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TMI Blog2019 (7) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... interest is to be calculated? - A proviso has been inserted to the provisions of section 201(1A) by the Finance Act, 2012 w.e.f 01.07.2012 wherein it has been clarified that the interest u/s. 201(1A) shall be payable from the date on which such tax was deductible to the date of the furnishing of return of income by the deductee. This proviso to section 201(1A) of the Act is only clarificatory in nature and would apply retrospectively. In the circumstances, we do not find any infirmity in the order passed by the Ld.CIT(A) in holding that the interest shall be calculated from the date on which tax was first deductible by the deductor to the date of filling of return by the recipient deductee. Thus, we uphold the orders of the Ld.CIT(A) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J of the Act. Assessee contended that these payments were made only under the contract for service and principle to principle basis and the provisions of section 194J have no application and the services rendered by these parties are not in the nature of professional services. It was also contended that the deductees/parties have reflected the receipts in their income and paid taxes and therefore the assessee cannot be treated as deemed to be in default within the meaning of provisions of section 201(1) of the Act. Not convinced with the submissions of the assessee, the Assessing Officer i.e. ITO(OSD)(TDS) 3(2), Mumbai passed orders u/s. 201(1) holding that the assessee is in default for short deduction of TDS. 3. Subsequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions made before the lower authorities. He also placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. Eli Lilly Co. (India) (P.) Ltd. [312 ITR 225] and Hindustan Coca Cola Beverage (P.) ltd. v. CIT [293 ITR 226] and the decision of the Hon'ble Rajasthan High Court in the case of CIT v. Rajasthan Rajya Vidyut Prasaram Nigam Ltd., [287 ITR 354]. 7. Ld. DR vehemently supported the orders of the authorities below. 8. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied on. The only dispute before us is as to whether the interest u/s. 201(1A) of the Act is liable to be charged from the date of deductibility of TDS to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding the tax which ought to have gone to the exchequer. The levy of interest is mandatory and the absence of liability for tax will not dilute the default. The liability of deducting tax at source is in the nature of a vicarious liability, which pre-supposes existence of primary liability. The said liability is a vicarious liability and the principal liability is of the person who is taxable. A bare reading of Section 201(1) shows that interest under Section 201(1A) read with Section 201(1) can only be levied when a person is declared as an assessee-in-default. For computation of interest under Section 201(1A), there are three elements. One is the quantum on which interest has to be levied. Second is the rate at which interest has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese provisions wherein the provisos were inserted by the Finance Act, 2012 w.e.f. 01.07.2012. The proviso to Section 201(1) of the Act stipulates that any person who fails to deduct the whole or any part of tax on the sum paid to resident shall not be deemed to be an assessee in default in respect of such tax, if a resident has filed return u/s. 139(1) of the Act considered the income in its return of income and paid the taxes on such income. Similarly, a proviso was inserted to Section 201(1A) of the Act stating that the person who fails to deduct the whole or any part of tax on the payment made to resident though not deemed to be an assessee in default under the first proviso to sub-section (1), interest under clause (i) of section 201(1A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is only clarificatory in nature and would apply retrospectively. In the circumstances, we do not find any infirmity in the order passed by the Ld.CIT(A) in holding that the interest shall be calculated from the date on which tax was first deductible by the deductor to the date of filling of return by the recipient deductee. Thus, we uphold the orders of the Ld.CIT(A) and reject the grounds of the assessee. 14. The decisions relied on by the assessee have no application to the facts of the assessee s case as they were rendered either prior to insertion of proviso to section 201(1A) of the Act or without considering the proviso. 15. In the result, appeals of the assessee are dismissed. Order pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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