Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2015 (1) TMI HC This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2015 (1) TMI 1168 - HC - Income Tax


  1. 2016 (8) TMI 1357 - SCH
  2. 2022 (8) TMI 387 - HC
  3. 2022 (3) TMI 904 - HC
  4. 2020 (9) TMI 873 - HC
  5. 2019 (10) TMI 1508 - HC
  6. 2019 (6) TMI 311 - HC
  7. 2019 (4) TMI 2092 - HC
  8. 2018 (12) TMI 1770 - HC
  9. 2018 (6) TMI 1556 - HC
  10. 2018 (4) TMI 1716 - HC
  11. 2018 (5) TMI 1265 - HC
  12. 2017 (4) TMI 1504 - HC
  13. 2017 (2) TMI 1514 - HC
  14. 2017 (1) TMI 1338 - HC
  15. 2016 (10) TMI 399 - HC
  16. 2015 (4) TMI 1331 - HC
  17. 2023 (6) TMI 345 - AT
  18. 2023 (4) TMI 986 - AT
  19. 2022 (12) TMI 1396 - AT
  20. 2022 (11) TMI 1345 - AT
  21. 2022 (9) TMI 1572 - AT
  22. 2022 (7) TMI 1365 - AT
  23. 2022 (3) TMI 447 - AT
  24. 2022 (2) TMI 693 - AT
  25. 2021 (11) TMI 806 - AT
  26. 2021 (6) TMI 328 - AT
  27. 2021 (5) TMI 150 - AT
  28. 2021 (4) TMI 251 - AT
  29. 2020 (12) TMI 1065 - AT
  30. 2020 (12) TMI 857 - AT
  31. 2020 (11) TMI 1049 - AT
  32. 2020 (11) TMI 206 - AT
  33. 2020 (10) TMI 604 - AT
  34. 2020 (7) TMI 191 - AT
  35. 2020 (3) TMI 470 - AT
  36. 2020 (3) TMI 43 - AT
  37. 2019 (11) TMI 1115 - AT
  38. 2019 (12) TMI 812 - AT
  39. 2019 (10) TMI 512 - AT
  40. 2019 (9) TMI 810 - AT
  41. 2019 (9) TMI 731 - AT
  42. 2019 (7) TMI 1083 - AT
  43. 2019 (7) TMI 527 - AT
  44. 2019 (6) TMI 1689 - AT
  45. 2019 (4) TMI 1428 - AT
  46. 2019 (4) TMI 1573 - AT
  47. 2019 (3) TMI 677 - AT
  48. 2019 (2) TMI 1513 - AT
  49. 2019 (2) TMI 1942 - AT
  50. 2019 (2) TMI 346 - AT
  51. 2018 (12) TMI 1069 - AT
  52. 2018 (12) TMI 1202 - AT
  53. 2018 (7) TMI 1808 - AT
  54. 2018 (7) TMI 1955 - AT
  55. 2018 (7) TMI 1954 - AT
  56. 2018 (6) TMI 401 - AT
  57. 2018 (4) TMI 504 - AT
  58. 2018 (3) TMI 1599 - AT
  59. 2018 (2) TMI 1927 - AT
  60. 2018 (4) TMI 240 - AT
  61. 2018 (1) TMI 670 - AT
  62. 2017 (11) TMI 1846 - AT
  63. 2017 (10) TMI 55 - AT
  64. 2017 (8) TMI 416 - AT
  65. 2017 (4) TMI 1145 - AT
  66. 2017 (4) TMI 1461 - AT
  67. 2017 (3) TMI 1469 - AT
  68. 2017 (2) TMI 780 - AT
  69. 2016 (10) TMI 1131 - AT
  70. 2016 (6) TMI 887 - AT
  71. 2016 (6) TMI 1441 - AT
  72. 2016 (6) TMI 259 - AT
  73. 2016 (6) TMI 329 - AT
  74. 2016 (5) TMI 258 - AT
  75. 2016 (2) TMI 705 - AT
  76. 2016 (2) TMI 921 - AT
  77. 2016 (2) TMI 836 - AT
  78. 2015 (7) TMI 1153 - AT
Issues Involved:
1. Whether the Income Tax Appellate Tribunal (ITAT) erred in holding that the assessee could not be saddled with interest liability under Section 234B of the Income Tax Act, 1961.
2. Whether the obligation to deduct tax at source under Section 195 of the Act is absolute and rests solely on the payer.
3. The applicability of the legal precedent set in Director of Income Tax v. Jacabs Civil Inc. and CIT v. Anjum M.H. Ghaswala and Ors.
4. The impact of the Finance Act, 2012 amendment on the computation of advance tax and the assessee's liability.

Detailed Analysis:

1. Interest Liability under Section 234B:
The primary issue was whether the ITAT erred in confirming the CIT(A)'s order that deleted the interest levied under Section 234B. The Revenue argued that interest under Section 234B is mandatory, as held by the Supreme Court in CIT v. Anjum M.H. Ghaswala and Ors., and that the ITAT's reliance on Jacabs Civil Inc. was misplaced. The ITAT dismissed the Revenue's appeals, holding that the position of law in Jacabs Civil Inc. applied squarely, negating the assessee's liability for interest under Section 234B.

2. Obligation to Deduct Tax at Source under Section 195:
The Court examined whether the payer's obligation to deduct tax at source under Section 195 is absolute. According to the Court, Section 195(1) obligates the payer to deduct tax at source from payments to non-residents. The Court upheld the interpretation in Jacabs Civil Inc., stating that the obligation of the payer to deduct tax is absolute, and the non-resident assessee is entitled to reduce its advance tax liability by the amount deductible at source, regardless of whether it was actually deducted.

3. Applicability of Legal Precedents:
The Revenue relied on the Alcatel Lucent case, where the Court had held that interest under Section 234B could be imposed on a foreign company that denied tax liability initially but later admitted it. The Court distinguished the present case from Alcatel Lucent, noting that the latter involved a volte face by the assessee regarding its PE status, influencing the payer's non-deduction of tax. In contrast, the present case did not involve such a volte face, and the Court reaffirmed the applicability of Jacabs Civil Inc., emphasizing that the payer's obligation to deduct tax at source is absolute.

4. Impact of the Finance Act, 2012 Amendment:
The Court noted that the Finance Act, 2012, amended Section 209(1)(d) to specify that the non-resident assessee could take credit only for the amount of tax actually deducted by the payer, effective from 1.4.2012. This amendment was prospective and did not apply to the assessment years in question. The Court held that the law prior to the amendment allowed the assessee to take credit for the amount deductible, not necessarily deducted, thus negating the assessee's liability to pay advance tax and interest under Section 234B.

Conclusion:
The Court dismissed the Revenue's appeal, holding that the primary liability to deduct tax at source under Section 195 rested with the payer. The failure of the payer to deduct tax did not justify levying interest under Section 234B on the assessee. The payer could be treated as an assessee-in-default under Section 201, with the corresponding consequences. The Court upheld the ITAT's decision, confirming that no interest was leviable on the assessees under Section 234B.

Final Judgment:
The appeal of the Revenue was dismissed without any order as to costs. The Court reaffirmed that the obligation to deduct tax at source under Section 195 is absolute and rests with the payer, and the assessees were not liable for interest under Section 234B for the relevant assessment years.

 

 

 

 

Quick Updates:Latest Updates