9911796707
TMI Blog2018 (8) TMI 2110X X X X Extracts X X X X X X X X Extracts X X X X ..... ese assessee's on 26/7/2013. In the course of survey operations, it was noticed that these assessee's had not remitted the tax deducted at source on certain payments made. Rejecting the explanations put forth by the assessee's, the Assessing Officer ('AO') proceeded to treat the assesseess as an 'assessee in default' u/s 201(1) of the Act, determined the tax liability thereon and charged interest u/s 201(1A) of the Act in orders dated 30/6/2014. 2.2 On appeal, the CIT(A)-13, Bangalore vide the impugned orders dated 31/11/2017allowed the assessee's partial relief. 3.1 Aggrieved by the orders of the CIT(A)-13, Bangalore for asst. years 2008-09, 2009-10, 2010-11 and 2012-13 all dated 31/11/2017, the above two assessee's have filed these appeals for the aforesaid asst. years raising the following identical grounds challenging the action of the ld CIT(A) in upholding the charging of interest u/s 201(1A) of the Act:- 1. The learned Income-tax Officer has erred in passing the order in the manner passed andthe learned CIT (A) -13 has erred in confirming the same. The impugned order being bad in law and is liable to be quashed. 2.1 The authorities below have erred in a) not apprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest, (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200." Provided that in case any person including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee-in-de fault under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 by insertion of first proviso to sec. 201(1A) of the Act, the assessee would be liable to pay interest u/s 201(1A) and that the interest U/s 201(1A) of the IT Act has to be calculated from the date on which tax should have been deducted till the date on which the deductee should have filed return. The Hon'ble Punjab & Haryana HC had followed the decision of the Hon'ble Madras High Court in the case of CIT Vs. Ramesh Enterprises 250 ITR 465 (Mad) and CIT Vs. Chennai Metropolitan Water Supply and Sewerage Board, 348 ITR 530 (Mad). The relevant extract from the judgment of the Hon'ble Punjab & Haryana High Court is as below:- "13. The language of Section 201 is clear and unqualified. It indeed does not permit an assessee to decide for itself what the liability of the deductee assessee is or is likely to be. That is a matter for the assessing officer who assesses the returns of the deductee assessee. It is in fact not even possible for him to do so. He cannot ascertain with any degree of certainly as to the financial position of the deductee assessee. A view to the contrary would enable an assessee to prolong the matter indefinitely. If accepted, it may even entitle the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The Circular referred to recognises the fact that once the payee remits the differential tax the question of further recovery of the self-same sum from the payer did not arise and till the payment made by the,(utee assessee, interest would be charged. 16. Applying the said circular herein, with no liability thus arisen at the hands of the payee, the terminal point as regards the calculation of interest necessarily has to be given a meaningful interpretation. Given the fact that the interest levy is an automatic one, the determination on the ultimate liability of the payee company to pay or not to make payment being a procedural exercise has nothing to do with the liability of the assessee to deduct TDS. As such, the loss return filed by the payee company cannot be treated as a circumstance to be taken in in favour of the assessee company from not applying the provisions of Section 201(JA) of the Income Tax Act. On the facts herein, the only reasonable interpretation one can give to the provision under Section 2010A) as regards the terminal point upto which interest has to be calculated would be the date on which the return has to be filed by the payee, so that the calculation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument of the ld counsel for the assessee was that interest is compensatory and is levied only for the right lost by the revenue for using money due to the Govt. by way of tax. When no tax is payable there cannot be any loss to the exchequer and, therefore, levy of interest which is compensatory in nature cannot be sustained. In this regard, the ld counsel for the assessee placed reliance on the following decisions:- Sl No. Particulars 1. ITO vs Emrald Construction Co. (P) Ltd., [2009] 29 SOT 495 (Jodh.) 2. Thomas Muthoot vs DCIT, Kottayam 3. Reliance Communications Ltd vs ACIT(TDS) {2016} 69 taxmann.com 307 (Mum ~ Trib) 4. National Highway Authority of India vs ACIT (2014]49 taxmann.com 32 (Jabalpur ~ Trib.) 5. Haldia Petrochemicals Ltd., vs DCIT [2016] 72 taxmann.com 338 (Kolkata - Trib.) 9. In particular reliance was placed on the decision of the Calcutta Tribunal in the case of Haldia Petro Chemical Ltd. (Supra), wherein the Tribunal held that when the primary conditions to be satisfied before treating the payer assessee as 'assessee in default' and when no tax at all payable at any point in time, consequent interest u/s 201(1A) of the Act cannot be lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson making the payment is obliged to deduct tax at source. The fact that the payee does not have positive income will absolve the person making payment from being treated as 'an assessee in default' for not deducting tax at source but cannot absolve the payee from paying interest u/s 201(1A) of the Act. 11. In our view, this vital distinction has not been noticed in the decisions cited by the ld counsel for the assessee before us, especially in the case of Haldia Petrochemicals Ltd., (Supra). In any event, the decision of the Hon'ble Madras High Court being a decision of the Hon'ble High Court which has also been followed by the Hon'ble Punjab and Haryana High Court in the case of CIT (TDS) Vs. Punjab Infrastructure Development, 76 taxmann.com 365 (P & H), we are of the view that the decisions of the High Court should be followed. We, therefore, concur with the view of the CIT(A) and dismiss all the appeals of the assessee." 3.3.2 Respectfully following the aforesaid decision of the coordinate bench of this Tribunal in the case M/s Power and Control Systems (Supra) which followed the decisions of the Hon'ble Madras High Court in CIT vs. Research Enterprises (250 ITR 465) (Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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