The Dy.CIT.,, Dehradun v. M/s. B.J. Services Co.,(ME) Ltd.,, Dehradun

ITA 1190/DEL/2009 | 2001-2002
Pronouncement Date: 15-01-2010 | Result: Dismissed

Appeal Details

RSA Number 119020114 RSA 2009
Bench Delhi
Appeal Number ITA 1190/DEL/2009
Duration Of Justice 9 month(s) 15 day(s)
Appellant The Dy.CIT.,, Dehradun
Respondent M/s. B.J. Services Co.,(ME) Ltd.,, Dehradun
Appeal Type Income Tax Appeal
Pronouncement Date 15-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 15-01-2010
Date Of Final Hearing 11-01-2010
Next Hearing Date 11-01-2010
Assessment Year 2001-2002
Appeal Filed On 30-03-2009
Judgment Text
I.T.A. NO.1190 /DEL/09 1/5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.1190 /DEL/2009 ASSESSMENT YEAR : 2001-02 DDIT M/S BJ SERVICES CO. (ME) LTD. INTERNATIONAL TAXATION C/O NEERAJ NAGALIA CA DEHRADUN. V. 16-ASLEY HALL DEHRADUN. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAACB-8529-N APPELLANT BY : MS. Y. KAKKAR SR. DR. RESPONDENT BY : SHRI MP RASTOGI ADVOCATE. ORDER PER A.K. GARODIA AM: THIS IS REVENUE'S APPEAL DIRECTED AGAINST THE ORDER OF LD CIT(A)-I DEHRADUN DATED 31.12.2008 FOR ASSESSMENT YEAR 2001- 02. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD CIT(A) DEHRADUN WAS NOT JUSTIFIED IN DELETING THE INTEREST CHARGED BY ASSESSING OFFICER J/S 234B OF IT ACT 1961. 2. THE ORDER OF THE LD CIT(A)-1 DEHRADUN BE SET AS IDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. . I.T.A. NO.1190/DEL/09 2/5 3. BRIEF FACTS OF THE CASE ARE THAT THAT THE ASSES SEE COMPANY FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.683.94 LAKHS INCLUDING BUSINESS INCOME OF RS.599.65 LAKHS TO BE TAXED AT THE RATE OF 40% PLUS SUR-CHARGE AND INTEREST INCOME OF RS.84.29 LAKHS TO BE TAXED AT THE RATE OF 15% AND SUR-CHARGE. ASSESSMENT WAS COMPLETED U/S 143(3) ON 8.3.2004 AND THE ENTIRE INTEREST INCOME OF RS.84.29 LAKHS WAS BROUGHT TO TAX AND THE TAX WAS LEVIED ON THE SAME AT THE RATE OF 15% PLUS SUR CHARGE. IT IS WORTH WHI LE TO MENTION THAT WHILE MAKING PAYMENT OF INTEREST TO THE ASSESSEE THE ASSESSING OFFICER HAD DEDUCTED TDS AT THE RATE OF 15% ONLY. SUBSEQUENTLY THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT BECAUSE THE ASSESSING OFFICER WAS OF THE VIEW T HAT INTEREST INCOME OF RS.84.29 LAKHS SHOULD HAVE BEEN TAXED AT THE RATE O F 48% INSTEAD OF 15% CHARGED AT THE TIME OF ORIGINAL ASSESSMENT. NOTICE U/S 148 WAS ISSUED ON 1.10.2004 AND THEREAFTER THE RE-ASSESSMENT WAS COMP LETED VIDE ORDER DATED 9.9.2005 AND TAX WAS CHARGED ON INTEREST INCOME AT THE RATE OF 48%. SUCH DISPUTE AS TO WHETHER TAX IS CHARGEABLE ON THIS INT EREST INCOME AT THE RATE OF 48% OR 15% IS SEPARATELY PENDING FOR ADJUDICATION BEFOR E THE TRIBUNAL. IN ADDITION TO THIS THE ASSESSING OFFICER HAS CHARGED INTEREST U/ S 234B OF THE INCOME TAX ACT 1961 AT RS.7 78 860/- ON THE AMOUNT OF DIFFERENCE O F TDS DEDUCTED BY THE ASSESSING OFFICER FROM PAYMENT OF INTEREST BY HIM T O THE ASSESSEE AND THE AMOUNT OF TAX AS WORKED OUT BY THE ASSESSING OFFICE R AT THE TIME OF FRAMING THE