SNC Lavalin International Incorporated, V. ADIT International Taxation Circle-2 (2),

ITA 165/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2288 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 25-11-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 18-01-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHWANI KR MAHAJAN
• Assessee Lawyers: VIDUR PURI
• Keywords: Double taxation relief; Permanent establishment; TDS
• Section: 234B; 191; 208; 2

Judgement Text

I.T.A. NO.265 /DEL/08 1/10 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 165/DEL/2008 ASSESSMENT YEAR : 2004-05 SNC LAVLIN INTERNATIONAL INC. ASSTT. DIRECTOR OF INCOME TAX, C/O SP PURI & CO., INTL. TAXATION CIRCLE 2(2), 4/18, ASAF ALI ROAD, N. DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAGCS-5543-K APPELLANT BY : SHRI VIDUR PURI. RESPONDENT BY : SHRI ASHWANI KR. MAHAJAN, CIT-DR. ORDER PER A.K. GARODIA, AM: THIS IS AN ASSESSEE'S APPEAL DIRECTED AGAINST THE O RDER OF LD CIT (A)- XXIX, NEW DELHI DATED 28.9.2007 FOR ASSESSMENT YEAR 2004-05. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 1. THE LD CIT(A) ERRED IN LAW AND ON FACTS BY UPHOL DING THE ORDER OF ASSESSING OFFICER IN TAXING THE PROCEEDS OF RS,.6,9 4,07,349/- FROM NATIONAL HIGHWAY AUTHORITY OF INDIA AND RS.1,61,77, 393/- FROM ANDHRA PRADESH POWER CORPORATION AS FEES FOR TECHNICAL SER VICES U/S 9(1)(VII) @ 20% GROSS INSTEAD OF APPLYING MORE BENEFICIAL RATE @ 15% AS PER PROVISIONS OF ARTICLE 12 OF DOUBLE TAXATION AVOIDAN CE TREATY BETWEEN INDIA AND CANADA AS PER SECTION 90(2) OF THE INCOME TAX ACT, 1961. . I.T.A. NO.265/DEL/08 2/10 2. THAT THE LD CIT(A) ERRED IN LAW BY UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN APPLYING THE DEEMING PROVISION OF ARTIC LE 5(2)(I) OF THE DTAA BETWEEN INDIA AND CANADA FOR THE ESTABLISHMENT OF P E ON THE BASIS OF PERIOD DEPLOYMENT OF PERSONNEL IN INDIA WHICH IS ON LY APPLICABLE TO SERVICES OTHER THAN INCLUDED SERVICES:. 3. THE LD CIT(A) ERRED IN LAW IN FOLLOWING THE CIT( A) ORDER FOR THE ASSESSMENT YEAR 2000-01 EVEN WHEN THERE WAS NO CONT RACT OF APGENCO EXECUTED IN THE ASSESSMENT YEAR 2000-01. 4. THE LD CIT(A) ERRED IN LAW IN UPHOLDING THE CHAR GING OF INTEREST U/S 234B OF THE INCOME TAX ACT, 1961 WHEN THE TOTAL INCOME W AS SUBJECT TO TAX DEDUCTED AT SOURCE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED IN CANADA AND IS A TAX RESIDENT OF THAT COUNTRY. THE A SSESSEE IS A NON RESIDENT FOREIGN COMPANY FOR THE PURPOSE OF TAX ASSESSMENT IN INDIA UNDER THE ACT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING TE CHNICAL SERVICES FOR INFRASTRUCTURE PROJECTS. THE ASSESSEE FILED RETURN OF INCOME FOR THE PRESENT