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2016 (12) TMI 1534 - HC - Income TaxDefault u/s 201(1) - failure to deduct TDS - liability to pay interest u/s 201(1A) if the payee of such amounts has files a nil return or a return showing a loss - Held that:- We will presume that the first proviso to sub section (1) operates retrospectively and that the proviso to sub section (1A) does not. As the amendment of 2009 is with effect from 01.07.2010, a question may arise in a given case whether it applies only from the next assessment year i.e. From 01.04.2011 or whether it applies to the assessment year 2010-11 only from 01.07.2010 and prior to that i.e. From 01.04.2009 to 30.06.2010 the unamended provisions applies. The issue, however, does not affect the result of this appeal. Even if the proviso to sub section (1) is not retrospective, it would make no difference to the assessee's case in view of the judgment of the Supreme Court in Hindustan Coca Cola Beverage P. Ltd. vs. Commissioner of Income Tax [2007 (8) TMI 12 - SUPREME COURT OF INDIA ].The last sentence makes it clear that even if the deductee assessee has paid the tax dues, it would not alter the liability to charge interest under Section 201(1A) till the date of payment of taxes by the deductee assessee. It is further held that the same would not even affect the liability for penalty under Section 271C. Thus, even prior to the amendment on 1st July, 2012, the liability to pay interest under Section 201 (1A) was there even in cases where the deductee assessee had paid the tax dues. The language of Section 201 is clear and unqualified. It indeed does not permit an assessee to decide for itself what the liability of the deductee assessee is or is likely to be. That is a matter for the assessing officer who assesses the returns of the deductee assessee. It is in fact not even possible for him to do so. He cannot ascertain with any degree of certainty as to the financial position of the deductee assessee. A view to the contrary would enable an assessee to prolong the matter indefinitely. If accepted, it may even entitle the assessee to contend that it is not liable to pay interest till the finalisation of the assessment of the deductee assessee. This could never have been contemplated by the Legislature. The language of Section 201 does not even suggest such an intention. Even if the assessee is in a position to ascertain the tax liability of the deductee assessee, it would make no difference for the reasons already stated. The section does not distinguish between cases where an assessee is in a position to determine the tax liability of the deductee assessee and cases where it is not in a position to do so. The terminal point has to be taken as a date on which the payee/deductee should have filed returns. Thus, even before and de hors the amendment of 1st July, 2012, the assessee would be liable to pay interest under Section 201(1A). The amendment which introduced inter-alia the first proviso to Section 201(1) is of no assistance to the assessee either. Section 197 establishes that where the deductor assessee wishes to reduce its liability on account of a possible absence of liability or a reduced liability of the deductee assessee, the deductee assessee must obtain a certificate. In the event of such a certificate being issued in favour of the deductee assessee, the person responsible for paying the income i.e. the deductor assessee would be entitled to deduct tax at the rates specified in such certificate or deduct no tax as the case may be. Section 197 thus, militates against the deductor assessee unilaterally not paying or paying an amount less than the specified amount of TDS. It militates against the deductor-assessee deciding for itself the deductee assessee's liability to tax. Sub section (1A) as amended by Finance Act, 2010 with effect from 1st July, 2010 is applicable in respect of the assessment year 2010-11. The section as amended also does not make any difference to the assessee's liability to pay interest. In the circumstances, the question of law is answered in favour of the appellant-revenue and against the respondent-assessee.
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