Section 234B Interest cannot be levied on Non Resident for failure on the part of payee to deduct TDS

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1. vswami says:

   To add:
   Recalling another recently reported case , as narrated>
   A bare perusal of section 194J makes it clear that for the application of the provisions, it is necessary that the assessee or the person concerned liable to deduct and pay the TDS must be responsible for paying to a resident any sum, by way of fees for professional services, fees for technical services, royalty or any sum referred to in clause (va) of sec. 28.
   However, in the instant case, the assessee and super-stockist clearly had agreed upon the relationship of “Principal to Principal” and the assessee had not paid even a single penny to its super-stockist. Rather, it was just the opposite. The super-stockist was paying to the assessee-company for the products purchased. Therefore, there was no payment whatsoever by the assessee, and provision of Sec.194J were not attracted. PIRAMAL HEALTHCARE LTD. v. ACIT [2012] 21 taxmann.com 225 (Mumbai – Trib.)

   As commented elsewhere:
   ‘Manmade law’ has come to be growingly given a new meaning. Can anyone, any longer, dare say, with even an iota of conviction, that it is the legislature which has been entrusted with the onerous constitutional duty to make law? Should the lowly AO be at liberty, bent upon engaging himself all the time freely in the pastime, keep on re-writing even what law clearly and unequivocally spells out!
   Playing by the rules was an old belief; but modern day precept is, – to play besides / sans the rules. That, it appears, is the tall order given to, or evidently assumed by, the ones du-tied to simply implement clear mandates of  law !
   Do not the lamentations echoed by eminent experts, though in a different context, deserve being given by every impassioned taxpayer, rather right-minded citizen, a serious thought and insightful deliberations?
   :

     Reply

   May 20, 2012 at 1:04 pm
2. vswami says:

   Besides in the naure of things, even a layman’s reading of the provision should brook no doubt on the clarity of the position in law; namely, payer not payee is THE ONE obligated to decduct. Is it not a vexing instance of travesty in believing it to be otherwise; also horrifying to note that such a wholesome non-issue was allowed to travel upto the second appeal stage, entailing sheer waste of time and energy, much to the chagrine of tax paying community at large.

     Reply

   May 20, 2012 at 12:35 pm