TaxTMI 
TaxTMI 
1989 (9) TMI 3
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....to be deducted in the year in which the credit was given to the non-resident had become time-barred ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that it was primarily the duty of the assessee-bank to give the actual dates of payments to the nonresident if it wanted to avoid liability on the ground that they were different from the dates of credit and, consequently, in not accepting the assessee's appeal in its entirety? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not quashing the order of the Income-tax Officer under sub-section (1A) of section 201 and instead sending it back to the Income-tax Officer with the direction that be should ascertain the cases in which interest had been paid by the bank and yet tax had not been deducted by the bank in respect of the said interest and deposited in the Government Treasury and charged interest under sub-section (1A) of section 201 in respect of such cases only?" The facts narrated in the statement of case are as under " The assessee is carrying on the business of banking through its numerous branches in India. In the....
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....ank itself had chosen to deduct tax from such interest and had debited the accounts of the parties concerned with such tax from which it was evident that the assessee was aware of its liabilities to deduct tax therefrom. Apparently, there was no reason as to why tax should not have been credited to the Government as per rules. In the absence of any specific particulars as to the payment of the interest to the non-resident customers which the bank was unable to furnish and in view of the facts mentioned above, he held that the bank had committed default in respect of the tax deducted at source out of the interest allowed to the non-resident customers under section 195 with regard to 24 branches as it did not credit to the Government the tax deducted at source within the time permissible under rule 30 of the Income-tax Rules, 1962. He, therefore, levied interest for delayed payment under section 201(1A) of the Income-tax Act, 1961. As per detailed calculations in the chart annexed to the order, he computed the amount of such interest at Rs. 4,06,013 for which he issued a demand notice accordingly ". Being aggrieved by the order of the Income-tax Officer, the assessee went up in ap....
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.... he or it shall be liable to pay simple interest on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. Now, the question of computation of interest would come in only when the tax is actually paid. It may be that the tax is not paid in accordance with the provisions of Chapter XVII of the Income-tax Act but recovered in some other manner as contemplated by section 232 of the Act. In such a case, the liability to pay interest under section 201(lA) would nevertheless be there because that liability is without prejudice to the provisions of sub-section (1) of section 201. If any authority is required for this purpose, we may refer to the decision of the Gauhati High Court in CIT v. Shyam Sundar Tea Co. Pvt. Ltd. [1978] 114 ITR 116 (Gauhati) which is directly in point." The last dispute relates to the assessee's liability to pay interest on the amounts for which it was to be treated as an assessee in default under section 201 of the Income-tax Act and the dates from which it was payable. The Tribunal concluded that the liability under section 195 arose from the actual dates of payment to the non-residents and not fro....
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....isions of section 161 read with section 163, the assessee is liable to be assessed and to pay tax in respect of the interest income which had accrued or arisen to the non-residents who had deposits with the assessee-bank. It has been argued that, having regard to the provisions of section 195 of the Income-tax Act, since the assessee is a statutory agent and as such is liable to pay income-tax on the interest income of the non-residents as an agent, it has no duty to deduct income-tax from any interest income of the non-residents. In support of this contention, reliance was placed on the judgment of this court in the case of Bunge and Co. Ltd. v. ITO [1971] 79 ITR 93 (Cal). In my view, this argument is entirely misconceived. Section 195(1) provides as follows : " 195.(1) Any person responsible for paying to a non-resident, not being a company, or to a company which is neither an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India, any interest, not being 'Interest on securities', or any other sum, not being dividends, chargeable under the provisions of this Act, shall, at the time of payment, ....
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....e-tax on behalf of the non-resident depositors. Section 163(2) of the Income-tax Act clearly provides that " No person shall be treated as the agent of a non-resident unless he had an opportunity of being heard by the Income-tax Officer as to his liability to be treated as such ". The Income-tax Officer, before treating the assessee as an agent and proceeding against the bank as an agent of the non-resident depositors, will have first to serve a notice upon the assessee. If it can be established by the Income-tax Officer that the assessee-bank is an agent, then only can an assessment proceeding be commenced against the assessee. Reliance was placed on Bunge and Co. Ltd. v. ITO [1971] 79 ITR 93 (Cal) in support of the contention made by Dr. Pal. In my view, that judgment clearly goes against the contentions of the assessee. In that case, it was held that the same person cannot be treated as an agent under section 163 of the Act and proceeded against under section 201 of the Act simultaneously. In that case, a foreign company had an office at Calcutta. It carried on the business of exporting jute goods from India and had agents, some of whom were also the buyers in various fore....
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....re mutually exclusive. " This argument was accepted by the court and the court observed as follows ( at page 99): "This is quite clear from the heading of the second notice which speaks of action under sections 163 and 201 of the Act and of 'treatment as an agent'. Such an action, in my view, is plainly not permissible in law and the court is entitled to restrain the authorities from continuing proceedings on the basis of such a notice." "I make it clear, however, that it would be open to the incometax authorities, if and when they make up their minds to elect as to whether the petitioner should be proceeded against either under the former group of sections of the Act or the latter which are, in my view, mutually exclusive." In that case, the Income-tax Officer himself had not made up his mind whether the assessee should be proceeded against under the group of sections 195 to 201 or under the group of sections 160 to 163. In the instant case, no action was taken by the Income-tax Officer under sections 160 to 163. There is no present liability of the assessee to pay any tax on behalf-of the non-resident depositors. No proceeding has been taken against the assessee-ba....