, the said amount had to be deposited on or before 31st May, 1995. Before the said date, however, the competent authority had authorized the non-deduction of tax at source. In that view, therefore, there was no real default in compliance with the provision regarding tax deduction at source. No substantial question of law arises for consideration in this appeal which fails and is hereby dismissed.