No Tax Deduction on Reversed Interest Provisions: Karnataka Power Wins

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Case Name:

Karnataka Power Transmission Corporation Ltd. vs. Deputy Commissioner of Income Tax (TDS) (High Court of Karnataka)

ITA Nos. 750, 758 & 759 of 2009

Date: 2nd February 2016

Key Takeaways:

- No Income, No TDS: The court emphasized that tax deduction at source (TDS) is only required on income that actually accrues to the payee. If the interest provision is reversed and no income is realized, TDS is not applicable.

- Section 194A (of Income Tax Act, 1961) Interpretation: The judgment clarified that Section 194A (of Income Tax Act, 1961) applies only to actual income by way of interest, not contingent provisions that are reversed.

- Impact on TDS Obligations: This case sets a precedent that contingent liabilities, if not realized as income, do not attract TDS obligations.

Issue

Is KPTCL liable to deduct tax at source on interest provisions that were reversed and not paid to the suppliers?

Facts

- KPTCL, a government undertaking, entered into power purchase agreements that included interest payments for delayed payments.

- For the assessment years 2005-06 to 2007-08, KPTCL made provisions for interest on delayed payments but later reversed these entries, indicating no interest was paid.

- The tax authorities argued that KPTCL should have deducted tax at source on these provisions, while KPTCL contended that no income accrued to the suppliers.

Arguments

- KPTCL's Argument: The provisions for interest were contingent and ultimately reversed, meaning no income accrued to the suppliers. Therefore, there was no obligation to deduct tax at source.

- Tax Authority's Argument: The tax authorities maintained that the provisions for interest, even if reversed, required TDS under Section 194A (of Income Tax Act, 1961), and KPTCL was in default for not deducting tax.

Key Legal Precedents

- KEDARNATH JUTE MFG. CO. LTD. vs. COMMISSIONER OF INCOME TAX (1971) 82 ITR 0363: This case was cited to support the argument that the existence or absence of entries in the books of accounts is not decisive in determining tax liability.

- DIRECTOR OF INCOME-TAX vs ERICSSON COMMUNICATIONS LTD. (2015) 378 ITR 395 (Delhi): Referenced to distinguish the applicability of TDS provisions under different sections of the Income Tax Act.

Judgement

The court ruled in favor of KPTCL, stating that since the interest provisions were reversed and no income accrued to the suppliers, there was no liability to deduct tax at source under Section 194A (of Income Tax Act, 1961). The court also noted that the amendments to Section 201(1) (of Income Tax Act, 1961), which could have imposed liability, were not applicable during the relevant assessment years.

FAQs

Q1: Why was KPTCL not required to deduct tax at source?

A1: Because the interest provisions were reversed, meaning no actual income accrued to the suppliers, thus negating the need for TDS.

Q2: What does this mean for other companies with similar provisions?

A2: Companies with contingent interest provisions that are reversed may not be required to deduct TDS, provided no income accrues to the payees.

Q3: How does this affect the interpretation of Section 194A (of Income Tax Act, 1961)?

A3: The case clarifies that Section 194A (of Income Tax Act, 1961) applies only to actual income by way of interest, not to contingent provisions that do not materialize as income.

1. These appeals are filed by the assessee challenging the common order dated 03.07.2009 passed by the Income Tax Appellate Tribunal, “B” Bench,

Bangalore (‘Tribunal’ for short) under Section 260-A (of Income Tax Act, 1961), 1961 (the ‘Act’ for short) relating to the assessment years 2005-06 to 2007-08.

2. Facts in brief are:

The appellant is an undertaking of the Government of Karnataka engaged in power transmission. The appellant purchases electricity from various parties by entering into power purchase agreements. For such purchases, when payment of purchase price is delayed, the agreements provide for payment of interest to suppliers of electricity by theappellant. During the assessment years i.e., 2005-06, 2006-07 and 2007-08 in question, the appellant had

created provisions for a sum of Rs.17,65,75,903/-, Rs.12,40,70,972/- and Rs.5,74,39,557/- respectively for contingent payment of interest on belated payments to its suppliers. For the first two years, the appellants in their profit and loss account treated the said amount of provision as expenditure to arrive at the profit.

