ADIT, New Delhi V. M/s. Parpool Ltd., New Delhi

ITA 3316/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7500 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-04-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 28-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Permanent establishment; Non-deduction of tax
• Section: 234B; 194C; 90; 154

Judgement Text

PAGE 1 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI H S SIDHU JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.:- 3316 /DEL/2012 ASSESSMENT YEAR: 2001-02 ADIT CIRCLE 1(2) INTERNATIONAL TAXATION NEW DELHI VS PARPOOL LIMITED M/S M G B METRO GROUP BUYING H K LIMITED ILO 40 OKHLA INDUSTRIAL ESTATE PHASE II NEW DELHI PAN AAECM3289J (APPELLANT) (RESPONDENT) O R D E R PER PRASHANT MAHARISHI, A. M. 1) THIS APPEAL IS FILED BY REVENUE AGAINST THE ORDER O F CIT (A) XXIX , NEW DELHI DATED 26/03/2012 WHERE LD. CIT (A) APPEAL HAS HELD THAT I NTEREST UNDER SECTION 234B CANNOT BE LEVIED ON THE TAX PAYABLE BY THE ASSESSEE. 2) THE SOLITARY GROUND OF THE APPEAL TAKEN BY THE REVE NUE IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE INTEREST LEVIED UNDER SECTION 234 B OF THE INCOME TAX ACT. 3) THE BRIEF FACTS OF THE CASE ARE THAT APPELLANT IS A LIAISON OFFICE OF THE HONG KONG COMPANY. IT WAS FOUND TO BE EARNING CERTAIN INCOME IN INDIA AND THEREFORE IT WAS CHARGEABLE TO TAX. HOWEVER, THE ISSUE WAS THAT WHET HER INTEREST UNDER SECTION 234B OF THE INCOME TAX ACT CAN BE LEVIED ON INCOME TAX OF THE A SSESSEE WHERE TAX UNDER SECTION 195 OF THE INCOME TAX ACT IS DEDUCTIBLE FROM WHOLE OF SUCH INCOME. THE LEARNED ASSESSING ASSESSEE BY : NONE RESPONDENT BY: MR. R S NEGI SR DR DATE OF HEARING 18/04/2016 DATE OF PRONOUNCEMENT 03 /06/2016 PAGE 2 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 OFFICERS HELD THAT INTEREST IN THE SECTION 234B OF THE ACT IS CHARGEABLE AND THEREFORE THIS GROUND WAS RAISED BY ASSESSEE BEFORE THE LD. CIT (A ). HOWEVER, THE CIT (A) DID NOT PASS ANY ORDER ON APPLICABILITY OF THE PROVISIONS OF SEC TION 234B AND CONSEQUENT INTEREST PAYABLE BY THE ASSESSEE IN HIS ORDER DATED 01/12/20 11 FOR A Y 2001 2002 AND 2008 2009. THEREFORE THE ASSESSEE FILED AN APPLICATION U NDER SECTION 154 OF THE INCOME TAX ACT FOR THE BOTH THE YEARS MAKING THE PRAYER THAT THE G ROUND AGAINST CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT HAS NOT BEEN DECIDED. BASED ON THIS APPLICATION UNDER SECTION 154 THE LD. COMMISSIONER OF INCOME TAX (A) RELYING ON THE VARIOUS HIGH COURT DECISIONS INCLUDING DECISION OF HONOURABLE JURISDICTIONAL HIG H COURT ON THAT ISSUE HELD THAT INTEREST UNDER SECTION 234B OF THE ACT IS NOT CHARGEABLE IN THE HANDS OF THE APPELLANT BEING NON- RESIDENT WHEN ITS ENTIRE INCOME IS SUBJECT TO TAX D EDUCTION AT SOURCE UNDER SECTION 195 OF THE INCOME TAX ACT., HENCE REVENUE IS IN APPEAL BE FORE US. 4) LD. DEPARTMENTAL REPRESENTATIVE CONTENDED BEFORE US THAT INTEREST U/S 234B OF THE INCOME TAX ACT IS CONSEQUENT OF INCOME DETERMINATION AND T AX THEREON THEREFORE IT IS LEVIABLE. 