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TMI Blog2017 (4) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... )-VI/08-09/IT- 3(1)/Kol relating to A.Y.1992-93. 4. A brief history as to how all these appeals arise for consideration has to be explained. The Assessee is a non resident company incorporated in Australia. It entered into a contract on 28.09.1989 with Coal India Ltd. (CIL) in connection with the project for development of an open cast mine at Piparwar undertaken by Central Coalfields Ltd., a subsidiary of Coal India Ltd. For A.Y.1992-93 the assessee filed return of income declaring fees received for rendering managerial technical and consultancy services at Rs. 20,33,59,140/- which included procurement of fees of Rs. 3,57,35,557/-. 5. In accordance with the provisions contained in section 115A of the Income Tax Act (hereinafter referred to as the "Act"), tax @ 30% on the aforesaid fees was computed at Rs. 6,10,07,742/-. The entire tax of Rs. 6,10,07,742/-was paid by CIL. The Assessing Officer vide his order under section 143(3) of the Act dated 28th February, 1995 held that the services rendered by the Assessee for which procurement fees were paid are in the nature of Agent's service and hence the procurement fees paid by CIL were basically in the nature of commission and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restored back to the file of the Assessing Officer for passing a speaking order on this issue after giving an opportunity of hearing to the assessee as per law. The assessee is directed to cooperate with the Assessing Officer in prosecuting its case. Since we have remitted the matter back to the file of the Assessing Officer on technical point raised by the assessee, therefore, the other grounds of the assessee does not require any adjudication." 7. As we have already seen that the AO passed the order u/s 147 r.w.s. 143(3) of the Act on 27.03.2003. The AO by another order dated 27.05.2004 passed u/s 154 of the Act levied interest u/s 234B of the Act and further held that the asserssee is also liable to pay interest u/s 220(2) of the Income Tax Act, 1961 (Act.). 8. Against the aforesaid order the assessee preferred an appeal before CIT(A) in Appeal No.103/2004-05. But CIT(A) vide its order dated 27.01.2005 confirmed the order of the AO. Against the order of CIT(A) the assessee preferred an appeal before the Tribunal vide ITA No.831/Kol/2005 dated 08.06.2006 who restored the issue to the AO for fresh consideration. 9. Consequent to the aforesaid order of ITAT in ITA Nos.831 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Procurement Fee. Rs. 3,57,35.557/- TOTAL: Rs.20,33.59.142/- The technical fee was taxed @ 30% whereas Procurement Fee was treated as Commission and taxed at the rate 65%. It is relevant to note that these payments are net of taxes implying thereby that the payee i. e., Coal India Ltd., is required to pay the tax in respect of the said income in the hands of the assessee M/s white Industries Ltd. Now, the income tax liability being discharged by Coal India Ltd., on behalf of White industries Ltd. should form part of the income in the hands of M/s White Industries Ltd. In other words grossing up is required in respect of the receipt. In this regard, it is relevant to note that such income tax liability in respect of technical service is exempt U/S l0(6A). However, no exemption has been envisaged in respect of procurement feel commission. Thus grossing up will be required at the rate of 65% in respect of Procurement Fee of Rs. 3,57,35,557/- which works out to Rs. 5,89,63.669/-. Hence, the difference amounting to Rs. 2,32,281,112/- representing tax liability discharged! dischargeable by CIL on behalf of the 'A' for making the payment of Rs. 3,57,35.5571- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of interest u/s 234B and u/s 220(2) of the Act is concerned, the CIT(A) held that in so far as the levying of interest u/s 234B is concerned since the assessee was a non resident the key person making the payment has to deduct tax at source in terms of section 195 of the Act. Since the provision of section 209(1)(d) of the Act the liability of the assessee to pay advance tax has to be computed after giving credit to the tax deductible (where actually deducted or not) the assessee cannot be called upon to pay interest u/s 234B of the Act. Thus levying of interest u/s 234B was deleted by CIT(A). 16. In so far as levying of interest u/s 220(2) of the Act is concerned, the CIT(A) quoted CBDT Circular No.334 dated 3.4.1982 wherein it was laid down as follows: "1. Doubts hove been raised as to the quantum of interest chargeable under section 220(2) when the original assessment order passed by the Income-tax Officer is (a) Cancelled by him under section 146; (b) set aside/cancelled by an appellate/revisional authority and such appellate/revisional order has become final ; or (c) set aside by one appellate authority but, on further appeal, the order setting aside the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring the tax liability also appeared in the proceedings and in a letter dated 13.05.2015 had informed the bench that Price Waterhouse Coopers was not the consultant and that the matter was referred to the assessee for advice which was yet to be received. Thereafter CIL also did not appear in its proceedings. In these circumstances taking note of the fact that the appeals are very old appeals pertaining to A.Y.1992-93 and keeping in mind the lack of interest shown by the assessee to prosecute the appeals, we dismiss the appeals filed by the assessee for non prosecution. For doing so, we find support from the following decisions :- "1. In the case of CIT vs B.N.Bhattachrgee and another, reported in 118 ITR 461 [relevant pages 477 & 478] wherein their Lordships have held that : "The appeal does not mean merely filing of the appeal but effectively pursuing it." 2. In the case of Estate of late Tukojirao Holkar vs CWT; 223 ITR 480 (MP) while dismissing the reference made at the instance of the assessee in default made following observation in their order : "If the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 201(1) & 201(1A) to which our attention was drawn on behalf of the assessees. the assessees cannot be held to have committed default in paying the advance- tax. They are entitled to take into account the tax which is deductible by the payer. though not actually deducted. Consequently, there is no liability to pay interest. The decision of the CIT(A) to cancel the interest U/S 234B is upheld on merits. " 23. The issue was confirmed by the Delhi HC in the case of DIT vs. Ericsson AB [2011] 16 taxmann.com 371 (Delhi). Reliance was also placed on the decision in the case of DIT vs. Jacobs Civil Incorporated [2010] 194 Taxman 495 (Delhi) (Page 726 to 742), wherein the Hon'ble Delhi High Court has held as under: "No doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments. the non - resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of Section 191 of the Act along with Section 209 (1) (d) of the Act. For this reason. it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at source from the payments made to a non-resident but also penalties etc. Once it is found that the liability was that of the payer and the said payer has defaulted in deducting the tax at source, the Department is not remedy-less and therefore can take action against the payer under the provisions of Sec.201 of the Income Tax Act and compute the amount accordingly. No doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments, the non- resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. The provisions of Sec.209(1)(d) have been amended by the Finance Act, 2012 but those amendments are not relevant for the present case which relates to AY 1992-92. We therefore hold that the assessee was not liable to pay any interest under sec.234-B of the Act following the judgments referred to earlier. 27. We find no merits in the relevant grounds of appeal of the revenue wherein the revenue has challenged the order of the CIT(A) holding that charging of interest u/s.234B of the Act in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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