2015 (3) TMI 217

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....challenges levy of interest u/s 234B of the Act amounting to Rs. 45,93,808/- by the Assessing Officer vide order dated 31.3.2013 and affirmed by the CIT(A). 3. In the course of hearing, assessee contends that being a payee/deductee, it could not have been made liable to pay the impugned interest in view of case law CIT vs Madras Fertilizers Ltd [1984] 149 ITR 703(Mad), DIT vs Jacabs Civil Incorporated [2011] 330 ITR 578 (Del) and DIT (International Taxation) vs Maersk Co. Ltd as agent of Henning Skov [2011] 334 ITR 79 (Uttarakhand). 4. The Revenue supports the order of the CIT(A) confirming levy of interest u/s 234B. Taking cue from the same, it argues that the lower appellate authority has rightly pierced corporate veil in assessee's....

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.... assessment in assessee's case. In compliance thereto, the deductor/ assessee's subsidiary deducted TDS of Rs. 70,88,567/-. 6. Coming to assessment proceedings, the assessee claimed that reimbursements of Rs. 11,53,52,883/- were not taxable in its hands being in lieu of expenses. This plea failed to impress upon the assessing authority, Dispute Resolution Panel as well as the 'tribunal'. In order dated 11.5.2012 passed in I.T.A.No.1733/Mds/2011 filed by the assessee, the co-ordinate bench (headed by one of us Dr.O.K.Narayanan, VP), treated the same as 'fee for technical services' liable to be taxed. At the same time, issue of interest u/s 234B, the bench remitted it back to Assessing Officer for redoing the exercise....

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....he same income. Similarly, the hon'ble Delhi High Court Jacabs Civil Mitsubishi Corpn. case (supra) observes that in case of a payer-payee relationship, the payee concerned is not absolved from the tax liability in case of shortfall in TDS deduction. However, in such a case, interest liability u/s 234B cannot be fastened to the payee. Similar principle stands echoed by the full bench of hon'ble Uttarakhand High Court Maersk Co. Ltd. (supra). Thus, the net conclusion which flows from the aforesaid case law is that a payee/deductee whose payments have already been subjected to TDS provisions cannot be held liable to pay consequential interest u/s 234B of the Act. 10. Coming to the order of the CIT(A) releasing the corporate veil (sup....