9911796707
TMI Blog1988 (6) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... n 273 was accordingly issued and served upon the assessee. In response to the notice served upon it the assessee filed its reply dated 30th September, 1982. It was pointed out by the assessee, a non-resident company, that income accruing to it in India during 1980 comprised of interest due from the bank on short-term deposit, interest due from Tata Finlay Ltd. and dividends received from Tata Finlay Ltd. It was further stated that interest and dividends represented income from which tax was required to be deducted at source under Chapter XVII of the Income-tax Act, 1961. It was asserted that under section 209 tax calculated on the estimated income shall be reduced by the amount of tax deductible at source. Therefore, the tax deductible at s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate section in the assessee's case, the ITO has mentioned section 273(2)(c). The CIT (A) mentioned that it was an admitted fact that the statement contemplated under section 209A(1)(a) was not filed by the assessee though it had an obligation to do so. The explanation given was that the mode and manner of advance tax calculation stipulated in section 209 indicated that the assessee can take into consideration the taxes deductible at source whether such deduction and payment was made or not. The CIT (A) was of the view that the assessee sought to give a narrow interpretation of the word 'deductible' used in section 209(1)(a)(iii). According to the CIT (A), a comprehensive meaning has to be given to this word and that the word 'deductible' w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(b). 5. On merit, the contention advanced by Shri Sanyal was that the income derived by the assessee was interest income on short-term deposit with bank and interest and dividend income from Tata Finlay Ltd. It was further submitted that the assessee-company was a non-resident company and in respect of interest tax at source was deductible under section 195 and in respect of dividend income-tax was deductible at source under section 194. Shri Sanyal then pointed out that while computing advance tax under section 209(1) income-tax calculated has to be reduced by the amount of income-tax deductible under sections 194 and 195. If tax so deductible is taken into account, the advance tax payable by the assessee would be nil with the result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty has been imposed would not vitiate the penalty order. 7. We have considered the rival submissions as also the facts on record. The assessee has filed three papers which have been perused by us. The legal issue raised by the assessee may first be disposed of. There is dispute that the assessee was not required to file an estimate either under section 209A (4) or under section 212(3A) and therefore, no penalty was imposable in this case under section 273(2)(c). In the assessment order the ITO has no doubt stated that penalty proceedings under section 273(2)(c) have been separately initiated. The assessee has filed a copy of the notice issued by the ITO under section 274/273. In this notice it was clearly stated that in course of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken into account whether the same has been actually deducted or not. In taking this view, we stand fortified by the decision of the Madras High Court in the case of Madras Fertilisers Ltd. cited on behalf of the assessee. 9. The assessee's contention that if tax deductible under sub section 194 and 195 is deducted from the income-tax deductible under section 209(1), the advance tax payable would be nil is not tenable. Under the Finance Act, 1981, income-tax is payable by the assessee on interest and dividend income at 70 per cent. Further surcharge at 7 1/2 per cent is also payable on income-tax. In respect of income by way of dividends tax at the rate of 25 per cent is deductible at source under section 194 and no surcharge is deductibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f what has been said above, we hold that the assessee in this case had an obligation to file a statement of advance tax under section 209(1)(a) but it failed to do so. Therefore, penalty under section 273(1)(b) for such default is leviable in this case. 11. The quantum of penalty has to be computed in accordance with the provisions contained inn sub-clause (i)(1) of section 273(1). The ITO has imposed the minimum penalty at 10 per cent of the shortfall. While doing so, he has not taken into account tax deductible at source under sub section 194 and 195. Tax deductible at source under sub section 194 and 195 in respect of interest and dividend income from Tata Finally Ltd. will have to be taken into account while computing the 'assessed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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