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2013 (6) TMI 744 - AT - Income TaxNon deduction of TDS on payment of interest to Indian of Management, Lucknow - demand under section 201(1) and 201(1A) - Held that:- We find that it is a settled legal position now that once recipients have paid tax on income embedded in these payments, and in the light of Hon’ble Supreme Court’s decision in the case of Hindustan Coca Cola Beverages Pvt Ltd Vs CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA) the taxes cannot once again be recovered from the tax deductor. In the absence of the statutory powers to requisition any information from the recipient of income, the assessee is indeed not always able to obtain the same. The provisions to make good the shortfall in collection of taxes may thus end up being invoked even when there is no shortfall in fact. On the other hand, once assessee furnishes the requisite basic information, the Assessing Officer can very well ascertain the related facts about payment of taxes on income of the recipient directly from the recipients of income. It is not the revenue’s case before us that, on the facts of this case, such an exercise by the Assessing Officer is not possible. It does put an additional burden on the Assessing Officer before he can invoke Section 201(1). As far as levy of interest under section 201(1A) is concerned, this interest is admittedly a compensatory interest in nature and it seeks to compensate the revenue for delay in realization of taxes. Hon’ble Bombay High Court, in the case of Bennett Coleman & Co Ltd Vs ITO (1984 (11) TMI 58 - BOMBAY High Court ) has held so. Therefore, levy of interest under section 201(1A) is applicable whether or not the assessee was at fault. However, since it is only compensatory in nature it is applicable for the period of the date on which tax was required to be deducted till the date when tax was eventually paid. However, in a case in which the recipient of income had no tax liability embedded in such payments, there will obviously be no question of delay in realization of taxes and the provisions of section 201(1A) will not come into play at all. The computation of interest is to be redone in the light of this legal position. The matter thus stands restored to the file of the Assessing Officer for fresh adjudication in accordance with the law
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