5) DESPITE NOTICE, NONE APPEARED ON THE HALF OF THE AS SESSEE AND THEREFORE IN ABSENCE OF THE REPRESENTATION FROM THE RESPONDENT WE DECIDE THIS I SSUE ON THE MERITS OF THE CASE. 6) WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED RELEVANT ORDERS OF LOWER AUTHORITIES. THE I SSUE IN APPEAL IS WHETHER INTEREST IS CHARGEABLE UNDER SECTION 234B OF THE INCOME TAX ACT IN CASE OF NON-RESIDENT WHOSE INCOME IS SUBJECT TO TAX DEDUCTION AT SOURCE UNDER SECTION 195 OF THE INCOME TAX ACT. IN FACT IN VIEW OF THE DECISION OF HONOURABLE DELHI HIGH COURT IN CASE OF DIT V G E PACKAGED POWER INC. 56 TAXMANN.COM 190 ( DELHI) T HIS ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. HONOURABLE SUPREME COURT HAS ALSO DISMISSED THE SPECIAL LEAVE PETITION FILED BY REVENUE AGAINST THIS ORDER VIDE ORDER DATED 15.07.2015. HONOURABLE DELHI HIGH COURT HAS HELD AS UNDER :- 18. THE VIEW OF THIS COURT FINDS CONFIRMATION IN THE P OSITION OF LAW AS IT STANDS AT PRESENT, AFTER THE FINANCE ACT, 2012; SHOULD A SITUATION AKIN TO THAT IN ALCATEL LUCENT USA INC (SUPRA) ARISE, TH E PAYER WOULD BE TREATED AS THE ASSESSEE-IN-DEFAULT ACCORDING TO SEC TION 201, AND THE PAYEE/ASSESSEE WOULD NOT BE PERMITTED A TAX CREDIT UNDER THE PROVISO IN SECTION 209(1)(D). CLEARLY, THE ANOMALY OF AN ASSES SEE DENYING TAX LIABILITY (WHETHER UNDER A BONA FIDE MISTAKE OR BY DECEIT), THEREBY NOT PAGE 3 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 SUFFERING A TAX DEDUCTION AT SOURCE, AND STILL BEIN G PERMITTED A TAX CREDIT FOR THE TAX DEDUCTIBLE, IS REMEDIED AFTER TH E FINANCE ACT, 2012. 19. ALCATEL LUCENT USA INC (SUPRA), IN ANY EVENT, CAN BE DISTINGUISHED ON THE GROUND THAT THE COURT WAS PERSUADED TO CONFI RM THE LEVY OF INTEREST UNDER SECTION 234B, ONLY ON ACCOUNT OF THE EQUITIES THAT NEEDED TO BE BALANCED IN THOSE PECULIAR FACTS, IN FAVOUR O F TAXABILITY. THIS IS EVIDENT FROM THE FOLLOWING WORDS OF THE COURT: '26. IT FURTHER SEEMS TO US INEQUITABLE THAT THE AS SESSEE, WHO ACCEPTED THE TAX LIABILITY AFTER INITIALLY DENYING IT, SHOUL D BE PERMITTED TO SHIFT THE RESPONSIBILITY TO THE INDIAN PAYERS FOR NOT DEDUCTI NG THE TAX AT SOURCE FROM THE REMITTANCES, AFTER LEADING THEM TO BELIEVE THAT NO TAX WAS DEDUCTIBLE. THE ASSESSEE MUST TAKE RESPONSIBILITY F OR ITS VOLTE FACE. ONCE LIABILITY TO TAX IS ACCEPTED, ALL CONSEQUENCES FOLL OW; THEY CANNOT BE AVOIDED. AFTER HAVING ACCEPTED THE LIABILITY TO TAX AT THE FIRST APPELLATE STAGE, IT IS UNFAIR ON THE PART OF THE ASSESSEE TO INVOKE SECTION 201 AND POINT FINGERS AT THE INDIAN PAYERS. THE ARGUMENT AD VANCED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE INDIAN PA YERS FAILED TO DEDUCT TAX AT THEIR OWN RISK SEEMS TO US TO BE ONLY AN ARG UMENT OF CONVENIENCE OR DESPAIR. AS WE HAVE POINTED OUT EARLIER, IT IS D IFFICULT TO IMAGINE THAT THE INDIAN TELECOM EQUIPMENT DEALERS OF THE ASSESSE E WOULD HAVE FAILED TO DEDUCT TAX AT SOURCE EXCEPT ON BEING PROMPTED BY THE ASSESSEE. IT MAY BE TRUE THAT THE GENERAL RULE IS THAT EQUITY HA S NO PLACE IN THE INTERPRETATION OF TAX LAWS. BUT WE ARE OF THE VIEW THAT WHEN THE FACTS OF A PARTICULAR CASE JUSTIFY IT, IT IS OPEN TO THE COU RT TO INVOKE THE PRINCIPLES OF EQUITY EVEN IN THE INTERPRETATION OF TAX LAWS. TAX LAWS AND EQUITY NEED NOT BE SWORN ENEMIES AT ALL TIMES. THE RULE OF STRICT INTERPRETATION MAY BE RELAXED WHERE MISCHIEF CAN RE SULT BECAUSE OF THE INCONSISTENT OR CONTRADICTORY STANDS TAKEN BY THE A SSESSEE OR EVEN THE REVENUE. MOREOVER, INTEREST IS, INTER ALIA, COMPENS ATION FOR THE USE OF THE MONEY. THE ASSESSEE HAS HAD THE USE OF THE MONE Y, WHICH WOULD OTHERWISE HAVE BEEN PAID AS ADVANCE TAX, UNTIL IT A CCEPTED THE ASSESSMENTS AT THE FIRST APPELLATE STAGE. WHERE THE REVENUE HAS BEEN DEPRIVED OF THE USE OF THE MONIES AND THEREBY PUT T O LOSS FOR NO FAULT ON ITS PART AND WHERE THE LOSS AROSE AS A RESULT OF VA CILLATING STANDS TAKEN BY THE ASSESSEE, IT IS NOT EXPECTED OF