TMI Blog2018 (1) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... which has been held to be not sustainable in the aforementioned decisions. Therefore, the levy of interest is held to be not sustainable and accordingly the question arising for consideration is answered in favour of the petitioner/assessee and against the revenue. Writ Petition is allowed and the impugned order dated 06.07.2009 is set aside and it is held that the petitioner is not liable for payment of interest under Section 234(B) of the Act, in respect of the salary income earned by the petitioner outside India. - W. P. No. 18472 of 2009 MP. No. 1 of 2009 - - - Dated:- 27-11-2017 - T. S. Sivagnanam, J. For the Petitioner : Mr. R. Sivaraman For the Respondents : Mr. A. P. Srinivas ORDER The petitioner is an employee of a Multinational Company namely, M/s.Columbia Sportswear (Inc) of USA, which has a Liaison Office at Chennai. The petitioner Heads the Indian Operations of the aforesaid Company and has been employed in the company since 1995-1996 onwards. Part of the salary paid to the petitioner is received in India and the remaining part of salary received outside India. For the salary received in India, Tax was deducted at source by the employer. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute. The petitioner is aggrieved only with regard to the interest, which was ordered to be paid under Section 234 B of the Act. 4. The petitioner filed a Miscellaneous Petition before the Settlement Commission stating about his employment with the Multinational Company and what was the income earned by him outside India and to what extent the petitioner offered additional income before the Settlement Commission and tax paid thereon. The petitioner further contended that interest under Section 234B is chargeable provided the assessee, is liable to pay advance tax under Section 208. Thus, the pre-condition for levy of interest under Section 234B is liability to pay advance tax under Section 208. Advance tax shall be payable where the amount of such advance payable as computed in accordance with the provisions of Chapter-XVII is ₹ 5000/- or more. It was further submitted that under Section 209, the assessee is to estimate his current income and find out the tax payable therein, as per sub-clause (1) of Section 209(1). Under Clause (d) of sub - section (1) of Section 209, the income tax calculated under (a) is to be reduced by the amount of income tax, which would be deductibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case, the issue regarding current income, TDS, assessed tax, liability to advance tax etc., ought to be decided. It further held that since, the liability to interest under Section 234B is based on the submission that the petitioner was not liable to advance tax. So far as this finding is concerned, the revenue has not laid a challenge to the same and therefore, before this Court, the revenue is precluded from raising such contention having accepted the fact and contested the matter before the Settlement Commission. 8. Therefore, in the absence of any challenge by the revenue independently to the said finding, this Court cannot entertain a challenge at this stage. Therefore, in this petition this Court has not examined the maintainability of the petition before the Commission after final order was passed under Section 245D(4) as a need to consider the same, does not arise in the facts and circumstances of the case. 9. The Settlement Commission rejected the prayer sought for by the petitioner by holding that whether the person responsible for paying salary in foreign currency was a non- citizen, non-resident and hence not amenable to be responsible under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation, on which, tax was deducted under Section 194C of the Income Tax Act, 1961 (for short 'the Act') at 2 per cent. The Assessing Officer held that the assessee to be an ''assessee in default'' for failure to deduct tax at source in respect of warehousing charges and also levied of interest under Section 201 (1A) of the Act on the amount of tax alleged to be short deducted. The assessee preferred an appeal before the Commissioner of Income Tax (A) and thereafter, before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal took a view that the assessee to be an ''assessee in default'' in respect of the amount of short deduction of tax and also upheld the levy of interest under Section 201(1A) of the Act. 13. On further appeal filed by the assessee before the High Court was dismissed, thereafter, the assessee preferred miscellaneous applications in the appeals, which were already disposed of, seeking rectification of the order of the Income Tax Appellate Tribunal. The grievance of the assessee was that it is an alternative contention that where the warehouser has been assessed on its income and the tax due has been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an individual, an employee of a Multinational Company, deputed to work in India, did not disclose his original return income received by him in abroad. After proceedings were initiated under Section 148 of the Act, the assessee filed revised return showing total income making an addition on account of the addition of the amount, which assessee had received from outside India, resulting in an order to the said effect with further order directing levy of interest under Sections 234(A), 234(B) and 234(C) of the Act. The appeal filed by the assessee against the assessment order was dismissed. On further appeal to the Tribunal, the appeal was allowed holding that the issue regarding levy of interest under Sections 234B and 234C of the Act is covered by the Special Division Bench decision in the case of Sumit Bhattacharya Vs. Asstt. CIT (2008) 300 ITR 347 (Mumbai) (SB) (AT) and held that the interest under Sections 234A, 234B and 234C of the Act was not permissible. The Revenue challenging the said decision before the High Court, after taking note of the relevant statutory provisions namely, Sections 192, 209, 234A and 234B held as follows: The scheme of TDS, not only applies to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Uttaranchal High Court in the case of CIT Vs. Sedco Forex International Drilling Company Ltd., [(2003) 264 ITR 320 (Uttaranchal), wherein, the Court held that Section 234B which imposes interest is compensatory in nature and not as a penalty and the very same view holds good for Section 234C of the Act. 23. The decision of the Hon'ble Supreme Court in the case of (Hindustan Coca Cola Beverage (P) Ltd., Vs. Commissioner of Police) (2007) 293 ITR 226(SC), was also referred to and it was held that in the said case, deductee has already discharged the tax liability with interest payable under Section 201(1A) of the Act and as such no further interest can be claimed by the revenue from the assessee either under Sections 234A or 234B or 234C of the Act. In the case of Jacabs Civil Incorporated cited supra, it was held that the liability to deduct or collect tax at source is that of the Payer, therefore, for the purposes of Section 234B of the Act, the question would be as to whether the Payee i.e., the assessee had any role in deducting or collecting the tax, it was held that once this is in the negative and it was not the duty of the Payee/Assessee, the question of payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act lays down the consequences of failure to deduct or pay. These consequences include not only the liability to pay the amount which such a person was required to deduct at source from the payments made to a non-resident but also penalties etc. Once it is found that the liability was that of the payer and the said payer has defaulted in deducting the tax at source, the Department is not remedy less and therefore can take action against the prayer under the provisions of Section 201 of the IT Act and compute the amount accordingly. No doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments, the non-resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of Section 191 of the Act along with Section 209 (1) (d) of the Act. For this reason, it would not be permissible for the Revenue to charge any interest under Section 234B of the Act . 25. The decisions referred in preceding paragraphs would apply with full force to the case on hand. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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