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TMI Blog1999 (11) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... red the assessees to deduct Income-tax at source from the amount of commission. This provision is reproduced below: "194H-(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying on or after the 1st day of October, 1991 (but before the 1st day of June, 1992), to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct Income-tax thereon at the rate of ten per can. (2) The provisions of sub-section (1) shall not apply-- (a) to such persons or class or classes of persons as the Central Government may, having regard to the extent of inconvenience caused or likely to be caused to them and being satisfied that it will not be prejudicial to the interests of the revenue, by notification in the Official Gazette, specify in this behalf; (b) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see cancelled the interests imposed under section 201(1A). 7. The department has challenged the order of the ld. CIT(A) before us in this appeal. 8. The ld. D.R. emphatically argued that in view of the mandatory provisions of section 194H, the ACIT(TDS) was fully justified in levying the interest under section 201(1A) of the Income-tax Act and that the ld. CIT(A) has committed a legal error in cancelling the levy of interest. In support of his contention, the ld. D.R. has made reference to the following decisions: 1. ITO v. Khushi Ram & Sons [1989] 31 ITD 151 (Asr.). 2. ITO v. Das Biri Mfg. Co. (P.) Ltd. [1984] 10 ITD 35 (Cal.). 3. Cawnpore Sugar Works Ltd. v. IAC [1982] 2 ITD 654 (All.). 4. ITO v. Marshall Sons & Co. (I) Ltd. [1992] 42 ITD 496 (Cal.). 9. Shri, S.K. Garg, ld. counsel for the assessee-company submitted detailed arguments for supporting the order of ld. CIT(A). He raised following specific pleas: (i) In view of the provisions contained under section 194H which came into effect from 1-10-1991, the relevant date for ascertaining the liability is the date on which the liability crystallised. (ii) As section 194H(2) itself provides for certain exemptions, the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k at pages 104 to 109. 11. In reply, the ld, D.R., Shri B.P. Singh submitted that no credit can be given to the assessee on account of the fact that payees had made the payment of tax by way of advance tax. He also submitted that so far as the exemption provided under section 194(2) is concerned, remedy was available to the assessee before 31-3-1991 and, in any case, on that account, the obligation cannot be held to be discharged. He also submitted that the language of section 194H and that of 201(1A) is very plain and there is no scope for introducing the scope of 'reasonable cause' for not deducting tax at source under, section 194H. 12. We have carefully considered the facts and circumstances relating to this matter, the material to which our attention was invited and the rival submissions. The ld. counsel for the assessee took extraordinary pains to demonstrate that the assessee had taken all care to comply with the provisions of section 194H. Referring to the sequence of events relating as described on pages 1 and 2 of the paper book, he submitted that the assessee has moved representation to the Central Government on 4-11-1997 and pursued the matter before the High Court wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to what is just and expedient. The express intention must guide the court. In the case of CED v. R. Kanakasabai [1973] 89 ITR 251 it was observed by the Supreme Court that if taxing provision is ambiguous and is reasonably capable of more than one interpretation, that interpretation which is beneficial to the subject must be adopted. It is not permissible for the court to read into a taxing provision any, words which are not there or exclude words which are there. According to Hon'ble Court, the words found in the provision must be given their natural meaning. 16. Viewed in the above perspective and settled legal position, the words "reasonable cause", "sufficient cause," "reasonable belief", "bona fide conduct", "without negligence" etc., cannot be introduced in the provisions contained under section 194H(1) or under section 201(1A) of the I.T. Act. The language of the provisions is plain and clear and there is no ambiguity so far as the understanding of these provisions are concerned. These provisions cast an absolute obligation on the part of the assessee who is obligated to deduct income-tax at the rate prescribed. The provision contained under section 194H(1) does not admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easy for the assessees to flout the provisions of section 194H just by making or sending representations and not deducting tax under the Act on the pretext that they are waiting for the result of their representations. The remedy for seeking exemption is no doubt available and in case the remedy is granted, then consequent effect can be given to the orders passed by the CBDT on the representations made for seeking relief. 20. So far as the order of the ITAT 'B' Bench dated 12-4-1999 is concerned, the matter before the Bench in that case related to the penalty under section 271C. In the matters relating to penalty, the 'reasonable cause' or 'bona fide belief' entertained by the assessee has to be considered and entertained. However, so far as the levy of interest is concerned, the scheme and intent of these provisions is different from those provisions which relate to penalty. In the case of Marshall Sons & Co. (I) Ltd. the Calcutta Bench 'A' of ITAT has considered this defence and has observed that the penalty and interest operate in different fields. The observations of the Bench are reproduced below: "...Penalty is levied for violation of the provisions of law and is quasi cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further it is not ascertained as to whether the advance tax paid by the three firms referred to above related to the Commission or not. In any case, the mere fact that the advance tax was paid by the three firms to whom the commission was paid cannot, in our opinion, absolve the assessee from the liability cast on it under section 194H, read with section 201(1A) of the I.T. Act. The cases referred to by the ld. counsel for the assessee in support of this plea are distinguishable on facts because these cases did not pertain to section 194H. So far as the decision of Delhi Bench in the case of Nestle India Ltd. is concerned that matter related to the scope of section 201. In the facts and circumstances of that case, there was a scope for estimation of the income i.e. whether tax is to be paid on conveyance allowance or not. So far as the matter in hand is concerned, the amount of commission was ascertainable and is specific and there was no scope for any doubt about the quantum of commission and quantum of tax which was to be deducted at source. Hence the liability being very specific and ascertainable in exact figures and being known to the assessee after the enforcement of the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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