2010 (3) TMI 892 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A) for assessment year 2000-01 regarding interest charged u/s 234B of the Income-tax Act, 1961.

Facts: The assessee, a non-resident company in the business of ISO 9000 certification, filed a return declaring a loss but was assessed at an income by the Assessing Officer. The AO also charged interest u/s 234B. The assessee contended that being a foreign company, its entire income is subject to withholding tax u/s 195, thus no advance tax was payable and no interest u/s 234B should be levied.

Decision: The ld. CIT(A) held that interest u/s 234B is not applicable in this case, citing relevant case laws. The revenue appealed, arguing that the assessee should have paid advance tax and interest u/s 234B is justified. The Tribunal noted that as per section 195, the income is subject to tax deduction at source, hence no advance tax was required. Referring to a High Court judgment, it was held that when tax is to be paid at source, no interest can be imposed on the payee-assessee. The Tribunal upheld the CIT(A)'s decision to delete the interest charged u/s 234B.

Conclusion: The revenue's appeal was dismissed, affirming the deletion of interest charged u/s 234B by the ld. CIT(A) based on the obligation to pay tax at source u/s 195 and relevant legal precedents.