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TMI Blog2001 (11) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... ract with GEC Turbines for setting up a coal based thermal power plant at Korba. For execution of the contract, the assessee engaged foreign technicians, who were deputed to the Indian project office. They were on the pay roll of theU.K.office of the assessee and were paid salaries in foreign currency byU.K.office which were credited directly to their bank accounts. These contracts of employment were approved by the Ministry of Mines for the purposes of section 10(6). However, the assessee did not deduct the tax at source while paying the salaries to these persons on the ground that provisions of section 192 were not applicable. All taxes due on the salaries were paid by such employees by way of advance-tax and self-assessment tax. On the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee as well as the foreign technicians were non-residents; (ii) the remuneration was paid outsideIndia; (iii) the contract of employment was also outsideIndia. This contention of the assessee has been opposed seriously by the learned Sr. DR by contending that the provisions of section 192 were clearly applicable inasmuch as the salary paid to the foreign technicians was chargeable to tax in India under the head 'salaries' in view of the provisions of Explanation to section 9(1)(ii). 4. After going through the relevant provisions of section 192 and section 9, we do not find merit in the contention of the learned counsel for the assessee. Section 192 provides that any person responsible for payment of any income chargeable under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable. Accordingly, the contention of the assessee's counsel in this regard is hereby rejected. 5. The next contention of the assessee's counsel is that assessee was under the bona fide belief that provisions of section 192 were not applicable to them. In this connection, the counsel for the assessee has relied on the opinion of the learned author and jurist, Mr. N.A. Palkhiwala in the Law and Practice of Income-tax, Eighth Edition, Volume 1, page 1391 on the applicability of section 195 of the Act on the payments made by non-resident to a non-resident. She has also relied on the decision of the Hon'ble Supreme Court in the case of Electronics Corpn. of India Ltd. v. CIT [1990] 183 ITR 43, wherein the issue whether the deeming provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess a bona fide belief that the provisions of section 192 were not applicable to its case. Accordingly, this contention of the assessee's counsel is rejected and it is not necessary for us to express any opinion as to whether the concept of reasonable cause could be imported while deciding the issue of the levy of interest under section 201(1A). Before parting with this contention, it is mentioned that assessee's counsel had relied on certain decisions in support of the proposition that no interest can be levied for not deducting the tax at source where there is a bona fide belief. Since we have held that there could not be any such bona fide belief, it is not necessary for us to discuss about such decisions. 7. The next contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carefully. We have also gone through the relevant provisions of section 201. The perusal of this section shows that provisions of sub-sections (1) and (1A) are without prejudice to each other. According to the dictionary meaning "without prejudice" means "without dismissing, damage or affecting any legal right". That means the provisions of both sub-sections are to be considered independently without affecting the rights in either of the subsections. The concept of interest is based on the theory that the person who has been deprived of his funds should be compensated for the same. It is on the basis of this theory that various provisions are enacted in the Income-tax Act providing the levy of interest where the legitimate amount of tax du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal in the case of Sood Enterprises, relied upon by theId.counsel for the assessee wherein it has been held that it starts from the date of deductibility till the date of actual payment of tax. Further, the date of payment by the concerned employee has been held to be the date of actual payment. Therefore, it has also to be held that levy of interest has to be restricted for the above stated period only. 9. In the present case, it is found that interest has been levied for the period commencing from the first day of April following the end of the financial year till the date of order levying interest under section 201(1A). This approach of the concerned income-tax authority appears to be erroneous and cannot be sustained. Admit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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