TMI Blog2010 (10) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... BER ORDER Per George George K : - This appeal by the assessee is directed against the CIT(A) s order dated 26.03.2010. The asst. year concerned is 2005-06. 2. The assessee has raised 15 exhaustive grounds. However, the crux of the issues is two fold, namely, (i) Whether the CIT(A) is justified in confirming the AO s action in disallowing the expenditure to the tune of Rs.2,40,09,915/- on the ground that the tax has not been deducted at source for the said expenditure u/s 40(a)(ia) of the I T Act. (ii) Whether the CIT(A) is justified in confirming the levy of interest u/s. 234A, 234B and 234C of the Act to the tune of Rs.35,29,873/-. 3. The brief facts of the case are as follows:- The assessee is a firm. It is enga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged the disallowance made u/s 40(a)(ia) of the Act. The assessee had also raised additional grounds wherein he had challenged the validity of levy of interest u/ss. 234A, 234B and 234C of the Act. The Tribunal remanded the matter to the CIT(A) for fresh consideration in the light of its observation in paras 6.3 and 6.4 of its order dated 22.1.2010. The CIT(A), after the remand of the matter, decided both the issues, namely, on merits as well as on the levy of interest, against the assessee vide his order dated 26.3.2010. 4. The assessee, being aggrieved by the order of the CIT(A) dated 26.3.2010, is in appeal before us. 4.1 As regards the issue on merits, it was submitted that the wage payments to the contractors was verified by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and regular income of the year. 4.3 The learned AR referring to the Hon ble Delhi High Court decision in the case of CIT v. V Anand Prakash 316 ITR 141 contended that levy of interest u/s 234B is compensatory in nature and default in non-payment of TDS amounting to Rs.5 lakhs should not result in huge tax demand of Rs. 1,00,63,655/- and interest amounting to Rs.35,29,873/-. 4.4 The assessee also relied on the decision of the Delhi Bench of the Tribunal in the case of Royal Jordan Airlines v. Deputy DIT (3 ITR (Tribunal) 181 wherein it was held that as regards charging of interest u/s 234B, it could be seen that the assessee had all along been claiming immunity from chargeability to tax on the basis of it being sovereign. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on record. The assessee had paid wages of Rs.2.4 crores to its contractors, which was claimed as expenses. In the 3CD report furnished along with the return of income, it was mentioned that the assessee had deducted tax at source on wages paid to the contractors only 7.1.2006 whereas the due date for making TDS payment was on 31.3.2005. Before the AO the assessee had stated that it was not possible to fulfill the TDS obligation due to financial difficulties faced by the firm during that period. It was not the firm s contention at the time of assessment proceedings that the payments were not covered by the provisions of section 194C nor has the firm objected to the disallowance u/s 40(a)(ia) of the Act. We are of the view that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding increase or decrease on the levy of interest by virtue of section 234A(4) and 234B(4). The assessee s contention that, interest is payable u/s. 234A, 234B and 234C on account of disallowance made in the assessment and the same could not have been predicted or anticipated, is devoid of merits. If the assessee was in a position to pay advance tax towards the likely disallowance u/s 40(a)(ia), it could very well remit the TDS amount to the government account, as TDS amount was far lesser than the tax liability arising out of default of TDS. Moreover, we are of the view that there is no uncertainty or ambiguity about the consequence of non-remitting TDS to the government account, since the provisions of section 40(a)(ia) has been on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant of waiver. However, it is pertinent to mention that the Hon ble Gujarat High Court in the case of Bhanuben Panchal and Chandrikaben Panchal v CCIT 269 ITR 27 had held that cases enumerated in the Circular dated 23.5.1996 are only illustrative and not exhaustive. The court went on to consider default due to a circumstances not prescribed/mentioned in the Board Circular for the grant of waiver. Similar views have been taken by the Hon ble High Courts in the following cases :- Motilal M Gupta v. CCIT 291ITR 557 (Bom.); Akilandeswari v. CCIT 318 ITR 1 (Mad.); TP Indrakumar v. ITO 322 ITR 454 (Kar.) 6.5 As mentioned earlier, we are only concerned whether interest charged u/s. 234A, 234B and 234C is in accordance with law and not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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