9911796707
TMI Blog1975 (10) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon ground that the tax was not deducted at source at the time of payment of the said interest to the banks in accordance with Chapter XVII B of the IT Act, 1961. It is also common ground that, subsequently, the tax thereon was recovered by the Deptt. by resorting to the provisions of s. 226 of the IT Act, 1961. This section falls under Chapter XVII D of the IT Act, 1961. On these facts, the question for decision is whether the interest payment of Rs. 2,10,209 to the non-resident banks is hit by the provisions of 40(a)(i) of the IT Act, 1961. Similar question had come up for decision before the Tribunal, Jaipur bench, Jaipur in ITA No. 3444/1970-71, and 3707/1970-71 vide their order dt. 3rd Nov., 1972, the Tribunal had decided the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Whatever amount has been paid has been interpreted by the Tribunal as having been 'paid' by the assessee in terms of Chapter XVII D, and sub-cl. (i) of cl. (a) of s. 40 does not visualise any exemption in case the payment is under Chapter XVII D. It must be 'under Chapter XVII B'. The payment of interest is therefore, hit by s. 40(a). 3. On behalf of the assessee, it was urged that the above construction was not correct and the words 'under Chapter XVII B' qualified only the verb 'deducted'. The verb 'paid' was not qualified by the words 'under Chapter XVII B'. 4. We have carefully examined the rival contentions. The argument of the learned Departmental Representative is, no doubt, attractive and sounds, as a first impression, plausible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the person who should deduct the tax. But for the provisions contained therein, the payer would not be legally in a position to deduct the tax. The same is, however, not the position with regard to the payment of tax. Sub-cl. (i) of cl. (a) of s. 40 does not say as to by whom tax will be paid. The non-resident payee may itself make the payment of tax directly or through its agent or alternatively the payer may pay the tax for and on behalf of the payee. He may do so without deducting the tax at source from the payment made to the non-resident. Alternatively, he may deduct the tax in accordance with the s. 192 to 195 (in the present case s. 195 is relevant), and then pay tax. In the latter case the deduction of tax and payment thereof woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature that both the words 'paid' and 'deducted' were to be governed by the words 'under Chapter XVII-B" they would not have used the conjunction word 'paid' first and the word 'deducted' later nor would they plant in the conjunction 'Or' in last when for them in terms of Chapter XVII-B act of 'deduction' comes first; act of payment comes later. Besides if mere deduction of the tax "under Chapter XVII-B" was enough to take a person out of the mischief of sub-cl. (i) of cl. (a) of s. 40, as it is, there was no need to provide for another alternative in the said section of "Payment" of the deducted tax, for the payment is dependent on "deduction". By necessity, therefore, the second alternative has to be an independent one, and not as a natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a change in the rate of exchange the liability of the assessee as expressed in Indian currency for making the outstanding payments had increased. The grievance of the Department is that in the present case the assessee has not proved as to what amount of liability was outstanding on the date when the rate of exchange of the Indian currency was changed and as a result of such change, how much increase in the assessee's out-standing liability for making payment has been occasioned. According to the Department, it was wrong on the part of the AAC to presume that an assessee become entitled to increased depreciation only on account of the fat of change in the rate of exchange. The assessee must prove that such change in the rate of exchange h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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