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Income Tax Appellate Tribunal, ‘L’ BENCH, MUMBAI
Before: SHRI B.R BASKARAN, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER
The present appeal is directed against the order passed by the Assessing Officer (for short „A.O‟), under Sec. 143(3) r.w.s 144C(13) of the Income-tax Act, 1961 (for short „Act‟), dated. 31.01.2017. The Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 2 A.Y. 2013-14 assessee assailing the order of the A.O had raised before us the following grounds of appeal:-
“Based on the facts and circumstances of the case, Hapag-Lloyd AG, (hereinafter referred to as the 'Appellant') respectfully craves leave to prefer an appeal against the order dated 31 January 2017 passed by Deputy Commissioner of Income-tax (International Taxation) - 2(2)(2) („AO‟) in pursuance of the directions issued by Dispute Resolution Panel-I ('DRP'), Mumbai on the following grounds: On the facts and in the circumstances of the case and in law, the AO, based on directions of DRP has; GENERAL 1. erred in assessing total income of the Assessee at Rs 3,41,36,600/- as against returned income of Rs Nil; Taxability of freight charges of Rs 43,94,25,340/- from transportation of cargo through feeder vessels 2. erred in holding that freight income from transportation of cargo through feeder vessels is not eligible for benefit under Article 8 of India- Germany DTAA; 3. erred in holding that while income from feeder vessels would fall within the ambit of section 44B of the Act whereas the same shall not eligible for benefit under Article 8 of India-Germany DTAA; 4. erred in not taking cognizance of the decision of jurisdictional Bombay HC/ ITAT the assessees own case for AY 2005-06 to AY 2011-12, wherein the Hon'ble HC/Hon‟bIe ITAT has held that freight income from transportation of cargo through feeder Vessels is eligible for benefit under Article 8 of the India-Germany DTAA; Taxability of service tax of Rs 1,57,29,380/- collected on freight income 5. erred in including service tax, amounting to Rs 1,57,29,380/- on freight income from feeder vessels, in the gross receipts for the purpose of computing income of the Assessee under section 44B of the Act; 6. failed to appreciate that service tax in India is a charge/levy by the Government and the same does not have any element of income which is chargeable to tax in the hands of the Assessee; 7. failed to appreciate that even if service tax on freight income is held to be taxable in India, the same is covered by Article 8 of India- Germany DTAA and thus, not taxable in India; Hapag Lloyd India Private Limited ('HLIPL') held to be agency permanent establishment ('PE') of the Assessee in India 8. erred in holding that HLIPL constitutes and agency PE of the assessee in India, without providing cogent reasons for the same; Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 3 A.Y. 2013-14 9. without prejudice to the above, erred in not appreciating that HLIPL is not a dependent agent of the Assessee as per Article 5 of India-Germany DTAA. 10. without prejudice to the above, failed to appreciate that even if it is held that HLIPL constitutes an agency PE of the Assessee in India, no further profits could be attributed to such PE since the Assessee has remunerated HLIPL on an arm‟s length basis: Interest under section 234B of the Act 11. erred in levying interest under section 234 B of the Act; Initiation of penalty proceedings under section 271 (1)(c) of the Act 12. erred in initiating penalty proceedings under section 271(1)(c) of the Act. The above grounds of appeal are mutually exclusive and without prejudice to one another. The Assessee craves leave to add/ alter/ amend/ delete/ withdraw any or all of the grounds at or before the hearing of the appeal so as to enable the Income tax Appellate Tribunal to decide the appeal according to law.”
Briefly stated, the facts of the case are that the assessee company, viz. Hapag-Lloyd AG is Foreign company, viz. a limited liability company incorporated in Germany and is tax resident of Germany. The assessee which is engaged in the business of operation of ships internationally had filed its return of income on 30.08.2013, declaring total income at Nil. The case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the „Act‟.
