DCIT (IT) 3(3)(1), MUMBAI vs. QUINTILES INC., MUMBAI

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ITA 1497/MUM/2016Status: DisposedITAT Mumbai27 November 2017AY 2012-133 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that no interest could be imposed on the assessee under Section 234B when the payer failed to deduct tax at source. This decision was based on the jurisdictional High Court's ruling in a similar case.

What were the facts?

The Revenue appealed against the DRP's order which held that the assessee was not liable for interest under Section 234B. The issue arose because the payer failed to deduct tax at source on the income assessed in the hands of the assessee.

What were the issues?

Whether interest under Section 234B is leviable on the assessee when the payer fails to deduct tax at source. The applicability of the jurisdictional High Court's decision on this matter.

Which sections of the Income-tax Act were involved?

Section 234B

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI

Before: Shri P K Bansal & Shri Amarjit Singh

For Appellant: Shri R P Meena
For Respondent: Ms Urvi A Mehta
Hearing: 13.11.2017Pronounced: 27.11.2017

O R D E R Per P K Bansal, Vice-President:

This appeal has been filed by the Revenue against the order of the DRP-2, Mumbai, dated 14.12.2015, for A.Y. 2012-13 in which directions were issued u/s. 144C(5) of the Income tax Act, 1961, by taking the following effective grounds of appeal:

“1 Whether on the facts and in circumstances of the case and in law the Ld. DRP was justified in holding that the assessee Company is not liable to interest u/s. 234B of the Act, despite decision of Hon’ble Delhi High Court in the case of Alkatel Lucent USA Inc. vs. DCIT”

2.

We have heard the rival submissions and carefully considered the same along with the orders of the authorities below. The only issue involved in this appeal relates to levy of interest u/s. 234B of the Act. After hearing both the parties, we noted that this issue is no more res integra in view of the decision of the jurisdictional High Court in the case of Director of Income-tax (International Taxation) vs. NGC Network Asia LLC 313 ITR 187 (Bom), in which the High Court has clearly held that when a duty was cast on the payer to deduct the tax at source, on failure of the payer to do so, no interest could be imposed on the assessee u/s. 234B. It is not denied that payer in the impugned case was under an obligation to deduct the tax at source but he has not deducted the tax at source on the income on which assessment has been made in the hands of the assessee. The Assessing Officer levied interest u/s. 234B as the advance tax paid by the assessee including the TDS was less than the amount the assessee was under an obligation to pay. The fact remains that there was failure on the part of the assessee to pay advance tax only in respect of the income which is subject to deduction of tax at source. Thus, interest was levied on the assessee to the failure of the payer to deduct tax at source.

3 The decision of the jurisdictional High Court is binding on us. We, therefore, do not find any illegality or infirmity in the order of the DRP on the issue.

4.

In the result, the appeal filed by the Revenue stands dismissed.

Order pronounced in the open court on 27th day of November, 2017.

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