However, in the returns of income filed for the assessment year 2005-06 and 2006-07, the appellant did not treat the said amount of provision towards

contingent interest payable as expenditure instead, it arrived at the taxable income without excluding such amounts of provision towards such interest. However, as these amount of provision created by book entries

towards contingent interest payable for assessment years 2005-06 and 2006-07, a corresponding reversal entries were made in the books of accounts during the financial year 2007, indicating that the subject amounts of provision towards contingent interest would never be paid.

3. In respect of financial year ending on

31.03.2007, a similar provision towards contingent

interest payable on belated payments were created but

at the end of the year, the said amount though treated

as expenditure in the profit and loss account was not

excluded to arrive at the taxable income in the return of

income filed for the year 2007-08. The TDS Officer

invoked the provisions of Section 194(A)(1) (of Income Tax Act, 1961) read with

explanation appended to the said Section, held that the

appellant should have deducted tax at source on the

amount of provision made towards likely interest

payable in respect of related purchase payments and

held the appellant as an assessee in default and further,

invoked the provisions of Section 201(1) (of Income Tax Act, 1961) and 201(1A) of

the Act Accordingly, orders under Section 201(1) (of Income Tax Act, 1961) and

Section 201(1A) (of Income Tax Act, 1961) for the assessment years in

question were passed.

4. On appeal by the assessee before the

Appellate Commissioner, the same was confirmed

against which appeals were filed by the assessee before

the Tribunal. All the three appeals filed by the assessee

were considered together and disposed off by a common

order, dismissing the appeals, confirming the orders

passed by the Authorities. Being aggrieved by the said

common order passed by the Tribunal for the

assessment years in question, the assessee is before

this Court. The matter was admitted on 20.11.2009 to

consider the following substantial questions of law:

“1. Whether in law, the Appellate

Tribunal was justified in ignoring the

evidence and submissions of the appellant

with regard to mutual agreement between

the appellant and the suppliers of power

not to enforce the interest clause in the

Power Purchase Agreement and thereby

the appellant had no obligation to pay

interest and consequently, had no

obligation to deduct tax at source under

Section 194A (of Income Tax Act, 1961).

2. Whether in law, the Tribunal was

justified in upholding the levy of tax u/S

201(1) and the interest u/S 201(1A) (of Income Tax Act, 1961) when

the bonafides of the appellant had been

proved for the non-deduction of tax at

source if any u/s 194A (of Income Tax Act, 1961)?”

5. Heard Sri Gurunathan, learned counsel

appearing for the appellant as well as Sri K V Aravind,

learned counsel appearing for the revenue and perused

the material on record.

6. Learned counsel appearing for the appellant

would contend that the following three aspects are

relevant to decide the questions raised

(i) Character of the sum for which provision was made

(ii) Liability for deduction of tax at source even when no

income accrued to the payees (the suppliers)

(iii) Jurisdiction of the Officer to invoke Section 201(1) (of Income Tax Act, 1961)

and 201(1A) of the Act.

7. The learned counsel elaborating the

arguments on these three aspects would contend that

primarily, the provision for contingent liability -

payment of interest towards belated payments of

purchase of electricity from power suppliers could not

be considered as interest at all. In this background, the

definition of interest as provided under Section 2(28) (of Income Tax Act, 1961) of

the Act is relied on. It is submitted that the phrase

“interest” mentioned in Section 194(A) (of Income Tax Act, 1961) would

confine to interest payments made on deposits or loans

with banks, post offices, co-operative societies etc. and

not on the interest, a contingent liability for which a

provision is made.

8. Next, it is argued by the learned counsel for

the appellant though a provision for payment of interest

towards delay in payment of purchase price was created

in the books of accounts, actually and ultimately,

interest was not paid. There would be no liability to

deduct tax as no income accrued to the payees

(suppliers) as the interest was not paid. This is a case

where the appellant and the suppliers by the

understanding and conduct were ad-idem that no

liability to pay interest arose on belated payment of

purchase price.

9. Further, it is contended that there are two

types of defaults that arise from non-compliance with

the provisions of Section 194(A) (of Income Tax Act, 1961). They are:

(1) non-deduction of tax at source i.e., failure to

deduct tax at source

(2) failure to pay the tax so deducted at source to

the revenue.