The assessee is engaged in transportation of cargo to ports outside India and vice versa. The assessee would transport cargo on vessels owned/chartered/pooled by it as well as on slot arrangement. That in the normal course of the business the vessels of the assessee or its consortium partners would on certain occasions not call at the Indian ports on account of various reasons, viz. the size of the vessels is too large to enter the Indian ports which have shallow draft, or the depth of the Indian ports would not be enough for the vessels to be anchored. The assessee under the aforesaid circumstances would transport the cargo on feeder vessels from the origin port to the hub port (i.e the intermediary port where vessels owned/chartered/pooled Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 4 A.Y. 2013-14 by the assessee could be anchored), and then the cargo would be transported from the hub port to the destination port on the vessels owned/chartered or pooled by the assessee. The assessee persuaded by commercial requirements would at times transport cargo on slot arrangement from origin port to destination port. The assessee would issue bill of lading to the exporters for transportation of cargo for the entire journey (i.e from the origin port to the destination port).
That during the course of the assessment proceedings the A.O called upon the assessee to explain as to how the freight earned by it from the feeder vessels (i.e portion of freight income attributed to feeder vessels) which were neither owned, chartered or leased by the assessee was brought within the sweep of Article 8 of the „Double Taxation Avoidance Agreement‟ (for short „DTAA‟) between India and Germany. The assessee submitted before the A.O that as per Article 8 –Clause 1 of the DTAA the profits from the operation of ships or aircraft in international traffic shall be taxable only in the contracting state in which the place of effective management of the enterprise was situated. The assessee taking support of the judgment of the Hon‟ble High Court of Bombay in the case of DIT (IT) Vs. Balaji Shipping Ltd. (UK) [77 DTR 361](Bom) and the OECD guidelines, therein submitted before the A.O that the Hon‟ble High Court of Bombay had held that the income from slot arrangement is to be construed as income from operation of ships and is an integral part of the business of the shipping companies. The assessee further deliberating on the issue that the assessee had no „Permanent Establishment‟ (for short „PE‟) in India, submitted at length before the A.O that the assessee neither had a fixed place PE in India under Article 5(1), nor an agency PE as per Article 5(5) and Article 5(6) of the tax treaty. Thus, it was the contention of the assessee before the A.O that slot hire arrangements were directly connected and interlinked with and were an integral part Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 5 A.Y. 2013-14 of the enterprises business of operating ships. The assessee in order to drive home its aforesaid contention that now when the income from slot arrangement was ancillary to its main business activity of operation of ships internationally, therefore, the income generated from the same would be covered under Article 8, relied on the order of the ITAT, Mumbai in the case of JDIT(IT) Vs. CMA CGM SA France (2009) 27 SOT 367 (Mum), as well as took support of the OECD commentary on Article 8. Thus, taking support of the aforesaid judgment of the Hon‟ble High Court it was submitted by the assessee that in its case also the income from slot arrangement did form part of the income from operation of ships in international traffic. The assessee further submitted that in its own case the Hon‟ble High Court of Bombay vide its order dated. 01.02.2013, after deliberating on the issue under consideration had restored the matter back to the file of the Tribunal to decide the same in view of the decision of the High Court in the case of DIT(IT) vs. Balaji Shipping U.K Ltd. (supra) [77DTR 361](Bom). It was further submitted by the assessee that pursuant to the aforesaid directions of the Hon‟ble High Court, the Tribunal had vide its order dated. 14.08.2013 disposed of the appeal of the assessee for A.Y. 2007-08 and had concluded that the freight earned by the assessee from transportation of cargo through use of feeder vessels was entitled to relief provided in Article 8 of Indo- Germany tax treaty, and hence, would not be taxable in India.
However, the A.O being of the view that as the case of Balaji Shipping U.K. Ltd. (supra) pertained to India-UK treaty, which specifically provided that income from the operation of the ships included income derived from the rental on a bareboat basis of ships, if such rental income is incidental to the income described in paragraph 1 of the Article 9, therefore, reliance placed by the assessee on the same was misconceived. The A.O observed that as there were Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 6 A.Y. 2013-14 no such alike provisions in Article 8 of India-Germany tax treaty, therefore, the ratio of the decision in the case of Balaji Shipping U.K. Ltd. (supra) would not be applicable to the case of the assessee. The A.O further being of the view that as the order of the Hon‟ble Bombay High Court in the case of Balaji Shpping U.K Ltd (supra) was not accepted by the department and a „Special Leave Petition‟ (for short „SLP‟) had been filed before the Hon‟ble Supreme Court, therefore, on the said count also declined to apply the ratio of the aforesaid decision. The A.O further placed heavy reliance on the order passed by his predecessor on the issue under consideration in the assesses own case for A.Y. 2007-08, wherein it was held that the income earned with respect to slot/feeder charges by the assessee would be taxable in India.
