Law:

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Section 201 of the Income-tax Act, 1961 - Deduction of tax at source - Consequence of failure to deduct or pay - Assessee was engaged in business of air taxi - During course of verification proceedings, it was found that assessee in year under consideration had made payments to Airports Authority of India in respect of space rent, rent for office space, parking charges, etc., at various airports all over India on which no tax was deducted at source - Assessing Officer held that assessee was liable to deduct TDS and since TDS was not deducted, it was in default under section 201(1) and also liable for interest under section 201(1A) - Commissioner (Appeals) sustained order of Assessing Officer - On further appeal, Tribunal held that since Airports Authority of India is a Government undertaking, taxes may be presumed to have been paid by due date of filing of return of income and, therefore, liability of assessee to pay interest on amount which was to be deducted as TDS ended with due date of filing of return by Airports Authority of India - Whether Tribunal was justified in its view - Held, yes CASE REFERRED TO CIT v. Adidas India Marketing (P.) Ltd. [2006] 157 Taxman 519 (Delhi) [Para 4]. Ms. Rashmi Chopra and Chandramani Bhardwaj for the Appellant. JUDGMENT A.K. Sikri, J. - These appeals have been filed by the revenue under section 260A of the Income-tax Act questioning the validity of the order dated 31-8-2007 of the Income-tax Appellate Tribunal (ITAT). By the impugned order, the ITAT allowed the appeals of the assessee to the extent that it held that the assessee is not liable to pay the TDS. The ITAT however held the assessee liable for interest under section 201(1)(A) of the Act. For the sake of convenience reference is being made to the facts of ITA 891/2008. 2. The facts are that the assessee is engaged in the business of air taxi operators. During the course of the verification proceedings, it was found that the assessee in the year under consideration had made payments to Airport Authority of India (AAI) in respect of space rent, rent for office space, parking charges etc. at various airports all over India on which no tax was deducted at source. The…

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