The liability to pay interest under Section 201(1a) of the Income-tax Act, 1961 is mandatory and automatic. The interest is payable from the date the tax was deductible till the date it is actually paid. The liability is absolute.

( 1 ) LEARNED counsel for the appellant points out that this appeal involves a substantial question of law. There cannot be any computation of interest payable under Section 201 (1a) of the Income-tax Act, 1961, until there has been a deduction inasmuch as unless there is a deduction, there is no question of actual payment and unless there is an actual payment and the date of such actual payment is discernible, no interest can be levied under Section 201 (1a) of the Act. According to him, there is no direct decision on this point except one by the Tribunal in Ess Kay Construction v. Asst. CIT [1997] 58 Taxman 32. Relying on this decision, he contended that interest under Section 201 (1a) was not leviable because the date of payment of tax deducted at source being not known, the interest was incapable of being calculated. The language used in Section 201 (1a) is different from the language used in Sections 220 (2) and 221. Under Section 220 (2) interest is chargeable from the date immediately following the end of the period mentioned in Section 220 (1) and ending with the date on which the amount is paid. This shows that the concept of continuing default is in-built in the section. Similarly, in Section 221 (1) there is in term a reference to a continuing default and the section empowers the Assessing Officer to levy penalty from time to time, so, however, that the total amount of penalty does not exceed the amount of tax in arrear. Section 201 (1a), however, is not couched in similar terms as the other two sections referred to above and even if there is discrimination in favour of companies for paying the tax deducted at source such discrimination cannot be helped. In fact, such lacunae in laws abound. One has, therefore, to interpret the law as it is and not to add to or subtract therefrom. Where the computation provisions, which constitute an integral code with the charging section fail, interest is not chargeable under Section 201 (1a ). Learned counsel distinguished the decisions of this court in Grindlays Bank Ltd. v. CIT [1992] 193 ITR 457 and Grindlays Bank ltd. v. CIT [1993] 200 ITR 441; and relied upon the decision in CIT v. B. C. Srinivasa Setty.

( 2 ) THE question is very simple. Section 201, Sub-section (1), provides that in case of failure to deduct or in case of failure to pay after deduction, the person shall be responsible for such deduction, or the principal officer in a case referred to under Section 194, shall be deemed to be an "assessee in default" in respect of the tax, though, however, he may explain such default on account of good and sufficient reasons in terms of the proviso thereto. In Sub-section (1) of Section 201 (1a), it is provided that an "assessee in default", if he fails to deduct or if he fails to pay after deduction, is liable to pay simple interest at 15 per cent. per annum on the amount of tax deductible from the date on which it was so deductible till the date it is actually paid. Sub-section (1a) is without prejudice to the provision of Sub-section (1 ). Therefore, in order to interpret Sub-section (1a) aid of Section 221 is not material. It has to be interpreted independent of it. The expression used in Sub-section (1a) is clear and unambiguous. It postulates liability to pay interest at the rate provided on the amount deductible as tax from the date on which such tax was deductible until it is actually paid, if the "assessee in default" does not deduct the tax. Similarly, the "assessee in default" is liable to pay interest in the same manner, if the "assessee in default" after deducting, fails to pay the tax. Non-payment of tax, on account of failure to deduct or on account of any other reason after deduction, makes the "assessee in default" liable to pay interest on the amount deductible made recoverable as a charge on the assets of the "assessee in default" under Sub-section (2 ). The charging of interest has been made continuous till it is actually paid. Under Sect