The A.O further deliberating on the facts of the case, further observed that the assessee had an agency PE in India in form of Hapag-Llyod India Ltd. The A.O in the backdrop of his aforesaid conviction concluded that the assessee was carrying out the business of operation of ships in India and was having a PE in India as per Article 5 of DTAA. Thus, the A.O held that the income from booking of cargo by agent in India, as well as transport of cargo from port in India to mother vessel in India was liable to be brought to tax in India.
7. Alternatively, the A.O observed that without prejudice to the fact that the assessee had a PE in India, even otherwise as there were special provisions in the Income-tax Act, 1961 in the form of Sec. 44BB and Article 8 of the DTAA between India and Germany, therefore, as the income earned by the assessee on slot hire basis did not qualify for exemption under Article 8 of the DTAA, the same would inescapably be brought to tax as per Sec. 44BB of the „Act‟.
Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 7 A.Y. 2013-14 8. The A.O further held that the Service tax totalling to Rs. 1,57,29,380/- payable by the assessee on account of services in connection with those vessels which were not owned/chartered /pooled by the assessee, i.e Feeder to Feeder and Entire journey on Feeder vessels were also to be treated as part of the total freight receipts for calculating the total taxable income under Sec. 44B/172 of the „Act‟.
Thus, out of the total freight income of Rs. 13,07,79,69,957/- earned by the assessee, the A.O held that (i). the freight income earned by the assessee from feeder to feeder vessel of Rs. 18,41,87,350/-; and (ii). the freight earned from the entire journey on feeder vessel of Rs. 25,52,37,990/-, therein aggregating to Rs. 43,94,25,340/- [i.e Rs. 18,41,87,350/- (+) Rs. 25,52,37,990/-] were not eligible for relief under Article 8 of the India-Germany treaty. The A.O further on the basis of his aforesaid observations raised the amount by the Service tax of Rs. 1,57,29,380/- and added back the same to the taxable receipts of the assessee. Thus, on the basis of his aforesaid deliberations the A.O held that the amount of Rs. 45,51,54,720/- [i.e Rs. 43,94,25,340/- (+) Rs. 1,57,29,380/-] would not be eligible for relief under Article 8 of the India-Germany DTAA.
The assessee assailed the draft assessment order passed by the A.O under Sec. 143(3) r.w.s 144C(13) of the „Act‟ before the DRP. The DRP dealt with the contentions of the assessee, as under: (A). The DRP at the very outset observed that the issue as to whether the freight earned by the assessee from feeder vessels would be covered by Article 8 of the India-Germany DTAA was decided in favour of the assesses in A.Y. 2011-12 by following the order passed by the Tribunal in the assessees own appeal for A.Y. 2007-08 (after the issue was set aside by the Hon‟ble High Court of Bombay) and the decision Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 8 A.Y. 2013-14 in the case of Balaji Shipping (supra). However, the DRP observed that the department had not accepted either of the aforesaid orders, and while for the order of the Hon‟ble High Court of Bombay in the assesses case for A.Y. 2007-08 had been assailed before the Hon‟ble Supreme Court by way of a „SLP‟, the order of the DRP for A.Y. 2011- 12 was also challenged before the Tribunal. The DRP holding a conviction that if the issue before him was decided in favour of the assessee, the same would tantamount to pre-judging the issue and bringing finality to the issue which was pending before a higher judicial authority. That on merits the DRP deliberated on the definition of the term “International traffic” and observed that the same as defined in Article 3(1)(i) of the DTAA, had to be construed as transport by the ship operated by an enterprise of a contracting state except when the ship is operated solely between places in the other contracting state. The DRP on the basis of his aforesaid observations concluded that the freight income from transportation of goods through feeder vessels cannot be part of income from the operation of ships international traffic unless the feeder vessels were part of the pool in which the assessee was participating. Thus, on the basis of his aforesaid observations the DRP concluded that all such income which were not in the nature of income from the operation of ships in international traffic but was an income from “Shipping Business” would be taxed under Sec. 44BB, which deals with computation of Profits and Gains of Shipping business in the case of non-residents. (B). The DRP thereafter deliberated on the issue as