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TMI Blog2014 (3) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... at the relied upon decision has not become final and appeal has been preferred before the Hon'ble Madras High Court against the said decision." 3. The assessee is a 'company' which manufactures steel forgings. On 24.9.2010, it had filed its return disclosing total income of Rs. 3,52,09,690/- which was 'summarily' processed. In the course of 'scrutiny', the Assessing Officer noticed the assessee to have incurred overseas commission expenses of Rs. 161.61 lakhs and warehousing and other charges incurred of Rs. 110.09 lakhs. In his view, these payments ought to have been subjected to TDS provisions and failure thereof would attract disallowance 40(a)(i) of the Act. Thereafter, he completed 'regular' assessment vide order dated 12.3.2013 and made disallowance/addition of Rs. 2,71,70,000/- in assessee's income on the ground that the assessee had failed to deduct TDS on the above payments. He repelled the contentions of the assessee about nonchargeability of TDS provision by holding that source of income in question had emanated principally on account of business activity conducted in India. 4. Aggrieved the assessee preferred appeal. The CIT(A) has followed order of the 'trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere to accept such a contention it would mean that on mere payment income would be said to arise or accrue in India. Therefore, as stated earlier, if the contention of the Department was accepted it would mean obliteration of the expression "sum chargeable under the provisions of the Act" from Section 195(1). While interpreting a Section one has to give weightage to every word used in that section. While interpreting the provisions of the Income Tax Act one cannot read the charging Sections of that Act de hors the machinery Sections. The Act is to be read as an integrated Code. Section 195 appears in Chapter XVII which deals with collection and recovery. As held in the case of C.I.T. Vs. Eli Lilly & Co. (India) (P.) Ltd. (2009) [312 ITR 225] the provisions for deduction of TAS which is in Chapter XVII dealing with collection of taxes and the charging provisions of the I.T. Act form one single integral, inseparable code and, therefore, the provisions relating to TDS applies only to those sums which are "chargeable to tax" under the Income-tax Act. It is true that the judgment in Eli Lilly (2009) 312 ITR 25 was confined to Section 192 of the Income-tax Act. However, there is some sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2), as interpreted by the High Court, would plug the loophole as the said interpretation requires the payer to make a declaration before the Income-tax Officer(TDS) of payments made to non-residents. In other words, according to the Department Section 195(2) is a provision by which payer is required to inform the Department of the remittances he makes to the nonresidents by which the Department is able to keep track of the remittances being made to non-residents outside India. We find no merit in these contentions. As stated hereinabove, Section 195(1) uses the expression "sum chargeable under the provisions of the Act." We need to give weightage to those words. Further, Section 195 uses the word Rs. payer' and not the word "assessee". The payer is not an assessee. The payer becomes an assessee-in-default only when he fails to fulfill the statutory obligation under Section 195(1). If the payment does not contain the element of income the payer cannot be made liable. He cannot be declared to be an assessee-in-default. The abovementioned contention of the Department is based on an apprehension which is ill founded. The payer is also an assessee under the ordinary provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s applicable only to pure income payments and not to composite payments which had an element of income embedded or incorporated in them. The controversy before us in this batch of cases is, therefore, quite different. In Transmission Corporation case (1999) 239 ITR 587 (SC) it was held that TAS was liable to be deducted by the payer on the gross amount if such payment included in it an amount which was exigible to tax in India. It was held that if the payer wanted to deduct TAS not on the gross amount but on the lesser amount, on the footing that only a portion of the payment made represented "income chargeable to tax in India", then it was necessary for him to make an application under Section 195(2) of the Act to the Income-tax Officer (TDS) and obtain his permission for deducting TAS at lesser amount. Thus, it was held by this Court that if the payer had a doubt as to the amount to be deducted as TAS he could approach the Incometax Officer (TDS) to compute the amount which was liable to be deducted at source. In our view, Section 195(2) is based on the "principle of proportionality". The said sub-Section gets attracted only in cases where the payment made is a composite payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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