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2013 (4) TMI 369 - HC - Income TaxTDS u/s 194C - Assessee in default – According to the agreement between assessee and TNREL , the assessee would construct the building with technical assistance from TNREL, who would also incur the expenses on behalf of the assessee and get them reimbursed from the assessee. A.O proceeded that the assessee should have deducted the tax at source at 2% on the entire cost of construction. Thus, the Assessing Officer raised a demand under Section 201(1) and also charged interest under Section 201(1A). Held that - Going by the decision of Hon’ble Supreme Court in Hindustan Coca Cola Beverage P.Ltd., Vs. CIT [2007 (8) TMI 12 – SC] what emerges is that the even though the appellant herein is held as assessee in default, tax cannot be recovered from them, if the same has been paid by the recipient viz., TNREL. It is needless to say that the Assessing Officer should find out as to what extent the recipient had paid the tax. If the entire tax amount as claimed from the assessee herein has been paid by the recipient, then there cannot be any further demand of the same from the assessee. On the other hand, if the recipient had only paid part of the tax amount, then rest of the same shall be recovered from the assessee. Insofar as the interest demand is concerned, the assessee is liable to pay the interest from the date of its liability till the date of actual payment made by the recipient. Accordingly, the Assessing Officer is directed to re-compute the liability of the assessee and pass fresh orders . The questions of law raised in both the appeals are answered accordingly.
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