to whether the Service tax totalling to Rs. 1,57,29,380/- payable by the assessee on account of services in connection with those vessels which were not owned/chartered/pooled by the assessee, i.e Feeder to Feeder and Entire journey on Feeder vessels had rightly been treated by the A.O as part of the total freight receipts for calculating the total taxable Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 9 A.Y. 2013-14 income under Sec. 44B/172 of the „Act‟, or not. The DRP though observed that the issue was covered in favour of the assessee by the judgment of the Hon’ble High Court of Delhi in the case of DIT Vs. Mitchell Drilling International Pvt. Ltd., (2016) 380 ITR 130 (Del), but however, holding a conviction that as the provisions of Sec. 44B and Sec. 44BB were similar and the position of law on the issue had not attained finality, therefore, to keep the issue alive observed that as the Hon‟ble High Court of Uttarakhand in the case of Halliburton Offshore Services Inc. Vs. ACIT, had referred the issue under consideration to a larger bench, therefore, the service tax on the freight income was liable to be considered as part of the amounts specified in Sec. 44B(2). (C). The DRP further upheld the observations of the A.O that Hapag Llyod India Ltd. was not an independent agent under Article 5 of India-Germany DTAA. The DRP observed that the aforesaid agent was working solely for the assessee. Thus, on the basis of his aforesaid observations the DRP held that Hapag Llyod India Ltd. constituted an agency PE of the assessee. The DRP was also not persuaded to accept the contention of the assessee that as the remuneration paid by assessee to Hapag Llyod India Ltd. was at arm‟s length, therefore, no further income could be subjected to tax in India. The DRP observed that what were being taxed in the case were the receipts of the assessee from the activities carried out in India or activities attributable to India which were not covered by Article 8 of the treaty between India and Germany. The DRP thus concluded that while for the receipts on account of transport of goods etc. by ship in international traffic is not taxable in India in view of Article 8 of the India-Germany treaty, any other receipt of the nature referred to in sub-section (2) in the case of the assessee, being a non-resident, Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 10 A.Y. 2013-14 engaged in the business of operations of ships was liable to be brought to tax in India as per the provisions of Sec. 44B.
The DRP further declined to adjudicate upon the objection of the assessee as regards the validity of the interest charged by the A.O under Sec 234B and 234C, for the reason that as the same did not pertain to variation in the income, therefore, it was beyond the scope of his powers to adjudicate the same.
The A.O on receipt of the directions of the DRP, therein gave effect to the same and vide his order passed under Sec. 143(3) r.w.s 144C(13), dated. 31.01.2017 assessed the income of the assessee at Rs. 3,41,36,600/-.
The assessee being aggrieved with the order of the A.O passed under Sec. 143(3) r.w.s 144C(13), had therein carried the matter in appeal before us. The Ld. Authorised representative (for short „A.R‟) for the assessee at the very outset submitted that the issue involved in the present appeal was squarely covered by the order of the Hon‟ble High Court of Bombay in the case of Director Of Income-tax (International Taxation) Vs. Balaji Shipping U.K Ltd. (2012) 211 Taxman 0535 (Bom). The ld. A.R further submitted that the Hon‟ble High Court of Bombay while disposing of the appeal of the assessee for A.Y. 2007-08 in Hapag-Llyod AG vs. Additional Director Of Income-tax (International Taxation) (2013) 84 CCH 0073 (Bom) had restored the issue to the Tribunal for fresh adjudication after considering the judgment of the High Court in the case of Balaji Shipping Pvt. Ltd. The ld. A.R submitted that the Tribunal pursuant to the matter having been restored to its file, had therein vide its order dated. 14.08.2013 disposed of the appeal of the assessee for A.Y. 2007-08. The ld. A.R submitted that the Tribunal in its order had held that the assessee would be eligible for exemption under the treaty Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 11 A.Y. 2013-14 provisions in respect of revenue earned from feeder vessels obtained by the assessee on slot hire arrangement basis. It was thus submitted by the ld. A.R that the issue involved in the present appeal was squarely covered by the aforesaid order of the Tribunal in the assesses own case for A.Y. 2007-08. Per Contra, the ld. D.R relied on the order of the A.O/DRP.
