Law:

Section:

Section 201, read with sections 192 and 194C, of the Income-tax Act, 1961 - Deduction of tax at source - Consequence of failure to deduct or pay - Assessee-company had its registered office at Mumbai and regional office at Kolkata - Assessee also had a project office at Balasore where assessee had undertaken some project works through sub-contractors - Since in respect of employees and sub-contractors engaged in project undertaken by assessee at Balasore, deductions as provided in sections 192 and 194C, were not made and deposited with income-tax office at Balasore, ITO, Balasore, passed an order under section 201 and charged interest for said default - Assessee's case was that such deductions of tax under sections 192 and 194C were being made by officers of assessee-company at its regional office at Kolkata and amounts so deducted had been deposited with Assistant Commissioner, Kolkata - Whether as per two circulars of CBDT, deductions and deposits under sections 192 and 194C with officers at Kolkata out of salary and sub-contractors payments made at Balasore were in order - Held, yes - Whether, therefore, ITO, Balasore, was not justified in charging interest under section 201 - Held, yes Circulars and clarifications - Circular Nos. 719 and 744, dated 22-8-1995 and 6-5-1996 respectively FACTS The assessee-company had its registered office at Mumbai and regional office at Kolkata. The assessee also had a project office at Balasore where the assessee had undertaken some project works through sub-contractors. Under sections 192 and 194C, the officers of the assessee-company were required to deduct income-tax from the salaries payable to its employees and amounts payable to sub-contractors and deposit the same with the income-tax department. Since in respect of the employees and the sub-contractors engaged in the project undertaken by the assessee at Balasore, deductions as provided in sections 192 and 194C, were not made and deposited with the income-tax office at Balasore, the ITO, Balasore, passed an order under section 201 and charged interest for said default. The assessee filed the writ petition for quashing the order passed by the ITO. The assessee…

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