TMI Blog1967 (9) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... interest accrued outside the taxable territories, the assessee was liable to deduct under section 18(3B) of the Act, tax on interest payments of Rs. 2,224 made to the non-resident company, Tata Ltd. ?" The department had, however, posed for reference before the Tribunal a slightly different question. They had omitted all reference to the findings of the Tribunal and had merely posed the following question: " Whether the assessee was liable to deduct under section 18(3B) of the Act, tax on interest payments of Rs. 2,224 made to the non-resident company, Messrs. Tata Ltd. ?" The Tribunal, however, has referred the question as posed by the assessee and not the latter question and before us the Commissioner has taken out a notice of motio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The amount represents the interest paid in the assessment year 1956-57 with which we are concerned. Before the Tribunal it was pointed out on behalf of the assessee that the services were rendered by Messrs. Tata Ltd., London, in England and, secondly, that no part of the services were performed in the taxable territories and, therefore, the amount outstanding on account of interest had only accrued in England and was therefore not subject to tax in India. The Tribunal, accepting this contention, has held that the services were rendered wholly in London and no part of them was rendered in India and, therefore, they have held that the amount of interest paid to Messrs. Tata Ltd. was "outside the scope of section 18(3B)". Upon these facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But upon the facts found, it is difficult to see how this amount of interest could be chargeable in India under any of the provisions of the Indian Income-tax Act. By virtue of section 4(1) the Act can only apply to income, profits or gains which are received or deemed to be received in the taxable territories. Clearly, therefore, upon the facts found the decision which the Tribunal reached was a correct decision. But then it was urged upon a construction of the section 18(3B) that the words used in the sub-section are "any interest ... or any other sum chargeable under the provisions of this Act" and the words "chargeable under the provisions of this Act" govern only "any other sum" but not "interest" and the word "or" by which the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ories for the person responsible for payment, to apply to the Income-tax Officer for determination of "the appropriate proportion of such sum so chargeable". Now the contention is that in making that provision though all sums are referred to which are chargeable under the Act there is a specific exception made in the case of interest by the use of the words "other than interest". It was contended, therefore, that this exception was specifically made in sub-section (3C) because interest under sub-section (3B) was not qualified by clause "chargeable under the provisions of this Act" and that in the light of sub-section (3C) sub-section (3B) should be so construed. When every other head of payment is dealt with under section 18, it is qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of interest is such that that interest is chargeable under the Act, the liability upon the person responsible for paying it to deduct the tax at source is not there. In the present case, upon the facts found we have already shown that the amount of interest payable to Messrs. Tata Ltd., London, was not an amount chargeable under the Act. Therefore, there was no obligation upon the assessee to deduct the amount of interest at source. If that be so, it seems to us that the assessing officer and the Appellate Assistant Commissioner were in error in adding it back to the assessment. We think that the view taken by the Tribunal was the correct view. In our opinion, the assessee was entitled to claim this amount as a deduction under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
