TMI Blog2009 (10) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... 482/09, ITA NO 2483/09, ITA NO 2484/09, ITA NO 2485/09, ITA NO 2486/09, ITA NO 2487/09, ITA NO 2488/09, ITA NO 2489/09, ITA NO 2490/09, ITA NO 2491/09, ITA NO 2492/09, ITA NO 2493/09, ITA NO 2494/09, ITA NO 2495/09, ITA NO 2496/09, ITA NO 2497/09, ITA NO 2499/09, ITA NO 2500/09, ITA NO 2501/09, ITA NO 2503/09, ITA NO 2504/09, ITA NO 2506/09, ITA NO 2535/09, ITA NO 2536/09, ITA NO 2537/09, ITA NO 2538/09, ITA NO 2539/09, ITA NO 2540/09, ITA(L) NO 3821/08, ITA(L) NO 3823/08, ITA(L) NO 3826/08 Vimal Gupta for the appellants. F.V Irani and A.K. Jasani for the respondents. Judgment: V. C. Daga J .- All these appeals filed under section 260A of the Income-tax Act, 1961, ("the Act" for short) are against the order dated June 27, 2008, of the Income-tax Appellate Tribunal ("ITAT" for short), Pune Bench, Pune, in the income-tax appeals arising from assessments meant for the assessment year 2001-02 and raising three questions of law. 2. Counsel appearing for the appellant and respondent agree that the first two questions sought to be raised in all these group of appeals are covered against the Revenue by virtue of the judgments of the hon'ble Supreme Court. The first que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning of section 147 of the Act. A notice under section 148 of the Act was issued on November 10, 2006. It was served on the assessee on November 17, 2006. In response thereto, the assessee filed a revised return of income on June 26, 2007, showing his income at Rs. 1,25,20,120. An assessment was completed under section 143(3) read with section 147 of the Act, vide order dated September 14, 2007, determining the total income of the assessee in the sum income of Rs. 1,25,20,120 by making an addition of Rs. 90,50,970 on account of addition of the amount which the assessee had received from outside India, i.e., from M/s. Tetra Pak International SA with further order directing levy of interest under sections 234A, 234B and 234C of the Act. 8. The assessee, not satisfied with the action of the Assessing Officer levying interest under sections 234A, 234B and 234C on the income determined under section 143(3) read with section 147 of the Act preferred an appeal before the Commissioner of Income-tax (Appeals)-III, Pune, which was dismissed by an order dated February 28, 2008, affirming the order of the Assessing Officer. 9. Aggrieved by the aforesaid order of the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to make payment of the advance tax under section 191 of the Act, as stipulated under sections 207 and 208 of the Act in respect of amounts on which tax had not been deducted at source in accordance with the provisions of Chapter XVII of the Act. He further urged that, on the facts and circumstances of the case, the Tribunal has ignored the fact that the central issue was not of interest but was that of non-payment of advance tax eventually attracting compensatory levy of interest under sections 234B and 234C of the Act. In his concluding submission, Mr. Gupta submits that the order of the Tribunal is palpably erroneous, wrong and perverse based on misinterpretation of the provisions of sections 234A, 234B and 234C of the Act warranting inference at the hands of this court. 12. Per contra, Mr. Irani, learned counsel appearing with Mr. Jasani, for the respondents urged that the interest under sections 234B and 234C of the Act can be levied only if an assessee is liable to pay advance tax but defaults in payment thereof. According to him, in the present case, the assessee was not liable to pay advance tax at all as such there was no question of his being liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident companies. 17. Mr. Irani, alternatively, without prejudice to his above submission, submits that in any event, considering the fact that the first step requires an estimation of current income, it, thus, follows that if two views are possible regarding the taxability of a receipt in an employee' s hands and if the employee, under a bona fide belief regarding its non-taxability, excludes it from the estimate of his current income, there can be no question of his being in default of payment of advance tax and, consequently, he cannot be made liable for interest under section 234B/234C of the Act. In support of this submission, reliance is placed on the judgment of the Uttaranchal High Court in CIT v. Sedco Forex International Drilling Co. Ltd. [2003] 264 ITR 320 followed by this court in Director of Income-tax (International Taxation) v. NGC Network Asia LLC [2009] 313 ITR 187 (Bom). 18. Lastly, Mr. Irani submits that in any event, the employer-company having already paid interest under section 201(1A) of the Act on account of non-deduction, by it, of tax deducted at source, the employee-respondent cannot be subjected to interest liability under section 234B/234C of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the head `Salaries' including the income referred to in sub-section (1A), and the tax so payable shall be construed as if it were, a tax deductible at source, from the income under the head `Salaries' as per the provisions of sub-section (1), and shall be subject to the provisions of this Chapter. (2) Where, during the financial year, an assessee is employed simultaneously under more than one employer, or where he has held successively employment under more than one employer, he may furnish to the person responsible for making the payment referred to in sub-section (1) (being one of the said employers as the assessee may, having regard to the circumstances of his case, choose), such details of the income under the head `Salaries' due or received by him from the other employer or employers, the tax deducted at source therefrom and such other particulars, in such form and verified in such manner as may be prescribed, and thereupon the person responsible for making the payment referred to above shall take into account the details so furnished for the purposes of making the deduction under sub-section (1). 