Law:

Section:

(a) Income-tax--- -----Deduction of tax at source---Interest---Failure to deduct tax---Levy of interest is mandatory---Payment of tax subsequently by recipient---Not relevant---Income Tax Act, 1961, Ss. 194A & 201. Section 201 of the Income Tax Act, 1961, provides not only for collection of tax, which has not been deducted but for levy and charge of interest also. Subsection (1A) of the said section provides for liability to pay simple interest at the rate of 12 per cent per annum on the amount of tax from the date on which the tax was deductible till the date the tax was actually paid. The provisions for payment of interest are mandatory and automatic and interest has to be paid from the date on which the tax was deductible till the date on which the tax is actually - paid. If the tax has already been paid by the recipient on such income the Income-tax Department may not be justified to recover the said amount of tax, but so far as the liability of interest is concerned, that cannot be considered to be non­existent on account of deposit of tax by the recipient at a subsequent or later stage. CIT v. Kannan Devan Hill Produce Co. Ltd. (1986) 91 ITR 477 (Ker.) ref. (b) Income-tax----- ----Depreciation---Investment allowance---Actual cost---Subsidy received from Central/ State Government is not deductible from the cost of plant and machinery, etc., for working out cost for purpose of depreciation and investment allowance---Income Tax Act, 1961, S. 43. The amount of subsidy received from the Central/State Government is not to be deducted from the cost of plant and machinery, building, etc., for working out the cost for the purpose of depreciation, investment allowance, etc. CIT v. Ambica Electrolytic Capacitors Pvt. Ltd. (1991) 191 ITR 494 (Raj.) fol. JUDGMENT V.K. SINGHAL, J.---The Income-tax Appellate Tribunal has referred the following questions of law arising out of its order dated December 3, 1986, in respect of the assessment year 1980-81 under section 256(1) of the Income Tax Act, 1961: "(1) Whether the Tribunal was right in concluding that interest under section 201 need not be levied on the assessee for non-deduction of tax at source for payment…

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