1. These two appeals filed by the revenue raised a common contention and are, therefore, disposed of by a common order.
2. The ITO by his order dated 13-2-1980 under Section 201(1A) of the Income-tax Act, 1961, pertaining to the financial year 1976-77, levied interest of Rs. 1,813 for the period 1-4-1976 to 31-1-1980 on the ground that the tax deducted at source out of the salaries of the employees of the assessee, during that financial year, was short. For a similar default pertaining to the financial year 1977-78, the ITO by his order dated 15-3-1980 under Section 201(1A) levied interest of Rs. 2,632 for the period 1-4-1977 to 29-2-1980. The assessee filed appeals to the Commissioner (Appeals) in respect of both the years. The Commissioner (Appeals) in principle confirmed the order of the ITO for both the years but gave a direction that the tax deducted at source should be re-computed after taking into consideration certain instructions contained in Circular No. 196 [F. No. 275/29/76/ITJ], dated 31-3-1976 issued by the Central Board of Direct Taxes. The Commissioner (Appeals), however, held that the interest should be restricted up to the period ending 31-3-1978 for the tax short deducted at source during the financial year 1976-77 and up to the period ending 31-3-1979 in respect of the tax short deducted at source pertaining to the financial year 1977-78. It is against this direction of the Commissioner (Appeals) that the revenue has come up in appeal.
3. We have heard the learned representatives of both the parties.
Section 201(1 A) reads as under : (1A) Without prejudice to the provisions of Sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at twelve per cent per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid.
This section clearly lays down that interest is to be paid from the date on which such tax was deductible to the date on which such tax is actually paid. The words "actually paid" can only mean the actual payment of due tax and so far as this section is concerned, the concept of limitation mentioned in Section 231 for commencing recovery proceedings is not relevant. The learned counsel for the assessee accepts this position. We, therefore, accept the revenue's appeal and held that if there is any default in respect of which interest become chargeable under Section 201(1A), such interest should be charged from the date on which such tax was deducted to the date on which such tax is actually paid.
4. The learned counsel for the assessee wanted to file certain statements before us to show that there was no default on the part of the assessee for which any interest could be charged under Section 201(1A). We did not accept these statements because the assessee has not filed any appeal against the order of the Commissioner (Appeals) on this point.
This is an appeal filed by the revenue and the position of the revenue cannot be made worse than what it would have been if no appeal had been filed by the revenue. The learned counsel for the assessee had also submitted on the point that there was no short deduction of tax at source and, therefore, no interest was chargeable. The Commissioner (Appeals) had not given any decision. If this position is correct, then the assessee may take such steps as may be permissible under the law.