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2011 (1) TMI 1472 - HC - Income TaxAssessee in default u/s 201(1) - liability to pay interest on TDS amount u/s 201(1A) - Payments of interest on the amount of tax to be deducted from the date of deduction till 1st Nov., 2004 under section 201(1A) - assessee in default - HELD THAT:- From the judgment in COMMISSIONER OF INCOME-TAX, NEW DELHI VERSUS ELI LILLY & COMPANY (INDIA) PVT. LTD. [2009 (3) TMI 33 - SUPREME COURT] and the Explanation to section 191, it is clear that once the payee acknowledges the receipt of the sale consideration, files a return assessing the said amounts in his hands and pays tax, which is accepted by the Department, the payer ceases to be an ‘assessee in default’. He is not liable to pay tax under s. 201(1) of the Act. However, that does not absolve his liability to pay interest on TDS amount which he has not deducted. Therefore in order to foist the liability of payment of tax under s. 201(1A) it is not necessary that on the date when the demand is made, the assessee should be an ‘assessee in default’. As held by the apex Court, both these sections are independent and mutually exclusive. They could be operated independent of each other. In that view of the matter, the Tribunal was justified in holding that on payment of tax due by the payee, the liability of the payer under s. 201(1) ceases, he ceases to be an ‘assessee in default’. But he has to pay interest under s. 201(1A) of the Act. Appeal dismissed.
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