THE ASSESSEE TO SHIFT THE RESPONSIBILITY TO THE INDIAN PAYERS. WE ARE NOT TO BE UNDERSTOOD AS PASSING A VALUE-JUDGMENT ON THE ASSESSEE'S CONDUCT. WE ARE ONLY SAYING THAT THE ASSESSEE SHOULD TAKE RESPONSIBILITY FOR IT S ACTIONS.' [EMPHASIS ADDED] PAGE 4 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 THIS COURT FINDS THAT NO NEED IS MADE OUT IN THESE FACTS TO BALANCE ANY EQUITIES IN THESE FACTS, AS THE ASSESSEE HAS NOT VA CILLATED IN ITS STAND AS TO THE EXISTENCE OF A PE IN INDIA OR OTHERWISE. IN ANY EVENT, AS OBSERVED EARLIER, THE POSITION OF LAW ITSELF REQUIRES THAT T HE TAX BE DEDUCTED AT SOURCE, WHATEVER MAY BE THE ASSESSEE'S STANCE, FAIL ING WHICH THE PAYER IS TREATED AS AN ASSESSEE-IN-DEFAULT UNDER SECTION 201, AND THE PAYEE IS REQUIRED TO DISCHARGE ITS LIABILITY TO PAY THE TAX THAT WAS NOT DEDUCTED UNDER SECTION 191. 20. THIS COURT ALSO NOTICES THAT THE MADRAS HIGH COURT DECISION IN MADRAS FERTILIZERS LTD. (SUPRA) AND THAT OF THE UTTARAKHAND HIGH COURT IN SEDCO FOREX INTERNATIONAL DRILLING CO. LTD . (SUPRA) WAS CONSIDERED AND AFFIRMED BY THE BOMBAY HIGH COURT IN NGC NETWORK ASIA LLC (SUPRA) THAT 'WE ARE CLEARLY OF THE OPINIO N THAT WHEN A DUTY IS CAST ON THE PAYER TO PAY THE TAX AT SOURCE, ON F AILURE, NO INTEREST CAN BE IMPOSED ON THE PAYEE-ASSESSEE.' AN IMPORTANT DEC ISION IS THAT OF THE KARNATAKA HIGH COURT IN CIT V. SAMSUNG ELECTRONICS CO. LTD. [2012] 345 ITR 494/[2011] 203 TAXMAN 477/16 TAXMANN.COM 14 1 , WHICH ALSO CONSIDERED THE SAME ISSUE, I.E. THE OBLIGATION UNDE R SECTION 195 (1). THE HIGH COURT IN THE FIRST INSTANCE HAD REJECTED THE R EVENUE'S APPEAL; THE SUPREME COURT REMITTED THE MATTER - FOR DETERMINATI ON AS TO WHETHER INCOME BY WAY OF ROYALTY HAD BEEN MADE OUT IN THE F ACTS OF THE CASE. THE HIGH COURT DECISION FIRST SET OUT THE ORDER OF THE SUPREME COURT INTER ALIA, AS TO THE NATURE OF OBLIGATION CAST UPO N THE PAYER UNDER SECTION 195: 'WHILE REMANDING THE MATTER, HON'BLE SUPREME COURT HAS MADE CERTAIN OBSERVATIONS WHILE ANALYSING THE PROVISIONS OF SECT ION 195 OF THE ACT AS FOLLOWS: '7. UNDER SECTION 195(1), THE TAX HAS TO BE DEDUCTE D AT SOURCE FROM INTEREST (OTHER THAN INTEREST ON SECURITIES) OR ANY OTHER SUM (NOT BEING SALARIES) CHARGEABLE UNDER THE I.T. ACT IN THE CASE OF NON-RESIDENTS ONLY AND NOT IN THE CASE OF RESIDENTS. FAILURE TO DEDUCT THE TAX UNDER THIS SECTION MAY DISENTITLE THE PAYER TO ANY ALLOWANCE A PART FROM PROSECUTION UNDER SECTION 276B. THUS, SECTION 195 I MPOSES A STATUTORY OBLIGATION ON ANY PERSON RESPONSIBLE FOR PAYING TO A NON-RESIDENT, ANY INTEREST (NOT BEING INTEREST ON SECURITIES) OR ANY OTHER SUM (NOT BEING DIVIDEND) CHARGEABLE UNDER THE PROVISIONS OF THE I. T. ACT, TO DEDUCT INCOME TAX AT THE RATES IN FORCE UNLESS HE IS LIABL E TO PAY INCOME TAX THEREON AS AN AGENT. PAYMENT TO NON-RESIDENTS BY WA Y OF ROYALTY AND PAGE 5 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 PAYMENT FOR TECHNICAL SERVICES RENDERED IN INDIA AR E COMMON EXAMPLES OF SUMS CHARGEABLE UNDER THE PROVISIONS OF THE I.T. ACT TO WHICH THE AFORESTATED REQUIREMENT OF TAX DEDUCTION AT SOURCE APPLIES. THE TAX SO COLLECTED AND DEDUCTED IS REQUIRED TO BE PAID TO TH E CREDIT OF CENTRAL GOVERNMENT IN TERMS OF SECTION 200 OF THE I.T. ACT READ WITH RULE 30 OF THE I.T. RULES, 1962. FAILURE TO DEDUCT TAX OR FAIL URE TO PAY TAX WOULD ALSO RENDER A PERSON LIABLE TO PENALTY UNDER SECTIO N 201 READ WITH SECTION 221 OF THE I.T. ACT. IN ADDITION, HE WOULD ALSO BE LIABLE UNDER