10. The consequences for the above two types of

defaults are mentioned in the provisions of Section 201 (of Income Tax Act, 1961)

read with Section 200 (of Income Tax Act, 1961). To impose the

consequences provided under Section 201 (of Income Tax Act, 1961), the provision

of Section 200 (of Income Tax Act, 1961) has to be read along with Section 201 (of Income Tax Act, 1961) of

the Act. The provisions of Section 200 (of Income Tax Act, 1961) prior to the

Finance Act, 2008 mandated that the amount of tax

deducted should be paid to the credit of the Central

Government within the prescribed time limit. It does

not spell out about the person who has not deducted

tax at source. It is concerned exclusively with those

who had deducted tax at source. The provisions of

Section 201(1) (of Income Tax Act, 1961) contemplates who are all the persons

who would have to face the consequences of:

(1) failure to deduct tax

(2) failure to pay the tax deducted at source to

Government account.

11. Much emphasis is placed on the words ‘if

any such person’ appearing in Section 201(1) (of Income Tax Act, 1961)

to contend that any such person referred to in Section

200 covers only the following categories:

(i) Any person who has deducted any sum

(ii) Employer referred to in sub-section (1a) of

Section 192 (of Income Tax Act, 1961), and

(iii) another category of persons referred to in

Section 194 (of Income Tax Act, 1961) i.e., a company which makes a dividend is

liable to deduct TDS on dividend payments

12. Subsequent to passing of Finance Act, 2008,

though with retrospective effect from 01.06.2002, the

term ‘any such person’ that existed in the old provision

was substituted by the terms ‘any person’. A new

clause, clause a of sub-section(1) of Section 201 (of Income Tax Act, 1961), “who is

required to deduct any sum in accordance with the

provisions of this Act...” was introduced. The said

Finance Bill, 2008 bringing in the above amendment

with retrospective effect from 1.6.2002 received the

assent of the President of India only on 10.05.2008 i.e.,

after the dates of orders of the TDS Officer being passed.

It is the case of the appellant that there was no liability

on the appellant as per the law that existed at the

relevant point of time to deduct tax at source and the

provision of interest made and subsequently, the entries

being reversed in the account books. The TDS Officer

proceeded to pass the orders on a non-est provision

during the relevant point of time. This crucial point has

been lost sight of by the Appellate Commissioner as well

as the Tribunal while upholding the order of the TDS

Officer.

13. Learned counsel in support of his contention

places reliance on the following Judgments:

1. [A] KEDARNATH JUTE MFG.CO.LTD. vs.

COMMISSIONER OF INCOME TAX (1971) 82 ITR 0363

2. DIRECTOR OF INCOME-TAX vs ERICSSON

COMMUNICATIONS LTD. ((2015) 378 ITR 395 (Delhi))

14. Per contra, learned counsel appearing for the

revenue justifies the order and would contend that

during the course of survey it was found that the

assessee-company has made the provision for interest

on belated payment for power purchased from different

power purchasers without deducting tax at source as

evidenced in the Annexure – V of the 3CD report

(auditor’s report) for the relevant assessment years.

Section 194A (of Income Tax Act, 1961) and the explanation thereof provides that

the provision for interest is liable for deduction of tax at

source. Non-compliance of the said provision provides

for invoking Section 201 (of Income Tax Act, 1961) and Section 201A (of Income Tax Act, 1961).

No relief could be given for the provision if reversed

later, would be out of the scope of the TDS provisions.

The assessee not deducting tax can never take shelter

under the provisions of Section 201 (of Income Tax Act, 1961) prior to

the amendment to shed away with the statutory

responsibility.

15. Learned counsel placing reliance on Circular

No.1/2009 dated 27.03.2009 would contend that Sub-

section (1) of Section 201 (of Income Tax Act, 1961) has been amended

to clarify that where a person, including the principal

officer of a company who is required to deduct any sum

in accordance with the provisions of the Act shall be an

assessee in default under Section 201 (of Income Tax Act, 1961). This

amendment is made applicable with retrospective effect

from 01.06.2002. The said amendment is made to

Section 200(1) (of Income Tax Act, 1961) to overcome the view that that the

provisions of Sub-section (1) of Section 201 (of Income Tax Act, 1961) do not

cover, failure to deduct tax at source, such an

interpretation being contrary to the intent of the

Legislature.

16. Learned counsel would further distinguish

the judgment of Erricson Communications (supra)

contending that the said judgment was rendered in the

context of Section 195 (of Income Tax Act, 1961) wherein. Section 195 (of Income Tax Act, 1961)

of the Act imposes a statutory obligation on any person

responsible for paying the non resident any sum

‘chargeable under the provisions of the Act’ which

expression do not find place in Section 194-A (of Income Tax Act, 1961).