RE-ASSESSMENT AT THE RATE OF 48%. THE ASSESSEE HAS MOVED AN APPLICATION U/S 154 OF THE IT ACT BEFORE THE ASSESSING OFFICER BECA USE ACCORDING TO THE ASSESSEE THE AMOUNT OF RS.84.29 LAKHS BEING INTERE ST RECEIVED BY THE ASSESSEE WAS SUBJECTED TO THE PROVISIONS OF SECTION 195 OF T HE ACT AND THE PAYER IN THE INSTANT CASE I.E. ASSESSING OFFICER HIMSELF HAS DED UCTED TDS ON THIS INTEREST INCOME AT THE RATES IN FORCE. HENCE IT WAS THE CL AIM OF THE ASSESSEE THAT INTEREST U/S 234B AND 234C IS NOT CHARGEABLE AND HENCE HE MO VED THE PETITION TO THE ASSESSING OFFICER U/S 154 OF THE ACT. AS PER THE OR DER PASSED BY THE ASSESSING OFFICER ON 1.9.2008 U/S 154 THE ASSESSING OFFICER REJECTED THE APPLICATION OF THE ASSESSEE. BEING AGGRIEVED THE ASSESEE CARRIED THE MATTER IN APPEAL BEFORE LD . I.T.A. NO.1190/DEL/09 3/5 CIT(A) . LD CIT(A) HAS HELD THAT INTEREST U/S 234B & 234C IS NOT LEVIEABLE. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. LD DR OF THE REVENUE SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER U/S 154 WHEREAS LD AR OF THE ASSESSEE SUPPO RTED THE ORDER OF LD CIT(A). IT WAS ALSO SUBMITTED BY HIM THAT THE ISSUE IN THE PRESENT CASE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECI AL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF MOTOROLLA AS REPORTED IN 95 ITD 269 (SB). IT WAS HIS SUBMISSION THAT SINCE TDS WAS DEDUCTIBLE ON THIS IN TEREST INCOME U/S 195 AT THE RATES IN FORCE THE ASSESSEE WAS UNDER NO OBLIGATIO N TO PAY ADVANCE TAX ON THIS INTEREST INCOME AND THEREFORE INTEREST IS NOT CHARG EABLE U/S 234B AND 234C OF THE ACT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT CITED BY LD AR OF THE ASSESSEE. WE HAVE TO FIRST DECIDE AS TO WHETHER ANY TAX WAS DEDUCTIBL E AT SOURCE AGAINST THIS INTEREST INCOME OF THE ASSESSEE OR NOT. FOR DECIDING THIS IS SUE THE PROVISION OF SECTION OF 195(1) ARE RELEVANT AND HENCE WE REPRODUCE THE SAME HEREIN BELOW:- 195 (1) ANY PERSON RESPONSIBLE FOR PAYING TO A NON RESIDENT NOT BEING A COMPANY OR TO A FOREIGN COMPANY ANY INTEREST OR A NY OTHER SUM CHARGEABLE UNDER THE PROVISIONS OF THIS ACT (NOT BE ING INCOME CHARGEABLE UNDER THE HEAD SALARIES SHALL AT THE TIME OF CRE DIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THER EOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE WH ICHEVER IS EARLIER DEDUCT INCOME TAX THEREON AT THE RATES IN FORCE. PROVIDED THAT IN THE CASE OF INTEREST PAYABLE BY TH E GOVT. OR A PUBLIC SECTOR BANK WITHIN THE MEANING OF CLAUSE (23D) OF S ECTION 10 OR A PUBLIC FINANCIAL INSTITUTION WITHIN THE MEANING OF THAT CL AUSE DEDUCTION OF TAX SHALL . I.T.A. NO.1190/DEL/09 4/5 BE MADE ONLY AT THE TIME OF PAYMENT THEREOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE. 6. FROM THE ABOVE WE FIND THAT TAX IS DEDUCTIBLE A GAINST ANY PAYMENT OF INTEREST BY ANY PERSON TO A NON RESIDENT OR TO A FO REIGN COMPANY AND SUCH DEDUCTION OF INCOME TAX HAS TO BE MADE AT THE RATES IN FORCE. AS PER THE PROVISIO TO SECTION 195(1) IN THE CASE OF INTEREST PAYABLE B Y THE GOVERNMENT DEDUCTION OF TAX