TMI Blog2018 (8) TMI 2110X X X X Extracts X X X X X X X X Extracts X X X X ..... payee has suffered loss or does not have positive income then the person 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) Respectfully following the aforesaid decision Research Enterprises [ 1998 (12) TMI 18 - MADRAS HIGH COURT] and CIT Vs. CIT Vs. Chennai Metropolitan Water Supply and Sewerage Board [ 2011 (9) TMI 224 - MADRAS HIGH COURT] and Hon ble Punjab Haryana High Court in Punjab and Infrastructure Development [ 2017 (8) TMI 78 - PUNJAB AND HARYANA HIGH COURT] we concur with and uphold the view of the ld CIT(A). Consequently, all four appeals of these two assessee s are dismissed. - ITA No. 426, 429, 432 & 436/Bang/2018 - - - Dated:- 1-8-2018 - Shri Jason P Boaz, Accountant Member And And Shri Laliet Kumar, Judicial Member For the Assessee : Shri H.N Khincha, C.A. For the Revenue : Shri B.R Ramesh, JCIT. ORDER PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER: These four appeals by the above mentioned two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of laws and contrary to various judicial pronouncements is to be deleted. 3. In any case and without prejudice the calculation of interest as done is erroneous and excessive. 4. In view of the above and on other grounds to be adduced at the time of hearing, it is requested that the impugned order be quashed or atleast interest levied/confirmed u/s. 201(1A) be deleted. 3.2 In these common grounds, raised in the four appeals before us (Supra), the sum and substance of the assessee s contentions are that the authorities below have erred in charging/ confirming the interest u/s 201(1A) of the Act without proper appreciation of law, judicial pronouncements and the fact that the recipient of the income has filed loss returns of income and no taxes were payable to the government. 3.3.1 We have heard both parties and perused the material on record. It was fairly agreed to by the counsel of both the assessee and Revenue that the issue before us i.e whether the assessee s are liable to pay interest u/s 201(1A) of the Act has been considered at length and held against the assessee by the decision of the co-ordinate bench of this Tribunal in the case of power and cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant part of the decision is reproduced below:- 10. Be that as it may, Circular No. 2751201195-IT(B) dated 29.01.1 997 issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares no demand visualized under Section 201(1) of the Income Tax Act should be enforced after the tax deductor has satisfied the officer in charge of TDS, that taxes due have been paid by the deductee assessee. However, this will not alter the liability to charge interest under Section 201(1-A) of the Act till the date of payment of taxes by the deductee assessee or the liability for penalty under Section 271-C of the Income Tax. [emphasis supplied] 5. W.e.f. 01.07.2012, in a situation where the tax is paid by the deductee, the interest is to be computed up to the date of furnishing of return of income by such deductee. This proviso makes no distinction whether the deductee files a return with positive income, nil income or even losses. Starting date for computing the interest liability is the date on which the tax was deductable and -the terminal date is the date of furnishing of return of income by the payee/deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deductee assessee and cases where it is not in a position to do so. This view is supported by the following further observations of the Madras High Court in the above judgment: 10. The Tribunal was clearly in error in accepting the case pleaded for the assessee that it had no duty to pay tax at source solely on the ground that one of its sister concerns had filed a loss return and the other sister concern had claimed refund. The concern which had filed the loss return was at the time of assessment found liable to pay tax and the concern which had claimed refund at the time of original assessment was found not entitled to the refund, though such refund was directed in appeal. The assessee had a duty to deduct tax at source. It apparently did not do so as payments were made to its own sister concerns and it did not wish to part with any part of that interest to the Revenue at that point of time. That however cannot be an acceptable reason for its failure to deduct tax at source and remit the same to the Government. 15. This judgment was followed by another judgment of a Division Bench of the Madras High Court in CIT v. Chennai Metropolitan Water Supply Sewerage B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the payee should have filed its return, so that the calculation of interest under the said provision does not suffer any illegality. 18. As already pointed out, the payee company is stated to have filed a loss return. Nevertheless, this fact needs to be verified by the Assessing Officer and if it is found to be so, the question of further recovery from the hands of the assessee company herein does not arise - vide (2007) 293 ITR 226 (Hindustan Coca Cola Beverage P. Ltd. v. Commissioner of Income-Tax). However, as far as levy of interest is concerned, it being an automatic one, the order of the Tribunal merits to be set aside as far as this aspect of the question is concerned. Accordingly, the assessment order regarding levy of interest has to undergo necessary modification to the effect that interest under Section 201(JA) of the Income Tax Act has to be calculated from the date on which tax should have been deducted to the date on which the payee should have filed its return under the provisions of the Income Tax Act. Accordingly, both the Tax Cases stand disposed of No costs. We are in respectful agreement with these observations as well. In particular, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e given a carefully consideration to the rival submission. Section 201(1A) of the Act has under gone a statutory amendment by the Finance Act of 2012 w.e.f 1/7/2012. A proviso was introduced to sec. 201(1A) of the Act which provides as follows:- [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 a resident but is not deemed to be an assessee in default under the first proviso to subsection (1), the interest under clause (1) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.] 9. Prior to the insertion of the proviso, the Hon ble Madras High Court in the case of Chennai Metropolitan Water Supply and Sewerage Board, 348 ITR 530 took the same view which is now statutorily recognized as a proviso to sec. 201(1A) of the Act. The Hon ble Madras High Court dealt with the case of the assessee suffering loss and still came to the conclusion that liability to pay interest u/s 201(1A) of the Act is mandatory. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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