TMI Blog2007 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Commissioner of Income Tax (Appeals) ['the CIT (A)'] for the assessment year 1999-2000 and 2000-01 levying interest under Section 201 (1A) of the Income Tax Act, 1961 ('Act') were set aside. 2. The Respondent Assessee, a private limited company incorporated in India, employs foreign nationals. The Respondent deducted tax on the salary paid to its employees and was depositing the same in accordance with the law. Some of the expatriate employees of the Respondent, who were also in receipt of income from certain foreign companies, informed the Respondent company of such receipts of income in the month of March of the relevant financial year (1999-2000) and requested that tax be deducted thereon. The Deputy Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia or outside India is for the services to the deductor company itself or on its behalf. " Accordingly interest in the sum of Rs. 12,87,078 on the short deduction of TDS was levied under Section 201 (1A) for the assessment year 2000-01. 4. Aggrieved by the orders dated 16.11.2000 and 16.7.2001 passed by the DCIT for the assessment year 1999-2000 and 2000-01 respectively, the Respondent company appealed to the CIT (A). By a common order dated 11.2.2002 the CIT (A) dismissed the appeals on the ground that the performance incentive was paid every year and was in the knowledge of the company. It was held that the TDS ought to have been deducted by the company on that basis. 5. The appeals filed thereafter by the Respondent company wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusively with the Respondent company and with no one else. She submitted that since the company had itself paid interest on the short deduction of TDS for the period from 1988-89 to 1997-98 there was no reason for it to be subjected to a different treatment for the financial year in question. According to her the requirement of payment of interest on the short deduction was mandatory in terms of Section 201(1A) of the Act. 7. Appearing for the Assessee, Mr. M.S.Syali, learned senior Advocate submitted that as regards the financial year 1998-99, the information provided to the Respondent company by the expatriate employees under Section 192 (2) of the Act was received only in March 2000. It was not therefore possible to deduct the TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce has to take place ?at the time of payment? of such salary. Secondly, the tax that is required to be deducted would of the tax payable at the rates in force during that financial year ?on the estimated income of the Assessee? under the head salary for that financial year. The provision therefore envisages that the employer would proceed to deduct TDS on the estimate income. Where an Assessee is employed simultaneously under more than one employer, he is required to furnish to the employer responsible for deducting tax at source "such details of the income under the head 'salaries' due or received by him from the other employer." Section 192(2) further mandates that once that information is furnished "the person responsible for making pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n default for the financial year 1998-99. There is no infirmity in the decision of the Tribunal in this regard. 11. As regards the financial year 1999-2000, the counsel for the Respondent is right in contending that by its very description the performance incentive cannot be a fixed mandatory payment made year after year. Since it is dependent on the performance of the company in a given financial year, the payment of the incentive is not only uncertain but the amount is also likely to vary. Giving the requirement of Section 192 (1) that TDS should be deducted on the "estimated income of the Assessee" it cannot be said that the Respondent company was in default on account of the short deduction of the TDS from the salary of its employe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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