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TMI Blog2024 (11) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... such deduction or collection and which is taken into account in computing such total income. As seen that the advance tax is reduced by any tax deductible or collectible which means that even the legislators have taken care of liability of the payer to deduct tax at source on payments and to that extent, assessee is not required to pay any advance tax. In the case on hand, since the payers faulted in deducting tax at source, the assessee discharged its liability by paying the full tax. Therefore, in our considered opinion, the assessee cannot be levied with interest u/s 234C of the Act for the fault of the payers. As decided in Ngc Network Asia LLC [ 2009 (1) TMI 174 - BOMBAY HIGH COURT] wherein the Hon ble High Court held that when a duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and intimation dt. 22/06/2022 u/s 143(1) of the Act, was served with a demand of Rs. 47,13,33,940/-. TDS credit was not granted and erroneous interest u/s 234B and 234C of the Act were levied which were subsequently rectified but the levy of interest u/s 234C of the Act at Rs. 51,75,514/- stood. This levy of interest was challenged before the ld. CIT(A) but without any success. 4. Before us, the ld. Counsel for the assessee explained that the assessee has received interest on commercial papers and non- convertible debentures (NCDs) amounting to Rs. 62,10,11,200/- Rs. 13,68,16,712/- respectively, which was subject to withholding tax/deduction of tax @20%. The ld. Counsel for the assessee further explained that the assessee has also received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions relied upon by the ld. Counsel. It is an undisputed fact that on some part of the interest received by the assessee on commercial papers, NCDs and Government securities, payers have faulted in not deducting the tax at source. It is true that for the fault of the payer, the assessee cannot be held responsible. In our understanding of the law, for failure on part of the payer to deduct TDS u/s 196D and 194LD of the Act, the assessee cannot be penalized by levy of interest u/s 234C of the Act. He has diligently discharged its full tax liability by paying the entire advance tax on the interest income 6. Section 234C of the Act reads as under:- [Interest for deferment of advance tax. 234C. (1) [Where in any financial year, [(a) an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay any interest on the amount of the shortfall on those dates;] (b) 68[69 [an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA, as the case may be], who is liable to pay advance tax under section 208 has failed to pay such tax or the advance tax paid by the assessee on its current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent on the amount of the shortfall from the tax due on the returned income:]] 70 [Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax due on the returned income where such shortfall is on account of increase in the rate of surcharge under section 2 of the Finance Act, 2000 (10 of 2000) as amended by the Taxation Laws (Amendment) Act, 2001 (4 of 2001) and the assessee has paid the amount of shortfall on or before the 15th day of March, 2001 in respect of the instalment of advance tax due on the 15th day of June, 2000, the 15th day of September, 2000 and 15th day of December, 2000.] 78 [79[Explanation 1]. In this section, tax due on the returned income means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income. 8. It can be seen that the advance tax is reduced by any tax deductible or collectible which means that even the legislators have taken care of liability of the payer to deduct tax at source on payments and to that extent, assessee is not required to pay any advance tax. 9. In the case on hand, since the payers faulted in deducting tax at source, the assessee discharged its liability by paying the full tax. Therefore, in our considered opinion, the assessee cannot be levied with interest u/s 234C of the Act for the fault of the payers. 10. F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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