201.(1) Where any person, including the principal officer of a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collectible at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable. 234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent. for every month or part of a month comprised in the period commencing on the date immediately following the due date, and, (a) where the return is furnished after the due date, ending on the date of furnishing of the return; or (b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment or recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the earlier assessment aforesaid. Explanation . . . (4) Where as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount of tax on which interest was payable under sub-section (1) or sub-section (3) of this section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, tax is paid by the assessee under section 140A or otherwise, (i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. (3) Where, as a result of an order of reassessment or recomputation under section 147 or section 153A, the amount on which interest was payable under sub-section (1) is increased, the assessee shall be liable to pay simple interest at the rate of one per cent. for every month or part of a month comprised in the period commencing on the day following the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made as is referred to in sub-section (1) following the date of such regular assessment and ending on the date of the reassessment or recomputation under section 147 or section 153A, on the amount by which the tax on the total income determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due on the returned income: Provided that if the advance tax paid by the company on its current income on or before the 15th day of June or the 15th day of September, is not less than twelve per cent. or, as the case may be, thirtysix per cent. of the tax due on the returned income, then, it shall not be liable to pay any interest on the amount of the shortfall on those dates; (b) the assessee, other than a company, who is liable to pay advance tax under section 208 has failed to pay such tax or,- (i) the advance tax paid by the assessee on his current income on or before the 15th day of September is less than thirty per cent. of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than sixty per cent. of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent. per month for a period of three months on the amount of the shortfall from thirty per cent. or, as the case may be, sixty per cent. of the tax due on the returned income; (ii) the advance tax paid by the assessee on his current income on or before the 15th day of March is less than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income; (ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (v) any tax credit allowed to be set off in accordance with the provisions of section 115JAA. (2) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years. Consideration: 20. Having heard both parties and having examined the provisions of the Act relevant for the purpose of deciding the issues involved in the present appeal, one has to turn to Chapter XVII of the Act which provides for collection and recovery of tax. Chapter XVII is divided into various Parts A to F. Part A provides for deduction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter XVII-B, which are in the nature of machinery provisions enabling collection and recovery of tax are at all applicable to payments made abroad by the foreign company/head office which had seconded the expatriate(s) for rendering services in India to the tax deductor-assessee (employer)" was pleased to hold that section 192 of the Act is very much applicable even to a non-resident company and observed as under (page 245): "Therefore, if a sum that is to be paid to the non-resident is chargeable to tax, tax is required to be deducted. The sum which is to be paid may be income out of different heads of income mentioned in section 14, that is to say, income from salaries, income from house property, profits and gains of business, capital gains and income from other sources. The scheme of the tax deducted at source provisions applies not only to the amount paid, which bears the character of `income' such as salaries, dividends, interest on securities, etc., but the said provisions also apply to gross sums, the whole of which may not be income or profits in the hands of the recipient, such as payment to contractors and sub-contractors. The purpose of the tax deducted at source pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay direct. Section 201 provides for consequences of failure to deduct or to pay tax, whereas sub-section (1A) of section 201 provides for liability to pay interest. Now, liability to pay interest as stated under section 201 is on the person who fails to deduct advance tax. As against this, if one turns to the Chapter XVII of the Act, it provides for chargeability of interest in certain cases. Section 234A provides for payment of interest for defaults in furnishing return of income, whereas section 234B provides for payment of interest for defaults in payment of advance tax and section 234C provides for payment of interest for deferment of advance tax. All these three sections create liability on the assessee to pay interest for the default committed by him in the circumstances mentioned in the said sections. 24. The apex court also had an occasion to consider the very same question with regard to the nature of liability of interest in the case of Dr. Prannoy Roy v. CIT reported in [2002] 254 ITR 755 (Delhi), wherein the apex court was pleased to hold that interest charged under section 234A of the Act is not by way of penalty. It is levied to compensate the Revenue in order to av ..... X X X X Extracts X X X X X X X X Extracts X X X X
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