YEAR DECLARING AN INCOME OF RS.8,94,41,813/- IN THE COUR SE OF SCRUTINY ASSESSMENT PROCEEDINGS, IT NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS RENDERED TECHNICAL SERVICES TO INDIAN PARTIES. THE ASSESSEE RECEIVED PAYMENTS FROM, INTER- ALIA, THREE INDIAN PARTIES NAMELY M/S NATIONAL HIGH WAY AUTHORITY OF INDIA (NHAI), ANDHRA PRADESH POWER GENERATION CORPORATION (APGENC O) AND DUMMUGUDEM HYDRO PROJECTS (DHP) AS CONSIDERATION FOR RENDERING TECHNICAL SERVICES TO THESE PARTIES. THE ASSESSEE RECEIVED PAYMENT OF RS.6,94, 07,349/- FROM NHAI AND RS.1,61,77,393/- FROM THE REMAINING TWO PARTIES. T HE ASSESSEE HAS OFFERED THESE RECEIPTS FOR TAXATION AS FEES FOR INCLUDED SE RVICES ON GROSS BASIS @ 15% UNDER ARTICLE 12 OF DOUBLE TAXATION AVOIDANCE AGREE MENT BETWEEN INDIA AND CANADA. THE ASSESSING OFFICER, HOWEVER, FOUND THAT THE ASSESSEE WAS HAVING PERMANENT ESTABLISHMENT IN INDIA UNDER ARTICLE 5 OF DTAA AND THEREFORE, THE INCOME ARISING FROM RENDERING OF TECHNICAL SERVICES WAS LIABLE TO TAX AS BUSINESS PROFITS UNDER ARTICLE 7 OF DTAA. THESE PAYMENTS WER E FOUND BY THE ASSESSING . I.T.A. NO.265/DEL/08 3/10 OFFICER IN THE NATURE OF FEES FOR TECHNICAL SERVICE S WITHIN THE MEANING OF SECTION 9(1)(VII) OF THE ACT. ACCORDINGLY, THE ASSESSING O FFICER ASSESSED THESE AMOUNTS AS FEES FOR TECHNICAL SERVICE ON GROSS BASIS U/S 44 D OF THE INCOME TAX ACT, 1961 AND TAXED THE SAME AT THE RATE OF 20% U/S 115A OF T HE ACT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT (A). BEFORE LD CIT(A), IT WAS THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE IS NOT HAVING PE IN INDIA IN RESPECT OF APGENCO AND DHP. IT WAS ALSO SUBMITTED BEFORE LD CIT(A) THAT THESE RECEIPTS SHOULD BE TAXED UNDER ARTICLE 12 OF DTAA A S FEES FOR INCLUDED SERVICE ON GROSS BASIS @ 15%. LD CIT(A) WAS NOT SATISFIED AND HE UPHELD THE ASSESSMENT ORDER AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BE FORE US. 4. IT IS SUBMITTED BY THE LD AR OF THE ASSESSEE THA T THE ASSESSEE HAS NO CASE WITH REGARD TO THE RECEIPT OF THE ASSESSEE OF RS.6,94,07,349/- FROM NHAI AND HENCE THIS PART OF THE ISSUE MAY BE DECIDED AGA INST THE ASSESSEE. REGARDING THE RECEIPT OF RS.161.77 LAKHS FROM REMAI NING TWO PARTIES, IT WAS SUBMITTED THAT OUT THIS AMOUNT ALSO, THE ASSESSEE H AS NO CASE REGARDING RECEIPT OF RS.14,23,498/- RECEIVED BY THE ASSESSEE AS SERVI CES OF REVIEW AND SUPERVISION. REGARDING THE BALANCE AMOUNT, IT WAS SUBMITTED THAT THE SAME WERE RECEIVED BY THE ASSESSEE IN CONNECTION OF REND ERING OF SERVICES OF DEVELOPMENT AND TRANSFER OF TECHNICAL DESIGN AND RE PORT AS PER CONTRACT REFERENCE NO.14455 FOR RS.16,48,604/- AND FROM CONT RACT REFERENCE NO.15308 FOR AN AMOUNT OF RS.1,31,05,291/- TOTAL RS.1,47,53,895/ -. IT WAS SUBMITTED THAT REGARDING THESE TWO RECEIPTS OF RS.1,47,53,895/-, T HE MATTER IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION IN ASSESSE ES OWN CASE FOR ASSESSMENT YEAR 2000-01 FOR I.T.A. NO.3536/DEL/2004 DATED 29.8 .2008. IT IS SUBMITTED THAT THIS TRIBUNAL DECISION IS AVAILABLE ON PAGES 2-18 O F THE PAPER BOOK AND THE SAME IS ALSO REPORTED AT 26 SOT 155 (DEL.). IT IS ALSO POINTED OUT THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002-03 IN I.T.A. NO. 1701 & 1702/DEL/2007 DATED 5.12.2008 ALSO, SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND THIS TRIBUNAL DECISION IS ALSO AVAILABLE ON PAGES 1 9-27 OF THE PAPER BOOK. WHEN IT WAS ENQUIRED BY THE BENCH AS TO WHAT ARE THE FACTS IN THE TRIBUNAL ORDER AND IN . I.T.A. NO.265/DEL/08 4/10 THE PRESENT YEAR, OUR ATTENTION WAS DRAWN TO PARA N O.7 OF THE TRIBUNAL DECISION FOR ASSESSMENT YEAR 2000-01 WHEREIN IT IS NOTED BY THE TRIBUNAL THAT FROM THE SCOPE OF SERVICES, IT IS CLEAR THAT THE ASSESSEE WA S REQUIRED TO FURNISH PROJECT REPORT SO AS TO COVER DETAILED DESIGN FOR REHABILIT ATION/STRENGTHENING OF THE EXISTING CARRIAGEWAYS AND DESIGN NEW CARRIAGEWAYS A ND REQUIRED STRUCTURES. THE ASSESSEE WAS REQUIRED TO FURNISH DETAILED DRAWINGS AND ALSO TO INCLUDE STUDY OF ENVIRONMENTS AND REHABILITATION NEEDS. IT IS POIN TED OUT THAT IT WAS HELD BY THE TRIBUNAL THAT THESE ACTIVITIES FALL WITHIN THE MEAN ING FEES FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION 2 BELOW SUB SECTION 9(1)( VII) OF THE INCOME TAX ACT, 1961. OUR ATTENTION WAS ALSO DRAWN TO THE FINDING OF THE TRIBUNAL THAT THE WORDS MAKE AVAILABLE GOES WITH TECHNICAL KNOW HOW, EXPE RIENCE, SKILL, KNOW-HOW OR PROCESS ETC. BUT DO NOT GO WITH CONSTRAINTS OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR A TECHNICAL DESIGN. IT IS ALSO P OINTED OUT THAT REGARDING THESE SERVICES, IT WAS HELD BY THE TRIBUNAL THAT THIS WIL L BE CONSIDERED AS FEES FOR INCLUDED SERVICES WITHIN THE MEANING OF ARTICLE 12( 4) OF THE ACT AND HENCE IN TERMS OF ARTICLE 12(2) TAX RATE SHOULD BE CHARGED. REGARDING THE FACTS OF THE PRESENT YEAR, LD AR OF THE ASSESSEE COULD NOT SHOW US THE EXACT NATURE OF WORK IN THE PRESENT YEAR REGARDING EARNING THESE TWO REC EIPTS AS PER CONTRACT REFERENCE NO.14445 AND CONTRACT REFERENCE NO.15308 OF RS.16,48,604/- AND RS.1,31,05,291/- RESPECTIVELY. IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER REGARDING THESE TWO RECEIPTS WITH THE DIRECTION THA T HE SHOULD DECIDE THIS ASPECT AFRESH IN THE LIGHT OF THESE TWO TRIBUNAL DECISIONS IN ASSESSEES OWN CASE. 5. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN ASSESSMENT YEA R 2000-01, IT WAS HELD BY THE TRIBUNAL THAT IF ANY AMOUNT IS RECEIVED BY THE ASSE SSEE IN CONNECTION WITH PROVIDING TO THE CUSTOMER DETAILED WORKING DRAWING INCLUDING THE STUDY ON ENVIRONMENT AND REHABILITATION NEEDS, THE SAME IS T HE RECEIPT IN THE NATURE OF . I.T.A. NO.265/DEL/08 5/10 FEES FOR INCLUDED SERVICE AND HENCE THE TAX RATE AP PLICABLE WILL BE AS PER ARTICLE 12(2). THE RELEVANT PARA OF THIS TRIBUNAL DECISION IS PARA NO.7 WHICH IS REPRODUCED BELOW:- PARA NO.7 WE HAVE CAREFULLY CONSIDERED RELEVANT FACTS, ARGUME NTS ADVANCED AND THE DECISION CITED. FROM THE SCOPE OF SERVICES, IT IS CLEAR THAT THE ASSESSEE WAS REQUIRED TO FURNISH PROJECT REPORT SO AS TO COVER DETAILED DESIGN FOR REHABILITATION/STRENGTHENING OF THE EXIS TING CARRIAGEWAYS AND DESIGN NEW CARRIAGEWAYS AND REQUIRED STRUCTURES. T HE ASSESSEE WAS REQUIRED TO FURNISH DETAILED WORKING DRAWINGS AND A LSO TO INCLUDE STUDY OF ENVIRONMENTS AND REHABILITATION NEEDS. THIS WAS TO FACILITATE WIDENING OF THE EXISTING TWO LANE HIGHWAYS TO 4/6 LANE HIGHW AYS. ACCORDINGLY, THE ASSESSEE WAS MADE SUITABLE PROPOSAL FOR FURTHER WID ENING THE HIGHWAY AND STRENGTHENING OF THE CARRIAGEWAYS BECAUSE OF SU CH DRAWINGS AND DESIGNS, NHAI WAS CAPABLE OF CARRYING OUT THE DESIR ED WORK. THERE IS NO DISPUTE TO THE FACT THAT THE SAME FALLS WITHIN T HE MEANING OF FEES FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION 2 BEL OW SUB SECTION 9(1)(VII) OF THE ACT. AS PER SAID EXPLANATION 2, F EES FOR TECHNICAL SERVICES MEANS ANY CONSIDERATION FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICE. THE ASSESSEE HAV ING RENDERED TECHNICAL OR CONSULTANCY SERVICE IS SAID TO HAVE RE CEIVED FEES FOR TECHNICAL SERVICES WITHIN THE MEANING OF EXPLANATI ON 2 TO SECTION 9(1)(VII) OF THE ACT. HOWEVER, WHETHER THE SAME IS FEES FOR INCLUDED SERVICES WITHIN THE MEANING OF ARTICLE 12(4)(B) OR NOT IS REQUIRED TO BE EXAMINED. FROM THE ARTICLE 12(4)(B) AS NOTED ABOVE , THE AMOUNT RECEIVED CAN BE CONSIDERED AS FEES FOR INCLUDED SE RVICES WHERE THE . I.T.A. NO.265/DEL/08 6/10 PAYMENT OF ANY KIND TO ANY PERSON IS IN CONSIDERATI ON FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICE IF SUCH SER VICES (I) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESS; OR (II) CONSISTS OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. THUS, IF THE PAYMENT IS FOR REND ERING ANY TECHNICAL OR CONSULTANCY SERVICE IS FEES FOR INCLU DED SERVICES, IF SUCH SERVICES EITHER MAKE AVAILABLE TECHNICAL KNOWL EDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESS OR CONSISTS OF THE DEVELOPMENT AND TRANSFER OF A TECHNOLOGY PLAN OR TE CHNICAL DESIGN. WHEN THE PAYMENT IS FOR DEVELOPMENT AND TR ANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN, IT NEED NOT BE COUPLED WITH THE CONDITION THAT IT SHOULD ALSO MAKE AVAILABLE TECHNI CAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESS ETC. THE WO RDS MAKE AVAILABLE GOES WITH TECHNICAL KNOW HOW, EXPERIENCE , SKILL, KNOW- HOW OR PROCESS ETC. BUT DO NOT GO WITH CONSTRAINTS OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR A T ECHNICAL DESIGN. THE SECOND LIMB IN CLAUSE (B) OF SUB ARTI CLE (4) OF ARTICLE 12 OF DTAA CAN BE INVOKED WHEN THE AMOUNT IS PAID I N CONSIDERATION FOR RENDERING OF ANY TECHNICAL OR CON SULTANCY SERVICES AND IF SUCH SERVICES CONSISTS OF THE DEVEL OPMENT AND TRANSFER OF A TECHNICAL PLAN OR A TECHNICAL DESIGN ALSO. IN A WAY, THE CONDITION OF MAKING AVAILABLE TECHNICAL KNOWLED GE IS NOT SIN QUA NON FOR CONSIDERING THE QUESTION AS TO WHETHER THE AMOUNT IS FEES FOR INCLUDED SERVICES OR NOT PARTICULARLY WHEN THE PAYMENT IS ONLY WHERE THE TECHNICAL OR CONSULTANCY SERVICES CO NSISTS OF DEVELOPMENT AND TRANSFER OF A TECHNICAL PLANT OR TE CHNICAL DESIGN ONLY. THIS WILL BE CONSIDERED AS FEES FOR INCLUDE D SERVICES . I.T.A. NO.265/DEL/08 7/10 WITHIN THE MEANING OF ARTICLE 12 (4) OF THE ACT AND HENCE, IN TERMS OF ARTICLE 12(2), TAX RATE SHOULD BE CHARGED. THE ITAT, CALCUTTA BENCH IN THE CASE OF ZENTEX MERCHANTS (P) LTD. (SUP RA) INTERPRETING ARTICLE 12 OF DTAA BETWEEN INDIA AND U SA (WHICH IS IDENTICAL WORDED) IN INDO-CANADA TREATY HELD AS UND ER: FOR DECIDING THE ISSUE UNDER ARTICLE 12(4), IT IS NOT MATERIAL AS TO WHETHER THE ASSESSEE ACQUIRED ON OUTRIGHT BASIS ANY TECHNICAL KNOWLEDGE, KNOW-HOW, TECHNICAL PLAN OR DESIGN. THE SAID ARTICLE 1(4) IS ATTRACTED THE MOMENT A PERSON RESIDENT OF O NE STATE (COUNTRY) MAKES AVAILABLE TECHNICAL KNOWLEDGE, EXPE RIENCE OR TRANSFERS A TECHNICAL PLAN OR TECHNICAL DESIGN TO T HE PERSON OF OTHER CONTRACTING STATE (COUNTRY). FROM THE AGREEME NT BETWEEN THE ASSESSEE AND THE NON-RESIDENT COMPANY IT WAS AP PARENT THAT THE LATER WAS TO DELIVER THE TECHNICAL DESIGNS TO T HE FORMER FOR ITS OWN USE AND BENEFIT IN INDIA. THE TERM TRANSFER AS USED IN ARTICLE 12(4) DOES NOT FER TO THE ABSOLUTE TRANSFER OF RIGH TS OF OWNERSHIP. IT REFERS TO THE TRANSFER OF TECHNICAL DRAWINGS OR DESIGNS TO BE EFFECTED BY THE RESIDENT OF ONE STATE TO THE RESIDE NT OF OTHER STATE WHICH IS TO BE USED BY OR FOR THE BENEFIT OF RESIDE NT OF OTHER STATE. THE SAID ARTICLE 12(4)(B), DOES NOT CONTEMPLATE TRA NSFER OF ALL RIGHTS, TITLE AND INTEREST IN SUCH TECHNICAL DESIGN OR PLANT. EVEN WHERE THE TECHNICAL DESIGN OR PLAN IS TRANSFERRED F OR THE PURPOSE OF MERE USE OF SUCH DESIGN OR PLAN BY THE PERSON OF OTHER CONTRACTING STATE AND FOR WHICH PAYMENT IS TO BE MA DE. ARTICLE 12(4)(B) WILL BE ATTRACTED.. IN VIEW OF OUR ABOVE DISCUSSION, WE HOLD THAT THE P AYMENT RECEIVED BY ASSESSEE IS IN THE NATURE OF FEES FOR INCLUDED SER VICES AND HENCE, TO . I.T.A. NO.265/DEL/08 8/10 BE TAXED AS SUCH AT THE RATE PRESCRIBED IN ARTICLE 12(2) TO THE TREATY BETWEEN INDIA AND CANADA. 