SECTION 201(1A) TO PAY SIMPLE INTEREST AT 12 PER CE NT PER ANNUM ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. THE MO ST IMPORTANT EXPRESSION IN SECTION 195(1) CONSISTS OF THE WORDS 'CHARGEABLE UNDER THE PROVISIONS OF THE ACT'. A PERSON PAYING INTERES T OR ANY OTHER SUM TO A NON-RESIDENT IS NOT LIABLE TO DEDUCT TAX IF SUCH IS NOT CHARGEABLE TO TAX UNDER THE I.T. ACT. FOR INSTANCE, WHERE THERE IS NO OBLIGATION ON THE PART OF THE PAYER AND NO RIGHT TO RECEIVE THE SUM B Y THE RECIPIENT AND THAT THE PAYMENT DOES NOT ARISE OUT OF ANY CONTRACT OR OBLIGATION BETWEEN THE PAYER AND THE RECIPIENT BUT IS MADE VOL UNTARILY, SUCH PAYMENTS CANNOT BE REGARDED AS INCOME UNDER THE I.T . ACT. IT MAY BE NOTED THAT SECTION 195 CONTEMPLATE NOT MERELY AMOUN TS, THE WHOLE OF WHICH ARE PURE INCOME PAYMENTS, IT ALSO COVERS COMP OSITE PAYMENTS WHICH HAS AN ELEMENT OF INCOME EMBEDDED OR INCORPOR ATED IN THEM. THUS, WHERE AN AMOUNT IS PAYABLE TO A NON-RESIDENT, THE PAYER IS UNDER AN OBLIGATION TO DEDUCT TAS IN RESPECT OF SUCH COMP OSITE PAYMENTS. THE OBLIGATION TO DEDUCT TAS IS, HOWEVER, LIMITED TO TH E APPROPRIATE PROPORTION OF INCOME CHARGEABLE UNDER THE ACT FORMI NG PART OF THE GROSS SUM OF MONEY PAYABLE TO THE NON-RESIDENT. THI S OBLIGATION BEING LIMITED TO THE APPROPRIATE PROPORTION OF INCOME FLO WS FROM THE WORDS USED IN SECTION 195(1), NAMELY, 'CHARGEABLE UNDER T HE PROVISIONS OF THE ACT'. IT IS FOR THIS REASON THAT VIDE CIRCULAR NO. 728 DATED OCTOBER 30, 1995 THE CBDT HAS CLARIFIED THAT THE TAX DEDUCTOR C AN TAKE INTO CONSIDERATION THE EFFECT OF WHILE DEDUCTING TAS. IT MAY ALSO BE NOTED THAT SECTION 195(1) IS IN IDENTICAL TERMS WITH SECT ION 18(3B) OF THE 1922 ACT, IN CIT V. COOPER ENGINEERING [1968] 68 ITR 457 (BOM.) IT WAS POINTED OUT THAT IF THE PAYMENT MADE BY THE RESIDEN T TO THE NON-RESIDENT WAS AN AMOUNT WHICH WAS NOT CHARGEABLE TO TAX IN IN DIA, THEN NO TAX IS DEDUCTIBLE AT SOURCE EVEN THOUGH THE ASSESSEE HAD N OT MADE AN APPLICATION UNDER SECTION 18(3B) (NOW SECTION 195(2 ) OF THE I. T. ACT). THE APPLICATION OF SECTION 195(2) PRE-SUPPOSES THAT THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT TO THE NON-RESID ENT IS IN NO DOUBT PAGE 6 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 THAT TAX IS PAYABLE IN RESPECT OF SOME PART OF THE AMOUNT TO BE REMITTED TO A NON-RESIDENT BUT IS NOT SURE AS TO WHAT SHOULD BE THE PORTION SO TAXABLE OR IS NOT SURE AS TO THE AMOUNT OF TAX TO B E DEDUCTED. IN SUCH A SITUATION, HE IS REQUIRED TO MAKE AN APPLICATION TO THE ITO (TDS) FOR DETERMINING THE AMOUNT. IT IS ONLY WHEN THESE CONDI TIONS ARE SATISFIED AND AN APPLICATION IS MADE TO THE ITO (TDS) THAT TH E QUESTION OF MAKING AN ORDER UNDER SECTION 195(2) WILL ARISE. IN FACT, AT ONE POINT OF TIME, THERE WAS A PROVISION IN THE I. T. ACT TO OBT AIN A NOC FROM THE DEPARTMENT THAT NO TAX WAS DUE. THAT CERTIFICATE WA S REQUIRED TO BE GIVEN TO RBI FOR MAKING REMITTANCE. IT WAS HELD IN THE CASE OF CZECHOSLOVAK OCEAN SHIPPING INTERNATIONAL JOINT STOCK COMPANY V. ITO [1971] 81 ITR 162 (CALCUTTA) THAT AN APPLICATION FOR NOC CANNOT BE SAID TO BE AN APPLICATION UNDER SECTI ON 195(2) OF THE ACT. WHICH DECIDING THE SCOPE OF SECTION 195(2) IT IS IMPORTANT TO NOTE THAT THE TAX WHICH IS REQUIRED TO BE DEDUCTED AT SO URCE IS DEDUCTIBLE ONLY OUT OF THE CHARGEABLE SUM. THIS IS THE UNDERLY ING PRINCIPLE OF SECTION195. HENCE, APART FROM SECTION 9(1), SECTION S 4, 5, 9, 90, 91 AS WELL AS THE PROVISIONS OF DTAA ARE ALSO