TaxTMI 
TaxTMI 
2025 (6) TMI 150
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....he interest charged us 2348 of the Act by relying upon Hon'ble Supreme Court's decision in case of Mitsubishi Corporation ignoring that the facts of the present case are not identical to that of the relied upon case. Here, the assessee is in default in tiling its ROl within stipulated time. 3. The Appellant craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of Appeal." 2. Heard rival submissions and carefully scanned the material available on record. 3. In the course of hearing, the Ld. DR submitted that the Ld. CIT(A) erroneously deleted the interest charged u/s 234B of the Income Tax Act, 1961 ("the Act", for short), without taking into consideration the fact that the assessee / respondent was in default for payment of advance tax even after being aware of the fact that no TDS was deducted on the income received by it and also erroneously relied upon the judgement of Hon'ble Supreme Court in the case of Mitsubishi Corporation [2021] 130 taxmann.com 276(SC), by ignoring that the facts of the present case are not identical to that of the relied upon case. 4. The Ld. Counsel submitted that the Formula One Marketing II Limi....
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.... Section 154 of the Act ('Rectification order'), inter alia, levying interest under Section 234B of the Act for failure to pay advance tax on the income assessed to tax. 4.5 Further, the law is settled by the judgment of the Hon'ble Supreme Court in the case of Mitsubishi Corporation (supra), which has decided upon this issue and accordingly, levy of interest under Section 234B of the Act is to be deleted and the order passed by the Assessing Officer under Section 154 of the Act is not sustainable. 5. The Ld. CIT(A) observed in impugned order that it is a settled law by virtue of the Hon'ble Supreme Court Judgment that interest u/s 234B is not applicable to the assessee and accordingly the interest levied by the AO u/s 234B is incorrect. Relevant extract of the impugned order is reproduced as under: "5.3.5 The non-applicability of interest u/s 234B of the Act has now been settled by the Hon'ble Supreme Court in the case of Mitsubishi Corporation (130 taxmann.com 276) on 17.09.2021 wherein, it has been held that interest u/s 234B is not applicable in the hands of the recipient of income (as relevant for years prior to AY 2013-14), if the taxes were con....
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....vied by the AO u/s 234B in the impugned Rectification Order, is incorrect and consequently. the entire demand of Rs. 11,33,80,754/- is liable to be deleted." 6. The Ld. AR further submitted that interest under Section 234B of the Act is not leviable on the income on which tax is deductible under the provisions of the Act. 6.1 The provisions of Section 234B of the Act provide that where an assessee is liable to pay advance tax under Section 208 of the Act for a financial year, and has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of Section 210 of the Act is less than 90% of the assessed tax, the assessee would be liable to pay simple interest for the shortfall in payment of the advance tax. The provision of Section 234B(1) of the Act reproduced below: "234B. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest..." (Emphas....
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....deduction at source under Section 195 of the Act. Therefore, in view of the provisions of Section 209(1)(d) of the Act, there was no liability on the Assessee to pay advance tax. Consequently, there was no default on the part of the Assessee and hence, no interest under Section 234B of the Act was leviable on the income assessed by the Learned AΟ. 6.5 In this regard, reliance is also placed on the judgment of the Hon'ble Supreme Court in the case of DIT vs. Mitsubishi Corporation [2021] (438 ITR 174) wherein identical issue arose before the Supreme Court as to whether a non-resident assessee is liable to pay interest under Section 234B of the Act when its income is subject to tax deduction at source under Section 195 of the Act. The Supreme Court relying on the provisions of Section 209(1)(d) of the Act decided the issue in favour of the assessee and rejected the contention of the Revenue that interest under Section 234B of the Act is leviable on a non-resident assessee for failure to pay advance tax. The relevant portion of the judgment is extracted as under: "19. The dispute relating to the interpretation of the words "would be deductible or collectible" i....
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....td. case (supra), that the Revenue is not remediless and there are provisions in the Act enabling the Revenue to proceed against the payer who has defaulted in deducting tax at source. There is no doubt that the position has changed since the financial year 2012-13, in view of the proviso to section 209(1)(d), pursuant to which if the assessee receives any amount, including the tax deductible at source on such amount, the assessee cannot reduce such tax while computing its advance tax liability." 6.6 While arriving at the aforesaid conclusion, the Supreme Court also clarified that the proviso inserted by Financial Act, 2012 which now provides that an assessee is required to pay advance tax under Section 208 of the Act even if the income is subject to tax deduction at source, is applicable prospectively from the A.Y. 2013-14 (F.Y. 2012-13) and the years prior to the same are not affected by the amendment. The Assessee submits that the appeal pertains to A.Y. 2012-13 (F.Y. 2011-12) and therefore, the judgment of Supreme Court is squarely applicable to the present case. 7. During the course of the hearing, the Learned AR submitted the judgment relied upon by the Ld. DR the judgm....