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TMI Blog2006 (9) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... Allen Hamilton Inc. SE Asia/UK/USA/Brazil under section 163. The aforesaid company received various payments on which tax was deductible at source as per the provisions of section 195 of the Act. The assessee-company filed a return of income in respect of the assessment year 1998-99 declaring nil income on the ground that the payments received by one NRI company from other NRI companies cannot be brought to the charge of tax under the provisions of the Income-tax Act, 1961. This claim was rejected by the Assessing Officer with the result that the payments received by the NRI were assessed in the hands of the assessee-company as representative assessee of the NRI. The Assessing Officer also levied interest under sections 234A and 234B. The assessment made by the Assessing Officer was carried in appeal before the Commissioner of Income-tax (Appeals), who confirmed the quantum of the assessed income but deleted the interest charged under both the sections as mentioned above with the following observations : "In so far as objection to the levy of interest under sections 234A and 234B for want of any specific direction in the assessment is concerned, I do not agree with the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability on the part of the assessee to pay advance tax, if the income of the assessee is such on which tax is deductible at source as per the provisions of the Act. Therefore, in such a situation, interest under section 234B cannot be charged. However, with regard to levy of interest under section 234A, the Tribunal held that such interest is leviable for the default of non-filing the return of income in time and levy of such interest is mandatory. With regard to the interest under section 234B, the matter was restored to the Assessing Officer for determining the extent of such income on which tax was deductible at source. The learned Departmental representative also referred to the Income-tax Appellate Tribunal, Delhi Special Bench decision in the case of Motorola Inc. [2005] 95 ITD 269. In this case also, the Special Bench was concerned with the question regarding levy of interest under sections 234A and 234B, in a case where tax at source was deductible under section 195 of the Act. It was held by the Special Bench that the charging of interest under both the sections are mandatory and the Assessing Officer has no power to reduce or waive such interest. However, with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income, and the amount of income-tax so reduced shall be the advance tax payable. 23. In the light of these express provisions, we are of the opinion that if any perquisite was taxable in assessee' s hands, then, it was liable to be deduction of tax at source because the same was taxable under the head ' Salary' . 24. We are further of the opinion, that if this was taxable under the head ' Salary' then it was the responsibility of the employer to deduct the tax at source and for the failure of the employer, the assessee cannot be fastened with the liability to pay such amount by way of advance tax. Therefore, the question of charging interest under sections 234A, 234B and 234C do not arise at all and consequently the same are cancelled." 8. With regard to charging of interest under section 234A, learned counsel also placed reliance on the following cases : (1) Dr. Prannoy Roy v. CIT [2002] 254 ITR 755 (Delhi) ; and (2) Milan Enterprise v. Asst. CIT [2005] 95 ITD 18 (Mum). 9. We have given a careful consideration to the rival submissions and we have gone through the relevant facts as also the precedents cited before us. We first deal with the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable if there is a delay in filing the return of income. The separate provisions of law as regards charging of interest under sections 234A and 234B have not been considered by the Tribunal in the case of M. M. Ratnam [1997] 62 ITD 21 (Mumbai). Learned counsel appearing for the assessee has also relied on the hon'ble Delhi High Court decision in the case of Dr. Prannoy Roy [2002] 254 ITR 755. The relevant part of the ratio of this case is reproduced below from the headnote : "For the assessment year 1995-96, the petitioner earned substantial capital gains and paid the tax due before the return was due to be filed on October 31, 1995. The Assessing Officer charged interest for the return filed by the assessee after a delay of 11 months under section 234A of the Income-tax Act, 1961. In a revision petition filed by the assessee under section 264, the Commissioner held that deduction of tax paid was not provided in section 234A, as it compensates for delay or default in filing the return of income and not the tax. On a writ petition : Held, allowing the petition, that the petitioner had paid the tax before the due date for filing the return for the year in question. The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer and therefore even though interest under section 234A is mandatorily leviable as held by the Income-tax Appellate Tribunal, Special Bench in the case of Motorola Inc. [2005] 95 ITD 269 (Delhi), such interest has to be consequential to the quantum of tax determined as payable. We have been given to understand that the assessee' s quantum appeal is pending before the Tribunal and therefore we direct the Assessing Officer to recalculate the interest chargeable under section 234A on correct tax after giving effect to the Tribunal' s order in the quantum appeal. 11. Coming to the levy of charging of interest under section 234B, the learned Departmental representative has relied on the hon'ble Calcutta High Court decision in the case of Borhat Tea Co. Ltd. [1992] 193 ITR 134. In that case, the hon'ble Calcutta High Court was concerned about levy of penalty under section 273(1)(b) and the definition of assessed tax contained under section 215(5) for the purpose of calculating the penalty leviable. The ratio of this decision may be reproduced below from the head note : "While computing the assessed tax as defined under section 215(5) of the Income-tax Act, 1961, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he advance tax. They were entitled to take into account the tax which was deductible by the payer, though not actually deducted. Consequently, there was no liability to pay interest. The decision of the Commissioner of Income- tax (Appeals) to cancel the interest under section 234B was to be upheld on merits. As regards the interest under section 234A, the matter was to be restored to the file of the Assessing Officer so that a proper adjudication could be made with regard to the applicability of the section so that both sides would have an opportunity of putting forth their respective stands clearly." 13. Same view has been adopted by several Benches of the Tribunal in the cases, which have been relied upon by learned counsel appearing for the assessee and which have been referred to (supra). In our view, the hon'ble Calcutta High Court decision relied upon by the learned Departmental representative cannot be applied to the facts of the present case. The Income-tax Appellate Tribunal, Special Bench decision in the case of Motorola Inc. [2005] 95 ITD 269 (Delhi) is squarely applicable and therefore, we hold that interest under section 234B is not leviable as the entire income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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