SHALL BE MADE ONLY AT THE TIME OF PAYMENT THERE OF. HENCE IT IS CLEAR THAT EVEN WHEN INTEREST IS TO BE PAID BY THE GOVERNMENT TO A FOREIGN COMPANY OR TO A NON RESIDENT TAX HAS TO BE DEDUCTED AND SUCH DEDUCTION OF TAX HAS TO BE AT THE RATES IN FORCE. IN FACT ALSO IN THE PRESENT CASE TDS HA S BEEN DEDUCTED BY THE ASSESSING OFFICER ALTHOUGH AT A LESSER RATE I.E. 15 % BUT THIS ASPECT IS CLEAR FROM THE PROVISO TO SECTION 195(1) THAT IN CASES OF PAYM ENT OF INTEREST BY GOVERNMENT ALSO TAX IS DEDUCTIBLE AND SINCE IN THE PRESENT CA SE ALSO PAYMENT OF INTEREST TO THE ASSESSEE IS BY THE GOVERNMENT. TAX WAS DEDUCTIB LE AGAINST THIS INTEREST PAYMENT TO THE ASSESSEE U/S 195 (1)) AT THE RATES I N FORCE.. 7. NOW THE SECOND ASPECT IS THAT IF TAX IS DEDUCTI BLE FROM ANY INCOME RECEIVED BY A NON RESIDENT OR A FOREIGN COMPANY U/S 195 THEN WHETHER SUCH ASSESSEE IS LIABLE TO PAY ADVANCE TAX EVEN IF NO TD S HAS BEEN DEDUCTED OR LESSER AMOUNT OF TDS HAS BEEN DEDUCTED AND AS A CON SEQUENCE WHETHER THE ASSESSEE IS LIABLE TO PAY INTEREST U./S 234B AND 23 4C. THIS ASPECT IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECI AL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF MOTOROLLA (SUPRA). IN THIS CASE IT WAS HELD BY THE SPECIAL BENCH OF THE TRIBUNAL THAT THE ASSESSEE IS ENTITLED TO TAKE INTO ACCOUNT THE TAX WHICH IS DEDUCTIBLE BY THE PAYER THOUGH NOT ACTUALL Y DEDUCTED. IT WAS HELD THAT CONSEQUENTLY THERE IS NO LIABILITY TO PAY INTEREST U/S 234B. IN THE PRESENT CASE ALSO TAX WAS DEDUCTIBLE BY THE PAYER OF THIS INTER EST WHO IS THE ASSESSING OFFICER HIMSELF IN THE INSTANT CASE. TAX WAS ALSO DEDUCTED BY HIM ALTHOUGH AT THE RATE OF 15% AND IN THE ORIGINAL ASSESSMENT TAX WAS LEVIED BY HIM ALSO AT THE RATE OF 15% AND ONLY IN THE RE-ASSESSMENT PROCEEDINGS TAX IS LEVIED BY HIM AT THE RATE . I.T.A. NO.1190/DEL/09 5/5 OF 48%. UNDER THESE FACTS WE ARE OF THE CONSIDERED OPINION THAT THIS ASPECT OF THE MATTER IS FULLY COVERED IN FAVOUR OF THE ASSESS EE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF MOTOROLLA (SUPRA) THAT WHEN THE TAX IS DEDUCTIBLE BY THE PAYER THE ASSESS EE IS ENTITLED TO TAKE CREDIT OF SUCH TAX TO BE DEDUCTIBLE FOR THE PURPOSE OF PAYING ADVANCE TAX AND SINCE WHILE MAKING PAYMENT TO A NON RESIDENT OR A FOREIGN COMPA NY TDS IS DEDUCTIBLE U/S 195 AT THE RATE IN FORCE IT MEANS THAT FULL AMOUNT OF TAX IS DEDUCTIBLE AND THEREFORE NO INTEREST IS LIABLE TO BE PAID BY THE A SSESSEE U/S 234B & 234C EVEN IF LESSER AMOUNT OF TDS OR NIL AMOUNT OF TDS WAS DEDUC TED BY THE PAYER. FOR THIS DEFAULT OF THE PAYER INTEREST CAN BE RECOVERED FRO M THE PAYER U/S 201(1A) BUT THE PAYEE CANNOT BE ASKED TO PAY INTEREST U/S 234B 234C . CONSIDERING ALL THESE FACTS AND LEGAL POSITION WE FIND NO REASON TO INTE RFERE IN THE ORDER OF LD CIT(A) ON THIS ISSUE AND HENCE WE UPHOLD THE SAME. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH JA NUARY 2010. SD/- SD/- (I.P. BANSAL) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 15.1.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI).