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TMI Blog2016 (11) TMI 1763X X X X Extracts X X X X X X X X Extracts X X X X ..... on the statue with effect from 1st April 2012, does alter the legal position but then right now we are dealing with the pre-amendment period. In our considered view, the interest u/s 234B and 234 C cannot be levied at all in the cases in which the assessee is a non resident assessee and in which all the monies brought to tax in the hands of the assessee were received from Indian assesses who were obliged to deduct applicable tax at source from the related payments. Learned representatives fairly agree that in the event of this issue, in principle, being decided in favour of the assessee, the assessee succeeds in these appeals. We, therefore, uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned levies of interest under section 234B and 234C. Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... source by the persons making payment to this assessee. In other words, entire tax liability of the assessee was tax deductible at source in the relevant previous year. Accordingly, the assessee did not have any liability to pay advance-tax in the relevant previous year and as per the scheme of s. 209 of the Act. Since there was no advance-tax liability on the assessee, there was no question of application of interest under ss. 234B and 234C of the Act…. 3. The view so taken by the Tribunal has subsequently been confirmed by various decisions of Hon'ble High Courts. Hon'ble Bombay High Court, in the case of DIT vs NGC Network Asia LLC [(2009) 313 ITR 187 (Bom)] has held that the provisions of Section 234 B and 234 C cannot be pressed into service when tax was deductible from all the receipts in the hands of the non resident assessees. In the case of DIT Vs Jacabs Civil Inc [(2011) 330 ITR 578 (Del)], Hon'ble Delhi High Court has, in a detailed analysis, observed as follows: …………..We are not persuaded by this submission……... It is stated at the cost of repetition that the liability to deduct or collect the tax at source is that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is payable on such payments made by the payer to the non-resident. Sec. 201 of the Act lays down the consequences of failure to deduct or pay. These consequences include not only the liability to pay the amount which such a person was required to deduct 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 s. 201 of the IT 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 nonresident 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 s. 191 of the Act along with s. 209(1)(d) of the Act. For this reason, it would not be permissible for the Revenue to charge any interest under s. 234B of the Act. 4. Learned Departmental Representative, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the court to invoke the principles of equity even in the interpretation of tax laws. Tax laws and equity need not be sworn enemies at all times. The rule of strict interpretation may be relaxed where mischief can result because of the inconsistent or contradictory stands taken by the assessee or even the revenue. Moreover, interest is, inter alia, compensation for the use of the money. The assessee has had the use of the money, which would otherwise have been paid as advance tax, until it accepted the assessments at the first appellate stage. Where the revenue has been deprived of the use of the monies and thereby put to loss for no fault on its part and where the loss arose as a result of vacillating stands taken by the assessee, it is not expected of the assessee to shift the responsibility to the Indian payers. We are not to be understood as passing a value judgment on the assessee's conduct. We are only saying that the assessee should take responsibility for its actions. [emphasis added] This Court finds that no need is made out in these facts to balance any equities in these facts, as the assessee has not vacillated in its stand as to the existence of a PE in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Departmental Representative. As he rightly points out, "an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record" and that "a decision on debatable point of law is not a mistake apparent from the record". However, the fallacy in his logic is that the matter is, according to him, two views being taken in this regard. In the present case, unlike in the case of Alcatel Lucent (supra), it is not even the case of the revenue that there is any malafide or inconsistency in the conduct of the assessee, and unless that happens, the ratio of Alcatel Lucent (supra), as explained in the subsequent judgment of Hon'ble Delhi High Court in the case of GE Packaged Power Inc (supra), cannot be applied. The judicial views on the proposition that Section 234 B and 234 C cannot be invoked in the cases of non resident assesses where taxes are deductible from all the receipts brought to tax in the hands of the assessee, particularly where no malafides are alleged on the conduct of the assessee, are consistently in favour of the assessee. The plain words of the statue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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