2019 (3) TMI 721 - AT - Income Tax

Tribunal Upholds Interest Payment Ruling

Power & Control Systems Versus The Dy. Commissioner of Income Tax Circle-1 (2), Bengaluru.

Power & Control Systems Versus The Dy. Commissioner of Income Tax Circle-1 (2), Bengaluru. - TMI Issues:1. Whether the assessee was liable to pay interest under section 201(1A) of the Income-tax Act.Analysis:The Appellate Tribunal ITAT Bangalore dealt with misc. applications filed by the assessee under section 254(2) of the Income-tax Act 1961, claiming a mistake apparent in the Tribunal's order dated 4/6/2018. The primary issue was whether the assessee was liable to pay interest under section 201(1A) of the Act. The case revolved around payments made by the assessee to a foreign company's branch office in India without deducting taxes at source. The Assessing Officer (AO) issued a notice under sections 201(1) and 201(1A) of the Act, alleging default in tax deduction. The AO computed interest payable under section 201(1A) at Rs. 10,81,211. The CIT(A) and the Tribunal upheld the AO's decision.In the misc. applications, the assessee contended that the payments made were not liable to tax as they were for the supply of goods and equipment, exempt from tax deduction at source under section 195 of the Act. The assessee argued that the lower authorities erred in not recognizing this exemption. Additionally, the assessee referred to a decision of the Punjab and Haryana High Court to support its claim that interest under section 201(1A) should not apply if the provisions of section 194C were not applicable to the payments.During the proceedings, the assessee reiterated its arguments, while the Departmental Representative (DR) pointed out the Tribunal's previous decision and cited a judgment of the Madras High Court. The Tribunal noted that the assessee raised the plea related to tax deduction liability for the first time in the misc. application, which was not part of the original proceedings. The Tribunal emphasized that the assessee could not introduce new arguments through the misc. application and concluded that the issues raised were debatable and did not constitute a mistake apparent on the face of the record. Therefore, the Tribunal dismissed the misc. applications, finding no merit in them.In summary, the Tribunal rejected the assessee's claim that interest under section 201(1A) should not apply due to the nature of payments made to the foreign company's branch office. The Tribunal held that the issues raised were not new and did not reveal a mistake apparent on record, leading to the dismissal of the misc. applications.