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2017 (4) TMI 448 - AT - Income TaxInterest under sec.234-B liability - TDS liability u/s 195 - liability of the assessee to pay advance tax - Held that:- Under Sec.195 there is an obligation on the payer, i.e. any person responsible for paying to a non-resident, to deduct income tax at source at the rates in force from such payments excluding those incomes which are chargeable under the head 'Salaries'. Therefore, the entire tax is to be deducted at source which is payable on such payments made by the payee to the non- resident. Sec.201 of the Act lays down the consequences of failure to deduct or pay. These consequences include not only the liability to pay the amount which such a person was required to deduct at source from the payments made to a non-resident but also penalties etc. Once it is found that the liability was that of the payer and the said payer has defaulted in deducting the tax at source, the Department is not remedy-less and therefore can take action against the payer under the provisions of Sec.201 of the Income Tax Act and compute the amount accordingly. No doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments, the non- resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. The provisions of Sec.209(1)(d) have been amended by the Finance Act, 2012 but those amendments are not relevant for the present case which relates to AY 1992-92. We therefore hold that the assessee was not liable to pay any interest under sec.234-B of the Act following the judgments referred to earlier. We find no merits in the relevant grounds of appeal of the revenue wherein the revenue has challenged the order of the CIT(A) holding that charging of interest u/s.234B of the Act in the present case was not in accordance with law. Levy of interest u/s.220(2) - Held that:- CIT(A) has not given any finding as to whether interest is chargeable u/s.220(2) of the Act or not. He has only directed the AO to follow the CBDT Circular No.334 dated 3.4.1982 and charge interest u/s.220(2) of the Act in accordance with the said circular. The Assessing Officer and the Assessee will be at liberty to put forth their claim as to whether para 2.1 or 2.2 of the CBDT Circular will apply. The CIT(A) ought to have rendered a finding on this aspect. We are of the view that the order of assessment by the AO u/s.147 of the Act as well as the order u/s.154 of the Act were only set aside in appeal and such setting aside did not render the assessment final and issues were set aside for fresh consideration by the AO. In such circumstances, the charging of interest would be governed by para 2.2 of the Circular and charging of interest u/s.220(2) as done by the AO should be held to be proper. We hold accordingly. Consequently, the relevant grounds of appeal regarding levy of interest u/s.220(2) of the Act raised by the Revenue in its grounds of appeal are allowed.
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