Advance tax interest cannot be charged where a non-resident's income is fully subject to tax deduction at source.

For a non-resident assessee whose income was wholly subject to tax deduction at source, the advance tax scheme did not require a separate advance tax payment on that income. On that basis, the Tribunal held that interest for default in advance tax under sections 234B and 234C could not be charged. The assessee's substantive challenge to taxability was not pressed, so the dispute was confined to interest, which was decided in favour of the assessee and against the Revenue.

---

---

Issues: Whether interest under sections 234B and 234C was leviable on a non-resident assessee whose income was subject to tax deduction at source and who was not liable to pay advance tax.

Analysis: The assessee's substantive challenge to taxability was not pressed, leaving only the question of interest. The Tribunal followed its earlier view that where the assessee is a non-resident and the income is liable to deduction at source, the scheme of advance tax does not require separate advance tax payment by the assessee for that income. In such a situation, interest for default in advance tax cannot be charged.

Conclusion: Interest under sections 234B and 234C was not leviable; the issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The assessee obtained relief on the interest issue, while the cross-appeal of the Revenue failed.

Ratio Decidendi: Where a non-resident assessee's income is wholly subject to tax deduction at source, the assessee is not liable to pay advance tax on that income and interest under sections 234B and 234C cannot be imposed.

---