7. SINCE IN THE PRESENT YEAR, THE ASSESSEE COULD NO T POINT OUT THE EXACT NATURE OF WORK WITH REGARD TO RECEIPT OF RS.16,48,6 04/- IN CONNECTION WITH CONTRACT REFERENCE NO.14445 AND RS.1,31,05,291/- IN CONNECTI ON WITH CONTRACT REFERENCE NO.15308, WE FEEL THAT THIS MATTER SHOULD GO BACK T O THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION IN THE LIGHT OF THIS T RIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200-01. IF THE ASSESSEE C AN ESTABLISH THAT THESE TWO RECEIPTS ARE ALSO IN THE NATURE OF FEES FOR INCLUDE D SERVICES AS PER THE TRIBUNAL DECISION IN ASSESSEES OWN CASE, THE TAX RATE APPL ICABLE WILL BE 15% AND NOT 20% AS LEVIED BY THE ASSESSING OFFICER. WE WANT TO MAKE IT CLEAR THAT WE ARE NOT GIVING ANY DIRECTION AND THE ASSESSING OFFICER IS F REE TO DECIDE THE MATTER AS PER LAW IN THE LIGHT OF THESE TWO TRIBUNAL DECISIONS RE NDERED IN ASSESSEES OWN CASE AND IN THE LIGHT OF FACTUAL POSITION OF THE PRESENT YEAR TO BE BROUGHT ON RECORD BY THE ASSESSEE. THE ASSESSING OFFICER SHOULD PASS NE CESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPOR TUNITY OF BEING HEARD. 8. REGARDING BALANCE AMOUNT OF RS.14,23,498/- RECEI VED BY THE ASSESSEE FOR CONTRACT REFERENCE NO.15472 AND THE AMOUNT OF RS.6, 94,07,349/- RECEIVED BY THE ASSESSEE FROM NHAI, IT IS FAIRLY CONCEDED BY THE LD AR OF THE ASSESSEE THAT THE ASSESSEE HAS NO CASE WITH REGARD TO THESE TWO RECEI PTS AND HENCE WE HOLD THAT FOR THESE TWO RECEIPTS, THE APPLICABLE TAX RATE IS 20% AS HAS BEEN DONE BY THE ASSESSING OFFICER. REGARDING GROUND NO.4 REGARDING CHARGING OF INTEREST U/S 234B, IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BECAUSE THE TRIBU NAL HAS HELD IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 THAT SINCE THE ENTIRE RECEIPT OF THE ASSESSEE WAS SUBJECT TO TDS, INTEREST U/S 234B IS N OT CHARGEABLE. 9. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. . I.T.A. NO.265/DEL/08 9/10 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN ASSESSMENT YEA R 2000-01, THE TRIBUNAL HAS DECIDED THIS ISSUE REGARDING CHARGABILITY OF INTERE ST U/S 234B AS PER PARA NO.11 WHICH IS REPRODUCED BELOW:- WE HAVE CONSIDERED RIVAL SUBMISSIONS. INTEREST U/S 234B IS CHARGEABLE PROVIDED THE ASSESSEE, WHO IS LIABLE TO PAY ADVANCE TAX U/S 208 HAS FAILED TO PAY SUCH TAX. THUS, THE PRE-CONDITION FOR LEVY OF INTEREST