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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 ..... rdingly. 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. 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 present case was not in accordance with law. Levy of interest u/s.220(2) - Held that:- CIT(A) has not given any finding as to whether interest is chargeable u/s.220(2) of the Act or not. He has only directed the AO to follow the CBDT Circular No.334 dated 3.4.1982 and charge interest u/s.220(2) of the Act in accordance with the said circular. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 20,33,59,140/- which included procurement of fees of ₹ 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 ₹ 6,10,07,742/-. The entire tax of ₹ 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 commission cannot be termed as technical fees. Against the said order the appellant preferred appeal before the CII'(Appeals) and the Learned CIT(Appeals) vide his order dated 6th December, 1996 decided the issue against the appellant. The appellant preferred an appeal before the Hon'ble Tribunal against such order of the CIT(Appeals). The Hon 'ble Tribunal agreed with the findings of the lower authorities and regarded that the procurement fees received by the Assessee was in the nature of business income and remanded to the AO, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and 832/Kol/2005 the AO passed order giving effect to the directions of the tribunal. In so far as the direction to consider the issue of validity of initiation of proceedings u/s 147 of the Act is concerned it was the subject matter of ITA No.832/Kol/2005, the AO by its order dated 21.01.2009 held that the reopening of assessment was proper. The AO found that the objections to the validity of initiation of reassessment proceedings u/s.148 of the Act were as follows: 1) Issuance of notice u/s 148 without disclosing the reasons to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 3,57,35,557/- which works out to ₹ 5,89,63.669/-. Hence, the difference amounting to ₹ 2,32,281,112/- representing tax liability discharged! dischargeable by CIL on behalf of the 'A' for making the payment of ₹ 3,57,35.5571- (net of lax) requires to brought to tax. Since the said income of ₹ 2,32,28, 112/- has escaped assessment and the assessee had failed to disclose fully and truly all material/acts in respect of the said transaction and its nature/mislead the department while making the claim, I have reasons to believe that this is a fit case for invoking provisions under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 assessment is varied by the second appellate authority and the demand gets finally determined. 2. These issues were comprehensively examined in consultation with the Ministry of Law and the Board has been advised: 1. Where an assessment order is cancelled under section 146 or cancelled/set aside by an appellate/revisional authority and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference. 3. In the case of Commissioner of Income-tax vs Multiplan India (P) Ltd.: 38 ITD 320(Del), the appeal filed by the revenue before the Tribunal, which was fixed for hearing. But on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 would not be permissible for the Revenue to charge any interest under Section 234B of the Act. . 24. Reliance may also be placed on following decisions laying down identical proposition as set out above. DIT(lnternational Taxation) v Maersk Co. Ltd. 2011) 198 Taxman 518 (Uttarakhand) (FB). Sed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 present case was not in accordance with law. 28. As far as the levy of interest u/s.220(2) of the Act is concerned, the CIT(A) has not given any finding as to whether interest is chargeable u/s.220(2) of the Act or not. He has only directed the AO to follow the CBDT Circular No.33 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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