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2017 (1) TMI 1681 - HC - Income TaxLiability of interest of Assessee u/s 201(1A) - Tribunal held that deductor is not liable for interest under Section 201(1A) if the deductee has returned losses for relevant years and it will not make any difference if the assessment of the deductee was completed at positive income - HELD THAT:- If it is established that the recipient had filed all its returns for these years declaring loss in all the impugned assessment years, interest under Section 201 (1A) of the Act cannot be charged against the assessee. It may be that against loss declared by the recipient in its return, ultimately the assessment was completed at a positive income but in that situation also, that demand is on account of different between the returned income and assessed income and not because of non deduction of TDS by the assessee and hence it will not alter the situation particularly if that assessee has challenged the addition in his hands in appeal. Accordingly the order of the CIT(A) on this issue is set aside and the matter is restored to the file of the Assessing Officer for verification and adjudication of the issue in terms indicated above after affording an opportunity of being heard to the assessee. If it is found that in the return of income filed for these years by the deductee, it has included the impugned amount in its receipts and there is loss as per return, no demand can be raised u/s 201(1A) on the present assessee Question about liability of interest under Section 201(1A) has also been considered by this Court in Ghaziabad Development Authority Vs. Union of India and others [2016 (8) TMI 1240 - ALLAHABAD HIGH COURT] wherein it has been held that it is compensatory and if recipientAssessee has already paid tax or not liable to pay any tax whatsoever, obviously no interest under Section 201(1A) of Act, 1961 could have been recovered from alleged Assessee in default for the reason that interest could have been charged for the period when TDS fell due and actual amount of tax is paid by recipientAssessee. If there is no liability of payment of tax by recipien-Assessee, the question of deduction of tax by Assessee in default would not arise and the question of payment of tax by such recipient-Assessee also would not arise. In such case interest also could not have been charged. Hence, on the question of liability of interest, Tribunal has rightly observed that this aspect shall be examined by Assessing Officer and thereafter he shall pass a fresh order.
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