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2020 (9) TMI 873 - HC - Income TaxLiability to pay interest u/s 234B - non payment of tax in respect of Assessment Year 2005-06 and 2006-07 - payer had approached the department claiming that payments to be made to the assessee are not chargeable to tax in India and to determine the chargeability and after determination of the tax liability by the department, the deductor has deducted the tax at source and has remitted the balance to the assessee - HELD THAT:- Section 195(1) of the Act provides for deduction of Tax at Source by any person responsible for paying to a foreign company any other sum chargeable under the provisions of the Act at the time of credit of such income to the account of the payee. It is axiomatic that assessee was entitled to, in its computation of its advance tax liability to take a tax credit of the amount, which was deductible or collectible irrespective of fact whether the amount was actually deducted or collected. Under the aforesaid provision, the assessee was entitled to tax credit of an amount that was deductible even if it was not actually deducted. Therefore, in order to remove the anomaly in law, the parliament inserted a proviso to Section 209(1) by Finance Act, 2012 with effect from 01.04.2012. In the light of legal position as it existed for the relevant Assessment Years prior to insertion of proviso to Section 209(1) of the Act, it is clear that if payer who was required to make payments to non resident had defaulted in deducting the tax at source from such payments, the non resident is not absolved from payment of taxes thereupon and non resident is liable to pay tax and the question of payment of advance tax would not arise. Therefore, it would not be permissible for the revenue to charge any interest under Section 243B of the Act. - Decided in favour of assessee.
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