17. It is further contended that [a] the tax

deductor had failed to satisfy the Officer-in-charge of

TDS that taxes due have been paid by the deductee-

assessee; [b] the assessee company is in default for non

compliance of TDS provision under Section 194A (of Income Tax Act, 1961) of the

Act as held by the Tribunal. Any provision reversed in

the account books belatedly in March 2007 for the

assessment years in question would not come to the

rescue of the Assessee to absolve him from deducting

the tax at source under Section 194A (of Income Tax Act, 1961). The

Assessee-Company was under an obligation to deduct

tax at source which it had failed to do so as evidenced

from the Auditor’s report and as such the Assessee is in

default. In the circumstances, the Authorities have

rightly invoked the provisions of Sections 201 and

201[1A] of the Act. The Tribunal after elaborately

considering the grounds urged by the Assessee and

analytically examining the material on record, had

confirmed the order passed by the Authorities as

mandatory provision under Section 194A (of Income Tax Act, 1961) has

not been complied by the Assessee.

18. It is further contended that even prior to the

amendment to Section 201(1) (of Income Tax Act, 1961) by Finance Act,

2008, the law that existed at the relevant point of time

provided for deduction of tax at source and Section 200 (of Income Tax Act, 1961)

of the Act during the relevant period clearly attracted

even in cases where the tax was not deducted.

Accordingly, he submits that the order passed by the

Tribunal is a well considered order, which cannot be

found fault with.

19. We have considered the rival submissions

made by the parties and perused the material on record.

20. It is not in dispute that the Assessee has

made a provision towards contingent payment of

interest to suppliers of electricity when payment of

purchase price is delayed by the appellant. Though the

said provision is made towards contingent interest

payable as expenditure, as per the return of income filed

by the Assessee, the taxable income is arrived adding

back such amount of provision towards contingent

interest. The assessee having noticed, payment of such

interest made in the provision would never be paid in

view of the understanding between the appellant and its

suppliers, corresponding reversal entries were made in

the books of accounts during March 2007. It is noticed

that though the amount made in the provision is treated

as expenditure in the profit and loss account, was

added back to arrive at the taxable income. In such

circumstances, we have to examine the obligation of the

Assessee in deducting the tax at source towards the

provision of interest made reversed subsequently, which

would not form ‘any income’ in the hands of payees

(suppliers).

21. Section 194A (of Income Tax Act, 1961)[1] of the Act and explanation

thereof reads thus:

“Interest other than “Interest on

securities”

194A. (1) 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 [by way of 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 :

[Provided that an individual or a Hindu

undivided family, whose total sales, gross

receipts or turnover from the business or

profession carried on by him exceed the

monetary limits specified under clause (a)

or clause (b) of section 44AB (of Income Tax Act, 1961) during the

financial year immediately preceding the

financial year in which such interest is

credited or paid, shall be liable to deduct

income-tax under this section.]

[Explanation.—For the purposes of this

section, where any income by way of

interest as aforesaid is credited to any

account, whether called "Interest payable

account" or "Suspense account" or by any

other name, in the books of account of the

person liable to pay such income, such

crediting shall be deemed to be credit of

such income to the account of the payee

and the provisions of this section shall

apply accordingly.]”.

22. Section 201 (of Income Tax Act, 1961)[1] of the Act reads thus:

“1) If any such person referred to in

Section 200 (of Income Tax Act, 1961) and in the cases referred to in

section 194 (of Income Tax Act, 1961), the principal officer and the

company of which he is the principal officer

does not deduct the whole or any part of the

or after deduction fails to pay the tax as

required by or under this Act, he or it shall,

without prejudice to any other consequences

which he or it may incur, be deemed to be

an assessee in default in respect of the tax:

Provided that no penalty shall be charged

under Section 221 (of Income Tax Act, 1961) from such person,

principal officer or company unless the

[Assessing] Officer is satisfied that such

person or principal officer or company, as

the case may be, has [without good and

sufficient reasons] failed to deduct and pay

the tax.”