We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that the core issue involved in the case of the present assessee which is a Foreign company engaged in the business of operation of ships internationally, is as to whether the portion of freight income earned by the assessee in the course of its business of transportation of cargo to ports outside India and vice versa, to the extent the same is attributable to feeder vessels which were neither owned, chartered or leased by the assessee, would also fall within the sweep of Article 8 of the „Double Taxation Avoidance Agreement‟ (for short „DTAA‟) between India and Germany, or not. We find that the Hon‟ble High Court while disposing of the assesses own appeal for A.Y. 2007-08 in Hapag-Llyod AG vs. Additional Director of Income-tax (International Taxation) (2013) 84 CCH 0073 (Bom), had restored the matter to the Tribunal for fresh adjudication, in terms of the observations which were recorded by the High Court on the issue under consideration in the case of Director Of Income-tax (International Taxation) Vs. Balaji Shipping U.K Ltd. (2012) 211 Taxman 0535 (Bom). We find that the Hon‟ble High Court while disposing of the appeal of the assessee for A.Y. 2007-08 and restoring the matter to the Tribunal had observed as under:
2. Counsel for the parties states that in view of the decision of this Court in the matter of Director of income Tax (International Taxation) V/s. Balaji shipping UK Ltd. reported in 77 DTR 361, the impugned Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 12 A.Y. 2013-14 order be set aside in respect of the issue raised in the present appeal. Accordingly, the impugned order is set aside and the matter is remanded to the Tribunal for fresh consideration in the light of the decision of this Court in the matter of Balaji (supra). All contentions before the Tribunal are kept open.
We find that the Tribunal on the matter having been restored for fresh adjudication, had therein in its order passed in the case of the assessee for A.Y. 2007-08 in Hapag–Llyod Container Line GMBH Vs. Addl. Director of Income-tax (International Taxation), Mumbai (ITA No. 8854/Mum/2010; dated. 14.08.2013) keeping in view the observations of the High Court in the case of Director Of Income-tax (International Taxation) Vs. Balaji Shipping U.K Ltd. (2012) 211 Taxman 0535 (Bom), had held that the assessee would be eligible for exemption under the treaty provisions in respect of revenue earned from feeder vessels obtained by the assessee on slot hire arrangement basis. We find that subsequent to the aforesaid order of the Tribunal in the assesses own case for A.Y. 2007-08, the same had thereafter been followed by the Tribunal in the appeals of the department again in the assesses own case for A.Y. 2006-07 and A.Y. 2008-09 to 2011- 12, in Dy. CIT (IT)-2(2)(2), Mumbai Vs. Hapag Llyod AG [ITA Nos. 1624 – 1628/Mum/2015; dated.22.07.2016] and it had been held by the Tribunal that in the backdrop of the aforesaid order of the Tribunal for A.Y. 2007-08 and following the judgment of the Hon‟ble High Court of Bombay in the case of DIT (IT) Vs. Balaji Shipping U.K Ltd. (supra), the benefits of DTAA between India and Germany would also be available to the assessee in respect of the revenue earned from the feeder vessels obtained by the assessee by slot hire arrangements. We further find that again the Tribunal in the revenues appeal in the assesses own case for A.Y. 2005-06, had vide its order passed in dated. 21.09.2016, by referring to the earlier orders of the Tribunal in the case of the assessee for A.Y. 2007-08, Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 13 A.Y. 2013-14 dated. 14.08.2013 in as well as the consolidate order for A.Y. 2006-07 and 2008-09 to 2011-12, in ITA No. 1624-1628/Mum/2015; dated. 22.07.2016, had taken the same view. We have perused the aforesaid orders and find ourselves to be in agreement with the view taken by the Tribunal in the aforesaid preceding years in the case of the assessee. We thus, finding no reason to take a different view, thus, are of the considered view that the benefits of Article 8 of the DTAA between India and Germany would also be available to the assessee in respect of the revenue earned from the feeder vessels obtained by the assessee by slot hire arrangements. The Grounds of appeal
No. 2 to 4 raised by the assessee before us are allowed.
