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2005 (1) TMI 609 - ITAT BANGALOREDeduction of tax at source - Payments made in respect of rent and other services - Assessee in default - Penalty levied u/s 271C - HELD THAT:- In the present case, the assessee itself has called the payment as ‘rent’. Therefore, looking to the nature of payment, we are of the considered view that the payment made by the assessee to M/s. Wipro Ltd. was ‘rent’. Hence, section 194-I was to be applied. It is a fact that the assessee failed to deduct tax as required u/s 194(1) of the Act. Therefore, interest u/s 201(1A) is leviable for such default. However, in this case, M/s. Wipro Ltd. [2002 (8) TMI 258 - ITAT BANGALORE] has already paid the tax which was otherwise to be deducted by the assessee. Therefore, according to the assessee, there was no default. In our opinion, since the amount of tax has already been paid by the recipient, i.e., M/s. Wipro Ltd., the ITO (TDS) was justified in holding that there was no tax demand against the assessee. Although the assessee is to be treated as defaulter. However, since the assessee is a defaulter within the meaning of section 201 of the Act, hence, levy of interest was justified u/s 201(1A) of the Act, for the period of default. Before us, no details are available as to when the payment of tax was made by Wipro Ltd. Therefore, we uphold the order of levy of interest u/s 201(1A) of the Act. However, the matter is sent back to the Assessing Officer for fresh computation of the amount of interest. The interest has to be levied up to the period of non-payment of tax. No interest is to be levied from the date when tax was paid by Wipro Ltd. Payment of shared services and support services - Looking to the nature of expenditure, we are of the view that the payments made by the assessee do not come within the purview of section 194J of the Act because the assessee did not make any payment as fees for professional and technical services. Therefore, in our opinion, the assessee cannot be held as defaulter in respect of the payments made for support services and shared services. Accordingly, we direct the ITO (TDS) not to levy interest u/s 201(1A) in respect of these payments for the assessment year 1998-99. Penalty under section 271C - Looking to the facts of the case, we find that the amount of tax was already paid by Wipro Ltd. Therefore, the ITO (TDS) raised nil demand against the assessee. That being the position, we are of the view that there was no reason for levy of penalty for the default. Accordingly, we direct the Assessing Officer to delete the penalties. In the result, Appeals are partly allowed and ITA are allowed.
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