23. The expression ‘any such person’ referred to

in Section 200 (of Income Tax Act, 1961) and in the cases referred to in

Section 194 (of Income Tax Act, 1961) restricts to the person mentioned

in Section 200 (of Income Tax Act, 1961). Section 200 (of Income Tax Act, 1961)[1] of the Act

contemplates that ‘any person deducting any sum in

accordance with the provisions of Chapter – XVII, shall

pay within the prescribed time, the sum so deducted to

the credit of the Central Government or as the Board

directs. Section 200 (of Income Tax Act, 1961)[2] of the Act contemplates that any

person being an employer referred to in sub-section [1A]

of Section 192 (of Income Tax Act, 1961) shall pay, within the prescribed time, the

tax deducted to the credit of the Central Government or

as the Board directs. As could be seen from these

provisions, prior to passing of the Finance Act, 2008,

the provisions of Section 200 (of Income Tax Act, 1961) mandated that the

amount of tax deducted should be paid to the credit of

the Central Government. It does not speak about the

person who has not deducted tax at source. If the said

Section 200 (of Income Tax Act, 1961) is applied to Section 201 (of Income Tax Act, 1961)[1] of the Act, it is

only the following three categories of persons are held

liable for the consequence of failure to deduct tax at

source [a] any person deducting any sum [b] Employer,

who provides perquisites and [c] Company making

payment of dividends. Subsequently, the said provision

is amended and the same is extracted below:

“Consequence of failure to deduct or

pay:

201.(1) Where any person, including the

principal officer of a company,—

(a) who is required to deduct any sum in

accordance with the provisions of this Act;

or

(b) referred to in sub-section (1A) of section

192, being an employer, does not deduct,

or does not pay, or after so deducting fails

to pay, the whole or any part of the tax, as

required by or under this Act, then, such

person, shall, without prejudice to any

other consequences which he may incur,

be deemed to be an assessee in default in

respect of such tax:

Provided that any person, including the

principal officer of a company, who fails to

deduct the whole or any part of the tax in

accordance with the provisions of this

Chapter on the sum paid to a resident or

on the sum credited to the account of a

resident shall not be deemed to be an

assessee in default in respect of such tax

if such resident—

(i) has furnished his return of income

under section 139 (of Income Tax Act, 1961);

(ii) has taken into account such sum for

computing income in such return of

income; and

(iii) has paid the tax due on the income

declared by him in such return of income,

and the person furnishes a certificate to

this effect from an accountant in such form

as may be prescribed.

Provided further that no penalty shall be

charged under section 221 (of Income Tax Act, 1961) from such

person, unless the Assessing Officer is

satisfied that such person, without good

and sufficient reasons, has failed to

deduct and pay such tax.”

24. By this amendment, the term ‘any such

person’ is substituted with ‘any person’ including the

Principal Officer of the Company. A new clause “who is

required to deduct any sum in accordance with the

provisions of the Act” is introduced. This amendment is

given retrospective effect from 1.6.2002 and has

received the assent of the President of India on

10.5.2008. The order of the TDS Officer has been

passed as detailed below:

Assessment

Year

Date of Order

2005-06 27.03.2008

2006-07 27.03.2008

2007-08 18.02.2008

Thus, it is clear the TDS Officer has passed the order

based on non existent law during the interregnum

period between the period of Finance Bill becoming the

Finance Act by the assent of the President.

25. We have also noticed the Circular No.1/2009

dated 27.03.2009 relied on by the Revenue to point out

that the said amendment by Finance Act 2008 was

introduced to clarify the term ‘person’ envisaged in

Section 200 (of Income Tax Act, 1961). In fact, it was the intention of

the legislature to bring the person i.e., the Principal

Officer of a Company who is required to deduct any sum

in accordance with the provisions of the Act under the

umbrella of Section 201 (of Income Tax Act, 1961)[1] of the Act. The same is

clarified by the Finance Act, 2008 with retrospective

effect from 1.6.2002. This amendment Act was not in

force during the relevant assessment years in dispute at

the time of passing of the orders by TDS Officer. In

such circumstances, the Order of the Tribunal

upholding the views of the TDS Officer and the

Appellate Commissioner would go contrary to the

provisions of Section 201 (of Income Tax Act, 1961)[1] of the Act that existed

during the relevant time.

26. We have examined the applicability of

Section 194A (of Income Tax Act, 1961) to the present case. Section

194A of the Act mandates the tax deductor to deduct

‘income tax’ on ‘any income by way of interest other

than income by way of interest on securities’. The

phrase ‘any income’ and ‘income tax thereon’ if read

harmoniously, it would indicate that the interest which

finally partakes the character of income, alone is liable

for deduction of the income tax on that income by way

of interest. If the said interest is not finally considered

to be an income of the deductee, as per reversal entries

of the provision in the present case, Section 194A (of Income Tax Act, 1961)[1] of

the Act would not be made applicable. In other words,

if no income is attributable to the payee, there is no

liability to deduct tax at source in the hands of the tax

deductor. In view of the admitted fact that interest

being not paid to the payees [suppliers] being reversed

in the books of accounts, we are of the considered

opinion that there would be no liability to deduct tax as

no income accrued to the payees [suppliers]. It is true

that in the case of Ericsson Communication Limited

[supra], the Delhi High Court was dealing with the case

of Section 195 (of Income Tax Act, 1961) wherein obligation of a person

to deduct tax at source would be applicable to the

‘income chargeable under the Act’. Absence of such

words ‘chargeable to tax’ under the provisions of Section

194-A of the Act would not empower the authorities to

invoke the provisions of Sections 201 and 201(1A) of the

Act ignoring the words ‘any income by way of interest’.

27. Yet another reason assigned by the Tribunal

to reject the appeal filed by the Assessee is to the CBDT

Circular No.275/201/95-IT[B] dated 29.1.1997. The

relevant portion of the said circular reads thus:

“no demand visualized u/s. 201 (of Income Tax Act, 1961)[1] of the Act

should be enforced after the tax deductor has

satisfied the officer-in-charge of TDS, that

taxes due have been paid by the deductee-

assessee. However, this will not alter the

liability to charge interest u/s. 201 (of Income Tax Act, 1961)[1A] of the

Act till the date of payment of taxes by the

deductee-assessee or the liability for penalty

u/s. 271C (of Income Tax Act, 1961).”

Based on this circular, it is held that the assessee-

company has failed to prove that neither the deductor-

assessee had deducted and remitted the tax nor the

deductee-assessee had paid the same through advance

tax or self assessment tax. It is the case of the assessee

that the provision which was contingent was at no time

materialized as income to be liable for payment of

income tax on the said provision of interest. In such

circumstances, the reasoning of the Tribunal that the

deductor-assessee nor the deductee-assessee had paid

the tax on the provision amount and thus the provisions

of Sections 201 and 201[1] of the Act are attracted is

not acceptable. There is no cavil with the CBDT

Circular referred to above by the Tribunal. But, the

said circular in no way assists the Revenue to reject the

stance taken by the Assessee i.e., reversal of the

provisions during March 2007.

28. The Apex Court in the case of KEDARNATH

JUTE MFG. CO. LTD.’s [supra] has held thus:

“6. xxxx We are wholly unable to

appreciate the suggestion that if an assessee

under some misapprehension or mistake fails

to make an entry in the books of account and

although, under the law, a deduction must be

allowed by the ITO, the assessee will lose the

right of claiming or will be debarred from

being allowed that deduction. Whether the

assessee is entitled to a particular deduction

or not will depend on the provision of law

relating thereto and not on the view which the

assessee might take of his rights nor can the

existence or absence of entries in the books of

account be decisive or conclusive in the

matter.”

The said Judgment of the Apex Court would enunciate

that the existence or absence of entries in the books of

accounts is not decisive or conclusive factor in deciding

the right of the Assessee claiming deduction. The said

Judgment is squarely applicable to the facts of the

present case. The provision of law existing on the

relevant date of passing of the order by the TDS Officer

would establish that Sections 201 and 201[1A] of the

Act were not applicable to the appellant’s case. In the

circumstances, the Assessee falls outside the scope of

Section 194A (of Income Tax Act, 1961) read with Section 200 (of Income Tax Act, 1961) during

the relevant assessment years. Thus, the consequential

provisions of Section 201(1) (of Income Tax Act, 1961) and Section 201(1A) (of Income Tax Act, 1961) are not

attracted.

29. For the foregoing reasons, we are of the

considered view that the Judgment passed by the

Tribunal is not sustainable.

30. Accordingly, we answer the substantial

questions of law in favour of the Assessee and against

the Revenue.

31. In the result, the appeals are allowed.

Ordered accordingly.

Sd/-

JUDGE

Sd/-

JUDGE