TMI Blog2011 (9) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction of tax at a lower rate - As the same is no longer res integra, by reason of the decision of the Apex Court in the case of Transmission Corporation of A.P. Ltd., and another V. Commissioner of Income-Tax[1999 (8) TMI 2 - SUPREME Court], wherein, it was held that in the absence of any certificate obtained as given u/s 195(2) on the composite amount made by the assessee to the payee, TDS ought to have been made on the entire amount - Hence, the said question stands answered in favour of the Revenue. - Tax Case (Appeal) Nos.500 and 501 of 2005 - - - Dated:- 20-9-2011 - The Honourable Mrs. JUSTICE CHITRA VENKATARAMAN The Honourable Mr. JUSTICE M.JAICHANDREN For Appellant : Mr. K. Subramaniam, Sr. Standing Counsel for Income Tax For Respondent: Mr.R. Vijayaraghavan for M/s.Subbaraya Aiyar (Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) The Revenue has filed these Tax Case (Appeals) as against the order of the Income Tax Appellate Tribunal raising the following substantial questions of law: 1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that Sec.201(1) and 201(1A) would not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Apex Court reported in (1999) 239 ITR 587 (Transmission Corporation of A.P. Ltd., and another V. Commissioner of Income-Tax), wherein, it was held that in the absence of any certificate obtained as given under Section 195(2) on the composite amount made by the assessee to the payee, TDS ought to have been made on the entire amount. Hence, the said question stands answered in favour of the Revenue. 6. Learned counsel appearing for the assessee submitted that TDS has to be done only on the income chargeable under the Act. The payee being a loss making company and that the payment made was a composite amount covered under the DTAA, the question of there being any shortfall did not arise. We do not agree. Going by the decision of the Apex Court on Section 195(2) of the Income Tax Act that even in a case of composite amount payment, unless the assessee had approached the Officer for a certificate under Section 195(2) for applying the doctrine of proportionality, the entire amount has to suffer for deduction under Section 195(1) of the Income Tax Act. Consequently, the second question is answered against the assessee and in favour of the Revenue. 7. As for as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date on which tax was deductible to the date on which such tax is actually paid. Thus while there is no difficulty as for the applicability of Section 201(1A) and in applying the decision of the Apex Court reported in (1999) 239 ITR 587 (Transmission Corporation of A.P. Ltd., and another V. Commissioner of Income-Tax) to the case on hand, learned counsel appearing for the assessee pointed out that the period upto which interest could be calculated, poses a difficulty in invoking Section 201(1A) of the Income Tax Act. He pointed out that the payee being a loss making company and that it had also filed its return so, the question of further deduction on the shortfall does not arise on the facts of this case and the Assessing Officer cannot ignore this aspect while considering the levy of interest. In the circumstances, the Section not providing any answer, interest could not be levied on the assessee. 12. We do not think that such a contention could be entertained, having regard to the scheme of TDS. A reading of Section 195 of the Income Tax Act reveals that a person responsible for making payment to a non-resident has to deduct income tax at the time of credit of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and held that there could be no recovery of tax, alleged to be in default, once again, when the payee had already remitted the tax. The Apex Court pointed out that in view of Circular No.275/201/95-IT(B) dated 29th January, 1997, since the payee had paid the tax, the same could not be once again recovered from the assessee. However, that would not alter the liability to charge interest under Section 201(1A) of the Income Tax Act till the date of payment of tax by the deductee assessee or the liability for penalty under Section 271(C) of the Income Tax Act. The Apex Court pointed out that since the assessee had paid tax under Section 201(1A) of the Income Tax Act and since tax had been paid by the deductee assessee, the Apex Court did not go into the question of correctness of rectification order passed by the Tribunal. It also pointed out that the liability to pay interest under Section 201(1A) and the applicability of the Circular to the facts therein was also not denied. 15. As far as the present case is concerned, while the assessee had short deducted the tax under Section 195 of the Income Tax Act, it did not make good the shortfall on the ground that the payee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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