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ITAT, DELHI BENCH ‘H’: DELHI
Turner Broadcasting System Asia Pacific, Inc.
v.
ADIT (Int’l Taxation)
ITA No. 724 (Del)/2008
March 13, 2009
RELEVANT EXTRACTS:
3.1 Section 209 furnishes the method for computation of advance-tax payable by the assessee. It starts with the estimate of the current income, which according to us, should be bona fide estimate. Thereafter, tax has to be calculated on such current income at the rate in force for the relevant year. From this amount, the tax deductible at source or collectible at source has to be reduced, as provided in clause (d) of sub-section (1) of section 209. Therefore, it has to be found out whether any tax was deductible or collectible at source. In this connection, we may refer to the provisions contained in section 195 of the Act, which mandate that any person responsible for paying to a non-resident any interest or any other sum chargeable under the provision of this Act shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. It is an undisputed fact that the assessee is a non-residence person. It sources revenue from Indian advertiser a through the Indian agent. The advertiser a pay various amounts to the Indian agent. Thus, the agent steps into the shoes in the assessee for receipt of the amount in India and this is the point or time when the advertiser had to deduct tax at source. The tax has not been so deducted and consequently not paid to the credit of the Government. However, no fault can be found that the assessee in this regard. Section 209 speaks of tax deductible at source and not tax deducted at source. Therefore, what has to be deducted from tax on current income is the amount deductible at source, which on the facts of the case, are identical amounts. Therefore, the tax payable in advance, as per section 209, works out to nil. Accordingly, it becomes clear that the assessee was not liable to pay any advance-tax. We may mention here that the facts of the case of Madras Fertilisers Ltd. (supra) are squarely applicable to the facts of this case. The facts of the case of Ranoli Investments (P.) Ltd. and Other (supra) were some what different as the deduction was made at a later date, nonetheless, the court came to the conclusion that tax deductible at source should be reduced from the tax determined on the current income. In the case of Sedco Forex International Drilling Co. Ltd. (supra), the court took into account certain other factors, namely, that there were conflicting decisions of the Tribunal in the matter and that the levy was made without hearing the assessee. These factors do not exist in this case. The finding of the court was that the imposition of interest u/s234B was not justified inter-alia because the tax payable in advance has to be reduced by the amount of tax which was deductible at source. Looking to the provisions contained in sections 209 and 195 and the aforesaid decisions, it is clear that the assessee was not liable to pay any advance tax. In such circumstances, there would also be no liability to pay interest u/s 234B notwithstanding the fact that this provision, for the purpose of assessed tax, uses the words “any tax deducted or collected at source”. In other words, the charge of interest will follow only if there is a default of non-payment of advance tax. In absence of the default, the interest cannot be charged. |
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