RELEVANT, W HILE APPLYING TAX DEDUCTION AT SOURCE PROVISIONS. REFERENCE TO ITO (T DS) UNDER SECTION 195(2) OR 195(3) EITHER BY THE NON-RESIDENT OR BY T HE RESIDENT PAYER IS TO AVOID ANY FUTURE HASSLES FOR BOTH RESIDENT AS WE LL AS NON-RESIDENT. IN OUR VIEW, SECTIONS 195(2) AND 195(3) ARE SAFEGUARDS . THE SAID PROVISIONS ARE OF PRACTICAL IMPORTANCE. THIS REASON ING OF OURS IS BASED ON THE DECISION OF THIS COURT IN TRANSMISSION CORPO RATION (SUPRA) IN WHICH THIS SAFEGUARD. FROM THIS IT FOLLOWS THAT WHE RE A PERSON RESPONSIBLE FOR DEDUCTION IS FAIRLY CERTAIN THEN HE CAN MAKE HIS OWN DETERMINATION AS TO WHETHER THE TAX WAS DEDUCTIBLE AT SOURCE AND, IF SO, WHAT SHOULD BE THE AMOUNT THEREOF.' THE SUPREME COURT AFTER CONSIDERING THE SUBMISSIONS OF LEARNED COUNSEL APPEARING FOR THE PARTIES REGARDING THE VAL IDITY OF THE ORDER PASSED BY THIS COURT DATED 24-9-2009 HAS OBSERVED A S FOLLOWS: '9. ONE MORE ASPECT NEEDS TO BE HIGHLIGHTED. SECTIO N 195 FALLS IN CHAPTER XVII WHICH DEALS WITH COLLECTION AND RECOVE RY. CHAPTER XVII- B DEALS WITH DEDUCTION AT SOURCE BY THE PAYER. ON A NALYSIS OF VARIOUS PROVISIONS OF CHAPTER XVII ONE FINDS USE OF DIFFERE NT EXPRESSIONS HOWEVER, THE EXPRESSION 'SUM CHARGEABLE UNDER THE P ROVISIONS OF THE ACT' IS USED ONLY IN SECTION 195. FOR EXAMPLE, SECT ION 194C CASTS AN OBLIGATION TO DEDUCT TAS IN RESPECT OF 'ANY SUM PAI D TO ANY RESIDENT'. SIMILARLY, SECTIONS 194EE AND 194F INTER ALIA PROVI DE FOR DEDUCTION OF PAGE 7 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 TAX IN RESPECT OF 'ANY AMOUNT' REFERRED TO IN THE S PECIFIED PROVISIONS. IN NONE OF THE PROVISIONS WE FIND THE EXPRESSION 'SUM CHARGEABLE UNDER THE PROVISIONS OF THE ACT', WHICH AS STATED ABOVE, IS AN EXPRESSION USED ONLY IN SECTION 195(1). THEREFORE, THIS COURT IS RE QUIRED TO GIVE MEANING AND EFFECT TO THE SAID EXPRESSION. IT FOLLO WS, THEREFORE, THAT THE OBLIGATION TO DEDUCT TAS ARISES ONLY WHEN THERE IS A SUM CHARGEABLE UNDER THE ACT. SECTION 195(2) IS NOT MERELY A PROVI SION TO PROVIDE INFORMATION TO THE ITO(TDS). IT IS A PROVISION REQU IRING TAX TO BE DEDUCTED AS SOURCE TO BE PAID TO THE REVENUE BY THE PAYER WHO MAKES PAYMENT TO A NON-RESIDENT. THEREFORE, SECTION 195 H AS TO BE READ IN CONFORMITY WITH THE CHARGING PROVISIONS, IE., SECTI ONS 4, 5 AND 9. THIS REASONING FLOWS FROM THE WORDS 'SUM CHARGEABLE UNDE R THE PROVISIONS OF THE ACT' IN SECTION 195(1). THE FACT THAT THE RE VENUE HAS NOT OBTAINED ANY INFORMATION PER SE CANNOT BE A GROUND TO CONSTRUE SECTION 195 WIDELY SO AS TO REQUIRE DEDUCTION OF TAS EVEN I N A CASE WHERE AN AMOUNT PAID IS NOT CHARGEABLE TO TAX IN INDIA AT AL L WE CANNOT READ SECTION 195, AS SUGGESTED BY THE DEPARTMENT, NAMELY , THAT THE MOMENT THERE IS REMITTANCE THE OBLIGATION TO DEDUCT TAS AR ISES. IF WE WERE TO ACCEPT SUCH A CONTENTION IT WOULD MEAN THAT ON MERE PAYMENT INCOME WOULD BE SAID TO ARISE OR ACCRUE IN INDIA. THEREFOR E, AS STATED EARLIER, IF THE CONTENTION OF THE DEPARTMENT WAS ACCEPTED IT WO ULD MEAN OBLITERATION OF THE EXPRESSION 'SUM CHARGEABLE UNDE R THE PROVISIONS OF THE ACT' FROM SECTION 195(1). WHILE INTERPRETING A SECTION ONE HAS TO GIVE WEIGHTAGE TO EVERY WORD USED IN THAT SECTION. WHILE INTERPRETING THE PROVISIONS OF THE INCOME TAX ACT ONE CANNOT REA D THE CHARGING SECTIONS OF THAT ACT DE HORS THE MACHINERY SECTIONS . THE ACT IS TO BE READ AS AN INTEGRATED CODE. SECTION 195 APPEARS IN CHAPTER XVII WHICH DEALS WITH COLLECTION AND RECOVERY. AS HELD IN THE CASE OF C.I.T V. ELI LILLY & CO. (INDIA) (P.) LTD. [2009] 312 ITR 225 (SC) THE PREVISIONS FOR DEDUCTION OF TAS WHICH IS IN CHAPTER XVII DEALING W ITH COLLECTION OF TAXES AND THE CHARGING PROVISIONS OF THE I.T ACT FO RM ONE SINGLE INTEGRAL, INSEPARABLE CODE AND, THEREFORE, THE PROV ISIONS RELATING TO TDS APPLIES ONLY TO THOSE SUMS WHICH ARE 'CHARGEABL E TO TAX' UNDER THE I.T. ACT. IT IS TRUE THAT THE JUDGMENT IN ELI LILLY (SUPRA) WAS CONFINED TO SECTION 192 OF THE I.T. ACT. HOWEVER, THERE IS SOME SIMILARITY BETWEEN THE TWO. IF ONE LOOKS AT SECTION 192 ONE FINDS THAT IT IMPOSES STATUTORY OBLIGATION ON THE PAYER TO DEDUCT TAS WHEN HE PAYS ANY INCOME 'CHARGEABLE UNDER THE HEAD SALARIES'. SIMILARLY, SE CTION 195 IMPOSES A STATUTORY OBLIGATION ON ANY PERSON RESPONSIBLE FOR PAYING TO A NON- RESIDENT ANY SUM 'CHARGEABLE UNDER THE PROVISIONS O F THE ACT', WHICH PAGE 8 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 EXPRESSION, AS STATED ABOVE, DO NOT FIND PLACE IN O THER SECTIONS OF CHAPTER XVII. IT IS IN THIS SENSE THAT WE HOLD THAT THE I.T. ACT CONSTITUTES ONE SINGLE INTEGRAL INSEPARABLE CODE. HENCE, THE PR OVISIONS RELATING TO TDS APPLIES ONLY TO THOSE SUMS WHICH ARE DEPARTMENT THAT ANY PERSON MAKING PAYMENT TO A NON-RESIDENT IS NECESSARILY REQ UIRED TO DEDUCT TAS THEN THE CONSEQUENCE WOULD BE THAT THE DEPARTMENT T HAT ANY PERSON MAKING PAYMENT TO A NON-RESIDENT IS NECESSARILY REQ UIRED TO DEDUCT TAS THEN THE CONSEQUENCE WOULD BE THAT THE DEPARTMENT W OULD BE ENTITLED TO APPROPRIATE THE MONEYS DEPOSITED BY THE PAYER EVEN IF THE SUM PAID IS NOT CHARGEABLE TO TAX BECAUSE THERE IS NO PROVISION IN THE I.T. ACT BY WHICH A PAYER CAN OBTAIN REFUND. SECTION 237 READ W ITH SECTION 199 IMPLIES THAT ONLY THE RECIPIENT OF THE SUM. I.E., T HE PAYEE COULD SEEK A REFUND. IT MUST THEREFORE FOLLOW, IF THE DEPARTMENT IS RIGHT THAT THE LAW REQUIRES TAX TO BE DEDUCTED ON ALL PAYMENTS. THE PA YER, THEREFORE, HAS TO DEDUCT AND PAY TAX, EVEN IF THE SO-CALLED DEDUCT ION COMES OUT OF HIS OWN POCKET AND HE HAS NO REMEDY WHATSOEVER, EVEN WH ERE THE SUM PAID BY HIM IS NOT A SUM CHANGEABLE UNDER THE ACT. THE I NTERPRETATION OF THE DEPARTMENT, THEREFORE, NOT ONLY REQUIRES THE WORDS 'CHARGEABLE UNDER THE PROVISIONS OF THE ACT' TO BE OMITTED, IT ALSO L EADS TO AN ABSURD CONSEQUENCE. THE INTERPRETATION PLACED BY THE DEPAR TMENT WOULD RESULT IN A SITUATION WHERE EVEN WHEN THE INCOME HAS NO TE RRITORIAL NEXUS WITH INDIA OR IS NOT CHARGEABLE IN INDIA, THE GOVERNMENT WOULD NONETHELESS COLLECT TAX. IN OUR VIEW, SECTION 195(2) PROVIDES A REMEDY BY WHICH A PERSON MAY SEEK A DETERMINATION OF THE 'APPROPRIATE PROPORTION OF SUCH SO CHARGEABLE' WHERE A PROPORTION OF THE SUM SO CHA RGEABLE IS LIABLE TO TAX. THE ENTIRE BASIS OF THE DEPARTMENT'S CONTENTIO N IS BASED ON ADMINISTRATIVE CONVENIENCE IN SUPPORT OF ITS INTERP RETATION. ACCORDING TO THE DEPARTMENT HUGE SEEPAGE OF REVENUE CAN TAKE PLACE IF PERSONS MAKING PAYMENTS TO NON-RESIDENTS ARE FREE TO DEDUCT TAS OR NOT TO DEDUCT TAS. IT IS THE CASE OF THE DEPARTMENT THAT S ECTION 195(2), AS INTERPRETED BY THE HIGH COURT, WOULD PLUG THE LOOPH OLE AS THE SAID INTERPRETATION REQUIRES THE PAYER TO MAKE A DECLARA TION BEFORE THE ITO(TDS) OF PAYMENTS MADE TO NON-RESIDENTS. IN OTHE R WORDS, ACCORDING TO THE DEPARTMENT SECTION 195(2) IS A PRO VISION BY WHICH PAYER IS REQUIRED TO INFORM THE DEPARTMENT OF THE R EMITTANCES HE MAKES TO THE NON-RESIDENTS BY WHICH THE DEPARTMENT IS ABL E TO KEEP TRACK OF THE REMITTANCES BEING MADE TO NON-RESIDENTS OUTSIDE INDIA. SECTION 195(1)USES THE EXPRESSION 'SUM CHARGEABLE UNDER THE PROVISIONS OF THE ACT'. WE NEED TO GIVE WEIGHTAGE TO THOSE WORDS. FUR THER, SECTION 195 USES THE WORD 'PRAYER' AND NOT THE WORD 'ASSESSEE'. THE PAYER IS NOT AN PAGE 9 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 ASSESSEE. THE PAYER BECOMES AN ASSESSEE-IN-DEFAULT ONLY WHEN HE FAILS TO FULFIL THE STATUTORY OBLIGATION UNDER SECTION 19 5(1). IF THE PAYMENT DOES NOT CONTAIN THE ELEMENT OF INCOME THE PAYER CA NNOT BE MADE LIABLE. HE CANNOT BE DECLARED TO BE AN ASSESSEE-IN- DEFAULT. THE ABOVE MENTIONED CONTENTION OF THE DEPARTMENT IS BASED ON AN APPREHENSION WHICH IS ILL FOUNDED. THE PAYER IS ALSO AN ASSESSEE UNDER THE ORDINARY PROVISIONS OF THE I.T. ACT. WHEN THE PAYER REMITS A N AMOUNT TO A NON- RESIDENT OUT OF INDIA HE CLAIMS DEDUCTION OR ALLOWA NCES UNDER THE INCOME TAX ACT FOR THE SAID SUM AS AN 'EXPENDITURE' . UNDER SECTION 40(A)(I), INSERTED VIDE FINANCE ACT, 1988 W.E.F. 1. 4.89, PAYMENT IN RESPECT OF ROYALTY, FEES TECHNICAL SERVICES OR OTHE R SUMS CHARGEABLE UNDER THE INCOME TAX ACT WOULD NOT GET THE BENEFIT OF DEDUCTION IF THE ASSESSEE FAILS TO DEDUCT TAS IN RESPECT OF PAYMENTS OUTSIDE INDIA WHICH ARE CHARGEABLE UNDER THE IT. ACT. THIS PROVISION EN SURES EFFECTIVE COMPLIANCE OF SECTION195 OF THE I.T. ACT RELATING T O TAX DEDUCTION AT SOURCE IN RESPECT OF PAYMENTS OUTSIDE INDIA IN RESP ECT OF ROYALTIES, FEES OR OTHER SUMS CHARGEABLE UNDER THE I.T. ACT. IN A G IVEN CASE WHERE THE PAYER IS AN ASSESSEE HE WILL DEFINITELY CLAIM DEDUC TION UNDER THE I.T. ACT FOR SUCH REMITTANCE AND ON INQUIRY IF THE AO FI NDS THAT THE SUMS REMITTED OUTSIDE INDIA COMES WITHIN THE DEFINITION OF ROYALTY OR FEES FOR TECHNICAL SERVICE OR OTHER SUMS CHARGEABLE UNDER TH E I.T. ACT THEN IT WOULD BE OPEN TO THE AO TO DISALLOW SUCH CLAIM FOR DEDUCTION. SIMILARLY, VIDE FINANCE ACT, 2008, W.E.F. 1.4.2008 SUB-SECTION (6) HAS BEEN INSERTED IN SECTION 195 WHICH REQUIRES THE PAY ER TO FURNISH INFORMATION RELATING TO PAYMENT OF ANY SUM IN SUCH FORM AND MANNER AS MAY BE PRESCRIBED BY THE BOARD. THIS PROVISION IS B ROUGHT INTO FORCE ONLY FROM 1.4.2008. IT WILL NOT APPLY FOR THE PERIO D WITH WHICH WE ARE CONCERNED IN THESE CASES BEFORE US. THEREFORE, IN O UR VIEW, THERE ARE ADEQUATE SAFEGUARDS IN THE ACT WHICH WOULD PREVENT REVENUE LEAKAGE.' THE KARNATAKA HIGH COURT FIRST ADDRESSED THIS QUEST ION AND STATED THAT: '17. IT IS CLEAR FROM THE SCRUTINY OF THE MATERIAL ON RECORD AND THE CONTENTIONS OF THE PARTIES VIZ., REVENUE AND THE RE SPECTIVE RESPONDENT IN THESE CASES THAT THE FACT THAT PAYMENTS HAVE BEEN M ADE BY THE RESPONDENT HEREIN TO NON-RESIDENT FOR HAVING IMPORT ED SHRINK WRAPPED SOFTWARE/OFF-THE-SHELF SOFTWARE IS NOT DISPUTED. TH ERE IS ALSO NO DISPUTE THAT NO TAX WAS DEDUCTED AT SOURCE BY THE RESPONDEN T UNDER SECTION 195(1) OF THE ACT IN RESPECT OF SUCH PAYMENTS ON TH E GROUND THAT THE SAME WERE MADE FOR THE PURPOSE OF PURCHASE OF SHRIN K WRAPPED SOFTWARE/OFF-THE-SHELF SOFTWARE. IT IS CONTENDED BY THE RESPONDENT THAT PAGE 10 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 SINCE THERE IS NO PERMANENT ESTABLISHMENT OF THE NO N-RESIDENT IN INDIA, THE SAID PAYMENTS HAVE TO BE TREATED AS INCOME FROM BUSINESS AND IS NOT TAXABLE UNDER THE INCOME TAX ACT IN INDIA AND CONSE QUENTLY, THERE IS NO OBLIGATION ON THE PART OF THE RESPONDENT TO DEDUCT THE ADVANCE TAX UNDER SECTION 195 OF THE ACT AND