S. 195, S. 234B — Once the income is subjected to TDS provision, then that amount is outside the provisions of the advance tax as per the mandate of S. 209 of the Act. Merely because there is a failure on the part of the person who made payments to the as

The assessee, a tax resident of Germany, filed return of
income in which royalty received from Bajaj Tempo was declared. Originally, the
as-sessee’s assessment was completed u/s.143(3) r.w. S. 147 of the Act
determining the income at Rs.6,93,14,161. The said assessment order was subject
matter of challenge before the CIT(A) and then to the ITAT. The Tribunal set
aside the matter to the file of the Assessing Officer (AO). As per the
directions of the Tribunal, the AO passed assessment order determining the total
income at Rs.3,54,28,070 and also charged interest u/s.234B of the Act.
Aggrieved by the levy of interest u/s. 234B, the assessee preferred an appeal to
the CIT(A).

The CIT(A) held that the assessee is a foreign company and
its income was subject to the provisions of TDS u/s.195 and hence the assessee
was not required to pay any advance tax u/s.208 r.w. S. 209. The CIT(A) placed
reliance on the following decisions :

(i) CIT v. Halliburton Offshore Services Inc., 271 ITR 395
(Uttaranchal)

(ii) Motorola Inc. v. DCIT, 95 ITD 269 (Del.) (SB)

(iii) SNC-Lavalin International Inc. v. DCIT, 13 DTR 449
(Del.) (Trib.)

(iv) Sedco Forex International, 75 ITD 415 (Del.)

Aggrieved the Revenue preferred an appeal to the Tribunal.

The Tribunal noted that the assessee is a non-resident and
payments made to it are subjected to TDS u/s.195(1) of the Act. Merely because
there is a failure on the part of the person who made payments to the assessee
to deduct tax at source to which the provisions of S. 195(1) are attracted, to
the extent of the income/payments which are in the mischief of TDS provision no
liability to pay advance tax is put on the recipient. Once the income is
subjected to TDS provision, then that is outside the provisions of the advance
tax as per mandate of S. 209 of the Act. The Tribunal observed that this view
has been fortified by the decision of the Bombay High Court in the case of NGC
Network Asia LLC (222 CTR 86) (Bom.). The principles laid down in the case of
NGC Network Asia LLC were held to be squarely applicable to the facts of the
case.

The Tribunal dismissed the appeal filed by the Revenue.