COMMISSIONER OF INCOME TAX vs JASWANT MOTORS.

ASHOK BHAN, J. :

CIT has filed this petition under s. 256(2) of the IT Act, 1961 (hereinafter referred to as the Act) for issuance of a mandamus directing the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, (hereinafter referred to as the Tribunal) to refer the following questions of law along with the statement of the case to this Court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the interest charged under s. 201(1A) of the IT Act, 1961 ?"

This order shall dispose of IT Cases Nos. 68, 69 and 70 of 1990 as identical questions of law and fact are involved in all these cases. Facts are being taken from the asst. yr. 1985-86.

Respondent-assessee (hereinafter referred to as the assessee) is a registered firm deriving its income from purchase and sale of auto vehicles. It took on rent premises No. 40 G.T. Road, Jalandhar on a monthly rent of Rs. 12,500 from Sarvshri Sadhu Singh, Kashmir Singh, Balwant Singh and Balbir Singh. The premises were given on rent on behalf of these persons by one Jagdish Kaur Gill acting as their general power of attorney. Landowners were shown to be the residents of United Kingdom in the rent note.

Under s. 195(1) of the Act, any person responsible for paying any sum, not being dividend, chargeable under the provisions of the Act at the time of payment shall, unless he is himself liable to pay Income Tax thereon as an agent, deduct Income Tax thereon at the rates in force. The ITO concluded that assessee had failed to deduct the tax at source under s. 195(1) and levied the interest under s. 201(1A) for failure to comply with the provisions of s. 195(1) of the Act. This order was affirmed in appeal. Tribunal accepted the appeal inter alia holding that there was no material before the AO upto 28th February, 1989 to hold that landlords were no Indian residents and the assessment framed on the three landlords treating their status to be residents of India, Tribunal set aside the orders of the authorities below.

Petition filed under s. 256(1) was dismissed which necessitated the filing of the present petition under s. 256(2) by the CIT.

After hearing the counsel for the parties, we are satisfied that the following two questions of law do arise from the appellate order of Tribunal :

"(i) Was the Tribunal justified in law in holding on the basis of the assessment order of the landlords referred to by it in its appellate order that there was no material before the ITO upto 28th February, 1989 to hold that landlords were not residents of India ?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the interest charged under s. 201(1A) of the IT Act, 1961 ?"

Only second question had been claimed by the Revenue but in our opinion without framing the first question and answering the same, a proper answer to the second question, which had been claimed by the Revenue, cannot be given.

Accordingly, we direct the Tribunal to refer the aforesaid two questions of law along with the statement of the case to this Court, which are included apart from other material, the rent deed dt. 19th November, 1984 and the assessment orders of the landlords regarding which mention has been made by the Tribunal in its order.