TMI Blog2002 (6) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... see in India - Tribunal is correct in law in holding that the receipt in the form of 85 per cent. of the catch of fish by the non-resident was in India since all the formalities are completed in India - Tribunal is correct in law in holding that the assessee is liable to deduct tax at source u/s 195 on the alleged payment made to the non-resident towards hire charges even though the alleged payment is not in cash - Tribunal is correct in law in holding that the assessee was in default u/s 201, for the failure to deduct tax u/s 195 - - - - - Dated:- 7-6-2002 - Judge(s) : DR. MOTILAL B. NAIK., M. NARAYANA REDDY. JUDGMENT The judgment of the court was delivered by MOTILAL B. NAIK J.-This reference is at the instance of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to deduct tax under section 195 of the Act?" The assessee, a company incorporated in India and engaged in sale and export of sea food, obtained a permit to fish in the Exclusive Economic Zone of India on June 25, 1990, in pursuance of a letter of intent dated February 20, 1984. In order to exploit the fishing rights, the assessee entered into an agreement chartering two fishing vessels, i.e., two pairs of bull trawlers, with Eastwide Shipping Co. (Hong Kong) Limited, a non-resident company incorporated in Hong Kong. The agreement is dated March 7, 1990. Necessary permission to remit 85 per cent. towards hire charges was also granted by the Reserve Bank of India on August 12, 1991. The agreement between the parties, the grant of permit b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deduct tax is at the time of earliest mode of payment and the sum paid must be chargeable to tax. Sub-section (2) of section 195 of the Act provides for deduction from a lower sum on an application if the payer thinks that the entire sum paid is not income chargeable to tax in the case of the recipient. The other sections provide that other requirements are to be fulfilled. Section 201 deals with the consequences of failure to deduct or pay tax and sub-section (1A) provides for payment of interest in addition to the amount of tax deductible by the payer. The assessee contended that there was no chargeable income at all which resulted to the non-resident and that there was no payment of any sum by the assessee to the non-resident and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hire charges for chartering the vessels from the non-resident, it would be receipt in the hands of the nonresident under section 5(2) of the Income-tax Act. Having held so, the Tribunal came to the conclusion that section 195 casts an obligation on the assessee to deduct tax either at the time of payment or at the time of credit to the account of the payee. It was also held by the Tribunal that the payment contemplated under section 195 not only includes cash payment or payment by cheque or draft but also a payment even by any other mode and, therefore, the payment of hire charge made by the assessee by giving 85 per cent. of the fish catch to the non-resident amounts to payment as contemplated under section 195 of the Act and thus the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar referring to various decisions in the light of the provisions under sections 195, 201 and 201(IA) of the Income-tax Act, we do not think that there are any justifying reasons for us to take a different view than the view taken by the Departmental appellate authority, which is affirmed by the Tribunal. Since the reference is at the instance of the assessee, the questions of law involved in this reference are to be answered against the assessee and in favour of the Revenue. Thus we hold that: On the facts and in the circumstances of the case, the Tribunal is correct in law in holding that payment is made to the non-resident by the assessee in India; On the facts and in the circumstances of the case, the Tribunal is correct in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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