2010 (8) TMI 37
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.... deduction of TDS is mandatory and is leviable automatically." For the sake of convenience, we may look into the facts as they appear in ITA No. 491/2008. 2. The assessee in this case is a company which is incorporated in the United States of America and is executing World Bank finance projects. One of these projects financed by the World Bank is undertaken by the National Highway Authority of India which was also executed by the assessee. For the assessment year 2001-02 the assessee filed its return of income declaring an income of Rs.96,83,278/-. This return was picked up for detailed scrutiny and notice under Section 143(2) of the Income Tax Act, 1961 was issued. Thereafter, the assessment was framed on 26th March, 2004. The Assessing Officer had inter alia found that there was short payment of taxes inasmuch as the advance tax was not paid by the assessee on due dates and therefore, the Assessing Officer was of the opinion that the assessee had incurred interest liability under Section 234B of the Act. After giving show cause notice in this behalf, the Assessing Officer added the liability of interest under Section 234B of the Act. 3. We may point out at this stage itself tha....
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.... with the identical issue, the court gave the following reasons for holding that the liability of the assessee to pay interest would not arise under these circumstances: - "17. Although we agree with the conclusions of the Tribunal, we prefer to give our own reasons in support of our conclusion that on the facts and circumstances of this case, levy of interest under Section 234B on the assessee is not justified. Firstly, the decisions of the Tribunal on the interpretation of the contracts regarding on period and off period salary were conflicting. Ultimately, the Legislature has stepped into clarify the position by the Finance Act of 1999. In this connection, it is important to note that Section 234B imposes interest, which is compensatory in nature and not as a penalty (see Union Home Products ltd, v. [1995]215ITR 758, 766 (Karn)). Secondly, although Section 191 of the Act is not overridden by Sections 192, 208 and 209(1)(a)(d) of the Act, the scheme of Sections 208 and 209 of the Act indicates that in order to compute advance tax the assessee has to, inter alia, estimate his current income and calculate the tax on such income by applying the rates in force. That under Section 2....
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....wing the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax." 5. This section provides that when the advance tax paid is less than seventy-five per cent. of the assessed tax, simple interest at the rate of 12 per cent. per annum shall be levied from the 1st day of April next following the said financial year up to the date of the regular assessment, on the amount by which the advance tax falls short of the assessed tax. The "assessed tax" has been defined in s. 215(5) of the Act, as meaning the tax determined on the basis of the regular assessment as reduced by the amount of tax deductible in accordance with the provisions of ss. 192 to 194, s. 194A, etc. As per this definition, "assessed tax" represents the tax determined by regular assessment as reduced by the amount of tax deductible in accordance with the provisions of s. 194A of the Act. Therefore, the expression "assessed tax" used in s. 215(1) of the Act has to be understood as the tax finally assessed as reduced by the amount of tax deductible in accordance with the provisions of s. 194A of the Act. ....
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....t of the interest income, deduction of tax at source is contemplate under s. 194A of the Act. However, the deduction at source has not been effected by the banks which paid the interest to the assessee which they should have done as per the provisions of the Act. For the default of compliance with s. 194A the bank can be brought under s. 201 as an assessee in default. Section 201(1A) specifically provides that if a person or authority who is bound to make a deduction of tax at source as contemplated by the statute does not deduct or after deducting fails to pay the tax, then such a person or authority is liable to pay simple interest on the amount of tax not deducted from the date on which such tax was deductible to the date on which the said tax was actually paid. Thus, in respect of interest income on which deduction of tax at source should have been made, the liability to pay interest is fastened on the person or authority who failed to make deduction as required under s. 194A. Therefore, in respect of the tax payable on the said interest income, the assessee also cannot be taken to be liable to pay interest. Otherwise, it will mean that there are two persons under the Act to pa....
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....Once that is in the negative, and it was not duty of the payee/assessee, the question of payment of any interest would not arise as it cannot be said, in such circumstances, that the assessee is in default for the purposes of Section 234B of the Act. No doubt, as per the judgment in the case of Anjum Ghaswala (supra), if there is a default in making the payment of advance tax, the consequence which is to follow is that the interest becomes payable under Section 234B of the Act. But in the instant case, the provisions of Section 234B of the Act would not be attracted at all. 7. Section 2(1) of the Act defines "advance tax" to mean the advance tax payable in accordance with the provisions of Chapter XVII-C of the Act. These provisions are contained from Section 207 onwards. Section 209 falls under this Chapter. Sub-section (1) thereof deals with four situations under which the advance tax payable by the assessee is to be computed. Admittedly, these cases do not concern with clauses (a) to (c). Clause (d) of sub-Section (1) of Section 209, which is relevant reads as under: - "(d) The income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced ....
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....nterest under Section 234B of the Act following the judgments of the Uttaranchal and Bombay High Courts. 10. In some of the appeals, which pertains to the assessee-M/S. Mitsubishi Corporation, the additional issue in respect of the interest under Section 234D is raised by the Revenue. The Tribunal has held that the assessee was not liable to pay the interest under the aforesaid provision which was normally charged from the assessee for the assessment years 2002-03 and 2003-04. 11. We find from the order of the Tribunal that the Tribunal was of the opinion that Section 234D was applicable only from the assessment year 2004-05 onwards and not in the earlier assessment years and therefore no interest under that provision could be levied for the period prior to the assessment year 2004-05. For this purpose, the Tribunal has relied upon its own judgment rendered by a Special Bench of the ITAT in the case of ITO vs. Ekta Promoters Pvt. Ltd. 305 ITR (1) ITAT. 12. Mr. Venkatraman, the learned Senior Counsel appearing for the assessee submitted that even if Section 234D related to the charge of interest, it was in the nature of a substantive provision as held by the Supreme Court in the ....