Tribunal rules in favor of assessee, deleting interest under sec 234B based on High Court decision.

The Tribunal affirmed the first appellate order, ruling in favor of the assessee and dismissing the revenue's appeal. The interest charged under section 234 B was deleted by the Ld. CIT (A) based on the decision of the Hon'ble Jurisdictional High Court, which held that the assessee cannot be held liable for interest u/s 234 B due to the payer's default in deducting tax at source. The Tribunal found that the assessee had no liability to pay advance tax as the tax on the entire income was required to be deducted at source by payers under Section 195(2).

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Issues:
Questioning of first appellate order regarding interest u/s 234 B on short payment of advance tax by the assessee.

Analysis:
1. The revenue challenged the first appellate order, arguing that the Ld. CIT (A) erred in holding that interest u/s 234 B is not chargeable on the short payment of advance tax by the assessee. The assessee, a company registered in the United States and part of the Alcatel Lucent (ALU) Group, supplied telecom equipment to various Indian companies. A survey under section 133 A revealed that various Alcatel Lucent Overseas entities, including the assessee, had a permanent establishment in India. The Assessing Officer (AO) determined the net income chargeable to tax attributable to the PE in India and levied interests u/s 234 A, 234 B, and 234 C.

2. Before the Ld. CIT (A), the assessee contested the levy of interest u/s 234 B by the AO. The Ld. CIT (A) deleted the interest levied u/s 234 B, citing a decision of the Hon'ble Jurisdictional High Court of Delhi. The revenue, represented by the Ld. DR, argued that the AO had rightfully levied interest u/s 234 B due to the short payment of advance tax by the assessee. The Ld. AR for the assessee justified the first appellate order, referring to relevant provisions and court decisions supporting the deletion of interest u/s 234 B.

3. The Tribunal considered the submissions, provisions of Section 209(1)(d) of the Act, and relevant court decisions. It was noted that the liability to pay interest u/s 234 B arises only if advance tax is payable after adjusting for tax deductible at sources. The assessee's obligation to pay advance tax is governed by Sections 208, 209, and 210. The Tribunal found that the assessee had no liability to pay advance tax as the tax on the entire income was required to be deducted at source by payers under Section 195(2). Referring to the decision of the Hon'ble High Court of Delhi, the Tribunal held that the assessee cannot be held liable for interest u/s 234 B due to the payer's default in deducting tax at source.

4. The Tribunal affirmed the first appellate order, stating that the issue raised was covered by the decision of the Hon'ble Jurisdictional High Court. The interest charged u/s 234 B was deleted by the Ld. CIT (A) in line with the court decision. Consequently, the appeal was dismissed, upholding the deletion of interest u/s 234 B by the first appellate authority.

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