Turner Broadcasting System Asia Pacific, Inc., America
v.
Asst. DIT
ITA Nos. 724, 728 and 733 (Delhi) of 2008
A.Ys. : 2001-02 & 2004-05
Dated : 13-3-2009
S. 234B r.w. S. 195 and S. 209 — No interest can be levied
where advance tax is not paid in respect of income on which tax is not
deducted at source by payers who were obliged to deduct the same.
During the relevant assessment years, various parties
advertising their products paid consideration to the Indian agent of the
assessee, who, in turn, remitted such amounts to the assessee. Neither the
advertiser nor the agent deducted tax at source before payment or repatriation
of money, respectively, as provided u/s.195. The AO levied interest upon the
assessee u/s.234B for non-payment of advance tax. The CIT(A) upheld the levy
of interest.
The Tribunal, applying the decisions in the following
cases, deleted the interest levied u/s.234B :
(a) CIT v. Madras Fertilizers Ltd., (1984) 49 ITR
703 (Mad.)
(b) CIT v. Ranoli Investment (P) Ltd., (1999) 235
ITR 433 (Guj.)
(c) CIT v. Sedco Forex International Drilling Co.
Ltd., (2003) 264 ITR 320/(2004) 134 Taxman 109 (Uttaranchal)
The Tribunal noted as under :
1. Since the assessee was a non-resident person, the
amounts paid to their agent in India by the Indian advertisers were liable
for tax deduction u/s.195. The tax had not been so deducted and,
consequently, not paid to the credit of the Government.
2. As provided in S. 209, while computing the amount of
advance tax, the tax deductible at source was to be reduced from the total
tax liability.
3. In the assessee’s case the advance tax payable was Nil
after considering the amount of tax deductible at source u/s.195. It was not
the assessee’s fault, if no tax was deducted by the payers.
4. Since no advance tax was payable as per calculations
in terms of S. 209 and S. 195, there would be no liability to pay interest
u/s.234B. The charge of interest will follow only if there is a default of
non-payment of advance tax. In the absence of default, interest cannot be
charged.
