AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 25
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....ave not refunded the interest amount to Respondent No.3 to pass and/or alternatively this case may be transferred to High Court of Delhi since the petitioner is assessed at Delhi, if this Hon'ble Court think so. 7.2 That, in the alternative and without prejudice this Hon'ble Court may kindly be pleased to direct the respondent No.3 to take necessary action with regard to refund of interest levied u/s 201(1A) of the Income Tax Act. 7.3 Issue any other writ or direction as may be deemed fit by this Hon'ble Court in the facts and circumstances of the case." 2. The facts of the case, bereft of unnecessary details, are that the petitioner entered into a works contract with respondent No.3/National Highways Authority of India (in short "the NHAI") on 09.04.2006 for construction of four lane road of Jhansi-Lakhnadon Section KM 132 to KM 187 on NH-26 in the State of Madhya Pradesh. The petitioner had obtained certificates from its Assessing Officer at New Delhi for deduction of tax at lower rate under Section 195/197 of the Income Tax Act, 1961 (for short "the Act") entitling the petitioner for deduction of tax at source at lower rate of 2.11% inclusive of surcharge and ed....
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....TDS at the rate of 42.23% was upheld. Being aggrieved by the order of the CIT(A) dated 11.10.2011, the respondent No.3 then preferred an appeal before the Income Tax Appellate Tribunal (in short "the Tribunal"). The learned Tribunal vide orders dated 20.09.2013 (Annexure P-4) and 29.05.2015 (Annexure P-5) allowed the appeal and directed the Assessing Officer to adjudicate the issue as regards the income of the petitioner determined at loss under intimation under Section 143(1) or assessed under Section 143(3) and whether the petitioner was entitled to refund/credit of the TDS amount which was already deducted and deposited by the respondent No.3. 5. The respondent No.2 i.e. the Deputy Commissioner of Income Tax, New Delhi after detailed scrutiny vide orders passed under Sections 154/ 143(3)/143(1) dated 25.02.2016, 28.02.2016, 25.02.2016 and 29.02.2016 as contained in Annexure P-6 allowed the TDS credit in favour of the petitioner as it was found to have been assessed at loss. The respondent No.3 had issued letters dated 19.06.2012, 26.11.2013 and 31.07.2013 as contained in Annexure P-7, which shows deduction of TDS at higher rate and payment of the same along with interest to the....
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....e order under Section 201(1) and 201(1A) of the Act was passed against the respondent No.3 and not against the petitioner and therefore, the petitioner has no cause of action against the respondent No.1. However, the learned counsel submitted that the respondent No.1 had issued the summons to the petitioner on 17.03.2017 (Annexure-1) and called for the details of its claim. Similar letter was issued to the respondent No.3 to clarify certain queries. But, having received no response from them, the impugned order was passed. 9. Reply has also been filed on behalf of the respondent No.3. Learned counsel submitted that the respondent No.3 is not directly concerned with the demand made by the petitioner. It has deposited the TDS and interest as per the demand of the Income Tax Department. Further, its appeal for refund of interest is also pending. 10. We have heard learned counsel for the parties at length and find that the present petition deserves to be allowed. 11. We proceed to examine the scope of relevant statutory provisions. Section 195 of the Act is a special provision for tax deduction at source from payments to non-residents. All payments except under the head "salary" ar....
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....essing Officer assessing the payee to give a "nil' deduction or deduction at a lower rate, so as to avoid excessive deduction of tax at source. Under sub-section (2) of Section 197 of the Act, where any such certificate is issued, the person responsible for paying any amount shall, until such certificate is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be. Once the certificate is issued, the person responsible for making payment shall be required to deduct the tax at the rate specified in the certificate in respect of payment to be made or has already been made, as the case may be for the period mentioned in the certificate. The relevant provisions of Section 197 of the Act are reproduced as under:- "Certificate for deduction at lower rate. 197. (1) Subject to rules made under sub-section (2A), where, in the case of any income of any person (or sum payable to any person), income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194-I, 194J, 194K, ....
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....lared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed. Provided further that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax. (1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest, - (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200; P....
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.... levy of interest under Section 201(1A) of the Act, as the same is consequential in nature. In other words, in a situation where deductee is not required to pay any tax on its income, there is no reason to hold the deductor in default under Section 201(1) and 201(1A) of the Act, as deductee is not required to pay any tax on its income, which is, in fact, a loss. 13. Adverting to the present factual matrix, in the instant case, assessment in the case of the recipient for the assessment years 2008-09, 2009-10, 2010- 11 and 2011-12 had been completed under Section 143(3) of the Act at a loss and the recipient of the income was, therefore, not required to pay any income-tax for the relevant assessment years. Accordingly, no occasion will arise for charging any interest from the date on which tax was deductible to the date on which tax is actually paid. The Revenue had recovered the following amounts from respondent No.3 - deductor on account of interest under Section 201(1A) of the Act, which in turn had been paid by the petitioner to the deductor:- Assessment Year Interest 2008-09 Rs. 50,64,730/- 2009-10 Rs. 97,99,684/- 2010-11 Rs. 40,41,627/- 2011-12 Rs. 1,73,64,598/- To....