2018 (6) TMI 1854 - AT - Income Tax

Levy of interest u/s 234B - payments mad are subject to tax deduction u/s 195 - HELD THAT - An identical issue has already been adjudicated inNGC NETWORK ASIA LLC 2009 (1) TMI 174 - BOMBAY HIGH COURT , M/S. JACABS CIVIL INCORPORATED / MITSUBISHI CORPORATION 2010 (8) TMI 37 - DELHI HIGH COURT and HALLIBURTON OFFSHORE SERVICES INC. 2004 (7) TMI 74 - UTTARANCHAL HIGH COURT as held interest u/s. 234B is not leviable because payments made to non-resident appellant are subject to tax deduction u/s. 195 of the Act. The A.O. is directed to grant the relief accordingly - Decided in favour of assessee.

Summary

Issues involved:
1. Deletion of interest u/s. 234B by the ld.CIT(A).

Analysis:
The case involved an appeal filed by the Revenue against the order of the ld. CIT(A)-42, New Delhi for the assessment year 2010-11, specifically challenging the deletion of interest u/s. 234B. The Assessing Officer had charged interest u/s. 234B, which was contested by the assessee before the ld. CIT (A). The ld. CIT (A) relied on decisions of the jurisdictional High Court to conclude that interest u/s. 234B was not applicable to the assessee due to payments made to non-residents being subject to withholding tax u/s. 195 of the Act. The ld. CIT (A) directed the Assessing Officer to grant relief accordingly.

The ld. DR argued against the decision of the ld. CIT (A), claiming that the deletion of interest by the Assessing Officer was incorrect and should be restored. On the other hand, the ld. AR of the assessee maintained that as a non-resident, the assessee was not liable to pay interest u/s. 234B, and the ld. CIT (A) rightly deleted the same based on the jurisdictional High Court decision.

Upon reviewing the submissions and case laws, the Tribunal found that the ld. CIT (A)'s decision was in line with the jurisdictional High Court's ruling regarding the applicability of interest u/s. 234B to non-resident assessees subject to withholding tax u/s. 195. No contradictory decision was presented on behalf of the Revenue. Consequently, the Tribunal upheld the ld. CIT (A)'s order, stating that no infirmity was found, and dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming the decision of the ld. CIT (A) to delete the interest u/s. 234B based on the non-resident status of the assessee and the withholding tax provisions under u/s. 195 of the Act.