2009 (7) TMI 41 - HC - Income Tax

Interest on TDS u/s 201(1)(A) TDS not deducted by the appellant for payment made to the AAI AAI has deposited tax such income - Assessing Officer held the assessee was liable to deduct TDS and since TDS was not deducted, the assessee was held to be in default under Section 201(1) and also liable for interest under Section 201(1)(A) of the Act ITAT setaside the demand of TDS by following the decision in the matter of CIT Vs. Adidas Marketing P.Ltd 2008 TMI - 3391 - DELHI HIGH COURT but confirmed the interest u/s 201(1)(A) Held that interest is payable from the due date of liability of TDS to due date of filing of return by AAI.

Summary

Issues:
Validity of the order dated 31.8.2007 of the Income Tax Appellate Tribunal (ITAT) under Section 260-A of the Income Tax Act, liability of the assessee to pay TDS, liability for interest under Section 201(1)(A) of the Act, presumption regarding payment of taxes by Airport Authority of India (AAI), correctness of the interest ordered by ITAT, duration of interest liability.

Analysis:

1. Validity of ITAT Order:
The Revenue filed appeals questioning the validity of the ITAT order dated 31.8.2007, which allowed the appeals of the assessee regarding TDS liability but held the assessee liable for interest under Section 201(1)(A) of the Income Tax Act. The CIT(A) upheld the Assessing Officer's order, leading to the appeal before the ITAT, which partially allowed the appeal.

2. TDS Liability and Interest under Section 201(1)(A):
The Assessing Officer found the assessee liable for TDS on payments made to Airport Authority of India (AAI) for various charges without deduction. The ITAT held the assessee liable for interest under Section 201(1)(A) of the Act. The Revenue argued that the assessee is deemed to be in default for not deducting TDS, emphasizing that no presumption should be made regarding AAI's tax payments.

3. Presumption of AAI Tax Payments:
The ITAT referred to a previous court decision where it was held that if the deductee (AAI) had paid tax on the income received, the deductor (assessee) would not be required to pay the same. The ITAT noted that being a Government undertaking, it cannot be presumed that AAI has not paid tax. The appellant's counsel could not confirm if any notice was issued to AAI or if proceedings were initiated against AAI for tax non-payment.

4. Correctness of Interest Calculation:
The appellant contended that the interest ordered by the ITAT should be till the actual payment date of tax by AAI, not just the due date of filing AAI's return. However, the ITAT reasoned that since AAI is a Government undertaking, taxes are presumed to be paid by the due date of filing the return, thereby ending the assessee's interest liability.

5. Conclusion:
The High Court dismissed the appeals, stating that no substantial question of law arises. The judgment affirms the ITAT's decision regarding TDS liability, interest calculation, and the presumption of tax payment by AAI as a Government undertaking.