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2013 (7) TMI 733 - HC - Income TaxInterest u/s 234B - Order u/s 154 - Interest on non resident - Tribunal held that interest u/s 234B cannot be invoked by order u/s 154 - Held that - proceedings were taken under section 154 of the Income-tax Act on the ground that since the advance tax paid was less than 90 per cent., interest under section 234B of the Income-tax Act was leviable on the assessee - when there was 100 per cent. deduction of tax at source and there being no liability to pay any advance tax, interest under section 234B could not be charged on the assessee - when the entire tax is deducted at source and the consequence of non-deduction is given under section 201, the question of levy of interest under section 234B on the assessee did not arise - Following decision of Director of Income-tax v. Jacabs Civil Incorporated 2010 (8) TMI 37 - DELHI HIGH COURT and CIT v. Madras Fertilizers Ltd. 1983 (9) TMI 74 - MADRAS High Court - Decided against the Revenue.
Issues:
Levy of interest under section 234B of the Income-tax Act for tax deductible at source. Analysis: The judgment pertains to tax cases (appeals) filed by the Revenue against the Tribunal's order for the assessment years 1991-92 and 1994-95. The main issue raised is the levy of interest under section 234B of the Income-tax Act for tax deductible at source. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal both held that interest could not be levied in cases where no advance tax is payable, especially for foreign companies. The Tribunal emphasized that in the case of a foreign company, no advance tax was required to be paid under section 209 of the Income-tax Act. The Revenue contended that interest under section 234B should be levied due to short payment of Tax Deducted at Source (TDS). However, the court considered previous judgments and agreed that when the entire tax is deducted at source and there is no liability on the assessee to pay advance tax, interest under section 234B cannot be charged. In Tax Case Appeal No. 218 of 2005 for the assessment year 1991-92, the Assessing Officer initially treated the receipt as royalty but later assessed it at 20 per cent. under the Double Taxation Avoidance Agreement. The Officer levied interest under section 234B through a rectification order under section 154, which was challenged by the assessee. Similarly, in Tax Case Appeal No. 219 of 2005 for the assessment year 1994-95, the Assessing Officer assessed the receipt as royalty at 30 per cent., but the Commissioner of Income-tax (Appeals) deleted the tax charged. The assessing authority later passed a rectification order to levy interest under section 234B. However, the court held that since the advance tax paid was less than 90 per cent. of the assessed tax, the assessee was not liable to pay interest under section 234B. The court referred to previous decisions and agreed with the Delhi High Court's ruling that when the entire tax is deducted at source for a non-resident and there is no liability to pay advance tax, interest under section 234B cannot be charged. The court dismissed the appeals filed by the Revenue, concluding that the question of levy of interest under section 234B does not arise in such circumstances. Therefore, both tax case appeals were dismissed with no costs awarded.
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