Case Law Details
HSBC Bank (Mauritius) Ltd. Vs DCIT (International Taxation) (ITAT Mumbai)
The issue under consideration is whether penalty interest u/s 234B can be imposed on the payee in case of failure of payer to deduct the tax at source?
ITAT states that under this issue the assessee has challenged the levy of interest u/s 234B of the Act. The payer is under obligation to deduct the tax at source and on account of failure of payer to deduct the tax at source, the penalty interest u/s 234B cannot be imposed on the payee. In support of this contention, they relied upon the law settled by Hon’ble Bombay High Court Director of Income Tax (International Taxation) Vs. Ngc Network Asia LLC (2009) 222 CTR 85 (Bom). In the instant case also the assessee received the payment without deduction of TDS. No doubt, the payer was liable to be deduct the TDS who failed to do so, therefore, the penalty is not leviable to be payee in view of the law settled in Director of Income Tax (International Taxation) Vs. Ngc Network Asia LLC (2009) 222 CTR 85 (Bom). Therefore, in the said circumstances, it is quite clear that the interest and penalty cannot be imposed upon the payer. Accordingly, ITAT decide this issue in favour of the assessee against the revenue.
FULL TEXT OF THE ITAT JUDGEMENT
The assessee has filed the present appeal against the order dated 24.01.2018 passed by the Commissioner of Income Tax (Appeals) – 56, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2013-14.
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