( 1 ) AT the instance of the Revenue, the Income Tax Appellate Tribunal, Ahmedabad Bench "a" has referred to this Court the following question for its opinion under the provisions of section 256 (1) of the Income Tax Act,1961 (hereinafter referred to as the Act ). "whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the tax paid by the contractor in its own case by way of advance-tax and self-assessment tax should be deducted from the gross tax that the defaulter assessee should have deducted under section 194c in computing interest chargeable under sec. 201 (1a) of the Act?"

( 2 ) MR. AKIL Qureshi, learned Advocate has appeared for the applicant whereas Mr. Bhargav Karia has appeared for the respondent assessee. The facts giving rise to the present Reference in a nutshell are as under :2. 1. THE assessee is a Co. operative Society who had entered into two contracts with M/s. Ravi Builder for construction of its building. From the amount which was to be paid by the assessee society to the contractor, the assessee did not deduct any amount of tax which it was required to deduct as per the provisions of section 194c of the Act. It is pertinent to note that though the assessee society did not deduct the amount of tax as per the provisions of section 194c of the Act, M/s. Ravi Builder, the contractor, had paid advance tax as well as tax on self assessment with respect to the amount received by it from the assessee society. As the assessee society had not deducted the tax at source, in the process of assessment of income of the assessee society for the assessment years 1974-75 to 1977-78, the Assessing Officer charged interest under the provisions of section 201 (1a) of the Act, on the tax which was deductible by the assessee society from the amount which was paid to the contractor. It was the case of the assessee that though no tax was deducted from the amount payable to the contractor, the contractor had already paid tax and, therefore, interest under the provisions of section 201 (1a) could not have been levied by the Revenue on the assessee but the said argument of the assessee did not find favour with the Assessing Officer. 2. 2. BEING aggrieved by the levy of interest, the assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax. After hearing the assessee, the Appellate Assistant Commissioner of Income-tax partly allowed the appeal, mainly on the ground that M/s. Ravi Builder had already paid advance tax on the amount which was paid to it by the assessee society. For two years i. e. for assessment years 1974-75 and 1975-76, sufficient advance tax and tax on self assessment was paid by M/s. Ravi Builder and, therefore, the AAC held that the levy of interest under the provisions of section 201 (1a) was not justified for those two years. So far as the other two assessment years were concerned, the contractor had not paid sufficient advance tax and, therefore, the AAC came to the conclusion that as advance tax was not paid by M/s. Ravi Builder and as the Revenue had not received the amount of tax on due date, the action of the Assessing Officer with regard to levy of interest for the said years was justified. Thus, the appeal was partly allowed by the AAC.

( 3 ) BEING aggrieved by the order passed in the appeal, the Revenue approached the Tribunal and the Tribunal upheld the order passed by the AAC. In the circumstances referred to hereinabove, the question which has been referred to this Court is whether the Tribunal was right in law in holding that the tax paid by M/s. Ravi Builder in its own case by way of advance tax and tax on self assessment should be deducted from the gross tax that the assessee society should have deducted u/s. 194c while computing interest chargeable u/s. 201 (1a) of the Act.

( 4 ) WE have heard Mr. Akil Qurehi, learned Advocate, appearing for the Revenue and Mr. Bhargav Karia, learned Advocate appearing for the