TaxTMI 
TaxTMI 
2022 (11) TMI 543
X X X X Extracts X X X X
X X X X Extracts X X X X
....n on which, with the consent of both parties, we have heard the appeal. For completeness, however, elaborate grounds of appeal taken by the assessee are reproduced below: 1. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as the "CIT(A)" erred in passing the order without following the due process under the Faceless Appeal Scheme 2021 including non-granting of personal hearing requested by the appellant and accordingly, the order passed by the learned CIT(A) is illegal, null and void ab initio and hence ought to be quashed. 2. The order passed by the learned CIT(A) is without jurisdiction in as much as the appeal is arising out of an order passed by the international tax jurisdiction and, accordingly, the National Faceless Appeal Centre would have no jurisdiction to hear and dispose off such appeal. 3. The learned CIT(A) erred in not adjudicating the ground of appeal raised by the appellant which states that the Income-tax Officer (International Tax) - Circle 2(2)(2), Mumbai (hereinafter referred to as the "AO") erred in passing the order under Section 201(1) / 201(1A) of the Income tax Act, 1961 (hereina....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The learned CIT(A) erred in not adjudicating the ground of appeal raised by the Appellant which states that the A erred in not appreciating that the grossing up provisions under section 195A of the Act cannot be applied for computing the amount liable for TDS as there was no agreement between the appellant and BNY Mellon that the tax shall be borne by the appellant and in fact, the taxes due were paid by BNY Mellon directly, even though detailed submissions in support thereof were filed. 10. The learned CIT(A) erred in confirming the action of AO in levying interest of Rs.44,55,51,676 under section 201(1A) of the Act. 11. The learned CIT(A) failed to appreciate that interest under section 201(1A) of the Act cannot be calculated beyond the date of deposit of taxes by the recipient i.e., BNY Mellon. 3. To adjudicate on this issue, only a few material facts, as culled out from the material on record, need to be noted. The assessee before us is an Indian company and registered with the Securities & Exchange Board of India (SEBI), inter-alia, as a stock broker. Its in the course of his business activities as such, the assessee had a role to play in giving effect to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esidents) are not able to get the benefit for the taxes paid out of the sale proceeds distributed to them by BNY Mellon. This has happened due to the dereliction of legal responsibility entrusted upon by the assessee by the Income Tax Act, 1961". The Assessing Office then proceeded to compute the tax liability on the non-deduction of tax at source, @43.26%, on the payments plus grossing up amount under section 195A, which aggregated to Rs 135,54,33,700 and computed the tax withholding liability of Rs 58,63,60,619. The Assessing Office further computed interest liability for delayed payment of these taxes, and this amount worked out to Rs 44,55,51,676. Accordingly, a tax withholding demand, including interest for delay in payment thereof, was computed at Rs 103,19,12,294. Aggrieved, assessee carried the matter in appeal. Learned CIT(A), at pages 46-47 of the impugned order, inter-alia noted that "the dates of credit by ICICI Securities Ltd to the Bank of New York Mellon were 22.12.2014, 23.12.2014, 24.12.2014, 24.12.2014, 26.12.2014 and 8.1.2015" and "the date of payment of advance tax by the Bank of New York Mellom was 23.01.2015" and that "section 201 does not exempt TDS to be mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f income is already discharged. In the case of CIT Vs Eily Lilly & Co Pvt Ltd [(2007) 312 ITR 225 (SC)], Hon'ble Supreme Court has observed that "the liability of deducting tax at source is in the nature of a vicarious liability, which pre-supposes existence of primary liability. The said liability is a vicarious liability and the principal liability is of the person who is taxable". Therefore, once the principal liability itself is adequately protected or discharged, it cannot be said the vicarious liability still survives. Whether the amount is paid as tax deducted at source or as advance tax, all it does is that treated as payment by, or on behalf of the assessee, which obviously cannot be refunded unless the Assessing Officer is satisfied with the discharge of tax liability of the person to whose account is it credited; the interests of the revenue are thus adequately protected and that is the very raison d'être for the existence of tax withholding or tax deduction at source provisions. The provisions of Section 201 are only recovery provisions and compensatory in nature, and are, in that sense, not penal in nature, and that is what we must bear in mind while deal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ealization of taxes, and the admitted facts on record clearly evidence that. The time gap between the date of the transaction and the payment of advance tax by BNY Mellon is well within the permitted time for depositing the tax at source There is thus no occasion to invoke the provisions of vicarious liability under section 201 on the facts of this case. For this short reason alone, the impugned demands under section 201 r.w.s 195 deserves to be quashed. 6. While we have proceeded on the basis, as is the position admitted by the authorities below, that BNY had paid the advance tax in respect of the transaction in question, the facts indicated by a copy of form 15CB may also be perceived to be slightly different in a way. On page 18 of the impugned order passed by the Assessing Officer, the Assessing Officer has taken note of a certificate in respect of ICICI Bank, which shows the assessee as a remitter and the tax deduction of Rs 40,92,98,212 as having been made but it is only in the related challan, i.e. challan/ITNS 280 serial no. 00668 (advance tax) for the assessment year 2015-16 by BNY Mellon, that there is a mistake of paying it as an advance tax for BNY Mellon rather than....