November 2009
Appeal : Right of payer to appeal : S. 246(1)(i) and S. 248 of Income-tax Act, 1961 : A.Y. 1997-98 : Even if tax is not effected by the payer, the payer has every right to question the tax liability of the payee to avoid vicarious consequences : Payer is
By K. B. Bhujle, Advocate
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Appeal : Right of payer to appeal : S. 246(1)(i) and S. 248
of Income-tax Act, 1961 : A.Y. 1997-98 : Even if tax is not effected by the
payer, the payer has every right to question the tax liability of the payee to
avoid vicarious consequences : Payer is entitled to prefer appeal.
[Jindal Thermal Power Company Ltd. v. Dy. CIT, 225
CTR 220 (Karn.)]
In this case the appellant had made payment for which it
had not deducted tax at source. It preferred appeal disputing the tax
liability of the payee in respect of such payment. Dealing with the question
of the locus standi of the appellant to file appeals the Karnataka High Court
held as under :
“The decision (relied on by the Revenue) does not lay
down that the person who is obliged to effect TDS u/s.195 has no right to
question the assessment of tax liability. Since in law, if TDS is not
effected by the payer (Jindal), the payer would be ultimately responsible to
pay the tax liability of the payee. The conjoint reading of S. 195, S. 201
r.w. S. 246(1)(i) and S. 248 makes it clear that Jindal as a payer has every
right to question the tax liability of its payee to avoid the vicarious
consequences. Therefore, the contention that Jundal has no right of appeal
is to be rejected.”