16. We are of the considered view that as we have concluded that the benefit of Article 8 of the India–Germany DTAA would also be available to the assessee in respect of the revenue earned by it from the feeder vessels obtained on slot hire arrangements, therefore, the Grounds of appeal Nos. 5 to 7 pertaining to the validity of the order of the A.O as regards including the service tax in the freight income for computing the income of the assessee under Sec. 44B would be rendered infructuous. We thus in terms of our aforesaid observations dismiss the Grounds of appeal No. 5 to 7 raised by the assessee before us.
17. We are further of the view that as we have held that the the benefit of Article 8 of the India–Germany DTAA would also be available to the assessee in respect of the revenue earned by it from the feeder vessels obtained on slot hire arrangements, therefore, the Grounds of appeal Nos. 8 to 10 as to whether the assessee had an agency PE in India are also rendered academic and we thus refrain from adjudicating the same. The Grounds of appeal No. 8 to 10 are dismissed in terms of our aforesaid observations.
Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 14 A.Y. 2013-14 18. That as regards the assailing of the interest levied on the assessee under Sec. 234B, we find that the issue is covered in favour of the assessee by the decision of the Hon’ble High Court of Bombay in the case of DDIT(IT) Vs. NGC Network Asia LLC (2009) 313 ITR 187 (Bom), wherein it has been held that interest under Sec. 234B would not be applicable to a non-resident assessee by observing as under:
“5. Under the provisions of the present Act, the issue had come for consideration in the case of CIT & Anr. vs. Sedco Forex International Drilling Co. Ltd. & Ors. (2004) 186 CTR (Uttaranchal) 144 : (2003) 264 ITR 320 (Uttaranchal). One of the questions was, as to whether interest could be levied on the assessee under s. 234B of the Act in respect of tax which was not liable to be deducted at source. A learned Bench of the Uttaranchal High Court, after considering the provisions, held as under : "Secondly, although s. 191 of the Act is not overridden by ss. 192, 208 and 209(1)(a)/(d) of the Act, the scheme of ss. 208 and 209 of the Act indicates that in order to compute advance tax the assessee has to, inter alia, estimate his current income and calculate the tax on such income by applying the rates in force. That under s. 209(1)(d) the income-tax calculated is to be reduced by the amount of tax which would be deductible at source or collectible at source, which in this case has not been done by the employer company according to the law prevailing for which the assessee cannot be faulted."
6. Relying on the judgment in Sedco Forex International Drilling Co. Ltd. (supra), a learned Bench of this Court was pleased to pass an order dt. 16th July, 2008 in IT Appeal (L) No. 1796 of 2007 in the case of the Director of IT (International Taxation) vs. Morgan Guarantee International Finance Corporation, by applying the ratio of that judgment.
Our attention is also invited to the judgment of the Madras High Court in the case of CIT vs. Madras Fertilisers Ltd. (1984) 149 ITR 703 (Mad), where the Madras High Court took the view that the amount of tax deductible at source is to be taken into consideration to determine the liability to pay the interest under s.
In that case, the assessee had not paid advance tax on interest income. The payer of interest had not deducted the tax. The learned Bench of the Madras High Court was of the view that levy of interest under s. 215 on assessee was not justified.
Hapag-Lloyd AG Vs. DCIT(IT), Mumbai – 15 A.Y. 2013-14 8. We are in respectful agreement with the view taken in the case of CIT & Anr. vs. Sedco Forex International Drilling Co. Ltd. (supra), by the Uttaranchal High Court. We are clearly of the opinion that when a duty is cast on the payer to pay the tax at source, on failure, no interest can be imposed on the payee assessee.
9. Considering the submissions of both parties and the provisions of law, consequently the appeal is dismissed.” We thus follow the order of the Hon‟ble High Court and decide the issue in favour of the assessee. The Ground of appeal
No. 11 is allowed.
19. The Ground of appeal No. 1 being general is dismissed. The Ground of appeal No. 12 wherein the assessee had assailed the initiation of the penalty proceedings under Sec. 271(1)(c), being premature, is therefore dismissed.