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2014 (3) TMI 178 - AT - Income TaxDemand raised u/s 201/201(1A) of the Act r.w. section 194H of the Act – TDS not deducted – Held that:- A short deduction of tax at source by itself does not result in a legally sustainable demand u/s 201(1) and u/s 201(1A) – the decision in Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] - the taxes cannot be recovered once again from the assessee in a situation in which the recipient of income has paid due taxes on income embedded in the payments from which tax withholding requirements were not fully or partly, complied with. The onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primarily liability to pay tax, and it is only when the primary liability is not discharged that vicarious recovery liability can be invoked - Once all the details of the persons to whom payments have been made are on record, it is for the Assessing Officer, who has all the powers to requisition the information from such payers and from the income tax authorities, to ascertain whether or not taxes have been paid by the persons in receipt of the amounts from which taxes have not been withheld - The lapse on account of non-deduction of tax at source is to be visited with three different consequences – penal provisions, interest provisions and recovery provisions - Recovery provisions under section 201(1) can be invoked only when loss to revenue is established, and that can only be established when it is demonstrated that the recipient of income has not paid due taxes. Interest under section 201(1A) is compensatory interest in nature and it seeks to compensate the revenue for delay in realization of taxes – the decision in Bennett Coleman & Co Ltd Vs ITO [1984 (11) TMI 58 - BOMBAY High Court] – thus, levy of interest u/s 201(1A) is applicable whether or not the assessee was at fault - 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 - 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 – thus, the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee.
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