U/S 234B IS THE LIABILITY TO PAY ADVANCE TAX U/S 208. UNDER SECTIO N 208 OF THE ACT, ADVANCE TAX SHALL BE PAYABLE WHERE THE AMOUNT OF SU CH ADVANCE TAX PAYABLE AS COMPUTED IN ACCORDANCE WITH PROVISIONS O F CHAPTER-XVII IS RS.5,000/- OR MOE. THE ADVANCE TAX WILL BE COMPUTED AS PER SECTION 209 OF THE ACT. UNDER SECTION 209, THE ASSESSEE IS TO E STIMATE HIS CURRENT INCOME AND FIND OUT THE TAX PAYABLE THEREIN AS PER SUB CLAUSE (1) OF SECTION 209(1). UNDER CLAUSE (D) OF SUB SECTION (1 ) OF SECTION 209, THE INCOME TAX CALCULATED UNDER CLAUSE (A) IS TO BE RED UCED BY AMOUNT OF INCOME TAX, WHICH WOULD BE DEDUCTIBLE AT SOURCE DUR ING THE SAID FINANCIAL YEAR. THUS, THE ASSESSEE CAN TAKE CREDIT OF THE TA X DEDUCTIBLE AT SOURCE. WHETHER THE TAX IS DEDUCTIBLE @ 15% OR 20% IS TO BE DECIDED BY THE PAYER AND NOT THE PAYEE I.E. THE ASSESSEE. THEREFORE, THE TAX PAYABLE BY THE ASSESSEE DOES NOT EXCEED THE TAX DEDUCTIBLE AT SOUR CE. IN SUCH A SITUATION, THE ASSESSEE IS NOT REQUIRED TO PAY ANY ADVANCE TAX. IN THAT VIEW OF THE MATTER, INTEREST U/S 234B IS NOT CHARGEABLE. SECTION 191 ONLY REQUIRES THAT IF THE TAX IS NOT DEDUCTED AT SOURCE, SUCH INCOME TAX SHALL BE PAYABLE DIRECTLY. SECTION 191 ONLY REQUIRES THE ASS ESSEE TO PAY THE TAX. THUS, THE LIABILITY WHICH EXTENDS TO PAYMENT OF TAX U/S 191 DO NOT EXTEND TO PAYMENT OF INTEREST U/S 234B. IN THAT VIEW OF TH E SITUATION, THE CONCLUSION ARRIVED AT BY LD CIT(A) IS JUST. THE OT HER DECISIONS RELIED BY LD CIT(A) ALSO SUPPORTS THE ABOVE VIEW. THE DECISION R ELIED BY LD DR IN THE CASE OF M/S DMJM HARRIS INC. (SUPRA) IS DISTINGUISH ABLE ON FACTS. WE, THEREFORE, UPHOLD THE ORDER OF LD CIT(A). . I.T.A. NO.265/DEL/08 10/10 11. SINCE THE FACTS IN THE PRESENT YEAR ARE IDENTIC AL, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR. THERE IS NO D ISPUTE THAT THE ENTIRE INCOME PAYABLE TO THE ASSESSEE WAS SUBJECT TO DEDUCTION OF TAX AT SOURCE AND HENCE THE ASSESSEE WHILE ESTIMATING THE ADVANCE TAX LIABILITY IS ENTITLED TO REDUCE TAX DEDUCTED AT SOURCE AND ONLY FOR THE BALANCE AMOUNT, THE ASSESSEE IS LIABLE TO PAY AS ADVANCE TAX. SINCE THE ENTIRE AMOUNT OF RECE IPT OF THE ASSESSEE WERE SUBJECT TO TDS PROVISION, THERE IS NO LIABILITY OF THE ASSESSEE TO PAY ADVANCE TAX AND HENCE THE ASSESSEE CANNOT BE CALLED UPON TO PAY INTEREST U/S 234B OF THE ACT. WE, THEREFORE, DELETE INTEREST CHARGED U/S 234 B OF THE ACT. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AS INDICATED ABOVE. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 4TH DE CEMBER, 2009. SD/- SD/- (GEORGE MATHAN) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 4 12.2009. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).