ALSO CONSEQUENTIAL PROCEEDINGS WOULD NOT BE ATTRACTED. THEREFORE, THE DISPUTE BETWEEN TH E REVENUE AND THE RESPONDENT IN THESE CASES IS WHETHER PAYMENTS MADE BY THE RESPONDENT TO THE NON-RESIDENT WOULD CONSTITUTE 'ROYALTY' OR ' INCOME FROM BUSINESS' AND IF IT IS TO BE TREATED AS 'INCOME FROM BUSINESS ', WHETHER THE NON- RESIDENT IS REQUIRED TO HAVE A PERMANENT ESTABLISHM ENT IN INDIA. FURTHER, IN THE ABSENCE OF ANY PERMANENT ESTABLISHM ENT OF THE NON RESIDENT IN INDIA, IS THERE NO OBLIGATION ON THE PA RT OF THE PAYEE, THE RESPONDENT HEREIN TO DEDUCT TAX AT SOURCE UNDER SEC TION 195 OF THE ACT. THEREFORE, THE FACT THAT THE PAYMENTS MADE BY THE P AYEE, THE RESPONDENT HEREIN TO THE NON-RESIDENT WOULD CONSTITUTE INCOME OF THE NON-RESIDENT IS INDISPUTABLE. HOWEVER, THE DISPUTE IS AS TO WHET HER SUCH INCOME IN THE HANDS OF THE NON-RESIDENT IS TO BE TREATED AS S ALE AND INCOME FROM BUSINESS COVERED UNDER ARTICLE 7 OF THE DTAA WITH R ESPECTIVE COUNTRIES OR WHETHER THE PAYMENTS WOULD AMOUNT TO ROYALTY IN THE HANDS OF THE NON-RESIDENT, FOR WHICH NO PERMANENT ESTABLISHMENT IS REQUIRED FOR MAKING PAYMENT IN INDIA. THERE IS ALSO NO DISPUTE T HAT IF THE PAYMENTS MADE BY THE RESPONDENT ARE HELD TO BE ROYALTY AND N OT 'INCOME FROM BUSINESS', THERE IS AN OBLIGATION ON THE PART OF TH E PAYEE, THE RESPONDENT HEREIN TO DEDUCT THE TAX AT SOURCE AND I N DEFAULT, THE RESPONDENT HEREIN WOULD BE CONSIDERED AS A DEFAULT ASSESSEE. ONCE THERE IS AN OBLIGATION TO DEDUCT TAX AT SOURCE UNDE R SECTION 195 OF THE ACT, WHICH IMPOSES A STATUTORY RIGHT ON ANY PERSON RESPONSIBLE FOR PAYING TO A NON-RESIDENT, ANY INTEREST (NOT BEING I NTEREST ON SECURITIES) OR ANY OTHER SUM (NOT BEING DIVIDEND) CHARGEABLE UN DER THE PROVISIONS OF THE ACT, TO DEDUCT INCOME-TAX AT THE RATES IN FO RCE UNLESS HE IS LIABLE TO PAY INCOME-TAX THEREON AS AN AGENT. PAYMENT TO N ON-RESIDENTS BY WAY OF ROYALTY AND PAYMENT FOR TECHNICAL SERVICES R ENDERED IN INDIA ARE COMMON EXAMPLES OF SUMS CHARGEABLE UNDER THE PROVIS IONS OF THE ACT TO WHICH THE AFORESTATED REQUIREMENT OF TDS APPLIES . THE TAX SO COLLECTED AND DEDUCTED IS REQUIRED TO BE PAID TO TH E CREDIT OF CENTRAL GOVERNMENT IN TERMS OF SECTION 200 OF THE ACT READ WITH RULE 30 OF THE INCOME TAX RULES, 1962. FAILURE TO DEDUCT TAX OR FA ILURE TO PAY TAX WOULD ALSO RENDER A PERSON LIABLE TO PENALTY UNDER SECTION 201 READ WITH SECTION 221 OF THE ACT. IN ADDITION, HE WOULD ALSO BE LIABLE UNDER SECTION 201(1A) TO PAY SIMPLE INTEREST AT 12 PER CE NT PER ANNUM ON THE PAGE 11 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. THEREF ORE, IF THE AMOUNT IS HELD TO BE ROYALTY, THE OTHER CONSEQUENCES AS REFER RED TO ABOVE WOULD FOLLOW.' AFTER HOLDING THAT THE TRANSACTION IN THAT CASE AMO UNTED TO ROYALTY AND, THEREFORE, TAXABLE, THE COURT RULED THAT THE OBLIGA TION TO DEDUCT TAX WAS WITH THE PAYER: 'IN ANY VIEW OF THE MATTER, IN VIEW OF THE PROVISIO NS OF SECTION 90 OF THE ACT, AGREEMENTS WITH FOREIGN COUNTRIES DTAA WOULD O VERRIDE THE PROVISIONS OF THE ACT. ONCE IT IS HELD THAT PAYMENT MADE BY THE RESPONDENTS TO THE NON-RESIDENT COMPANIES WOULD AMO UNT TO 'ROYALTY' WITHIN THE MEANING OF ARTICLE 12 OF THE DTAA WITH T HE RESPECTIVE COUNTRY, IT IS CLEAR THAT THE PAYMENT MADE BY THE R ESPONDENTS TO THE NON-RESIDENT SUPPLIER WOULD AMOUNT TO ROYALTY. IN V IEW OF THE SAID FINDING, IT IS CLEAR THAT THERE IS OBLIGATION ON TH E PART OF THE RESPONDENTS TO DEDUCT TAX AT SOURCE UNDER SECTION 195 OF THE AC T AND CONSEQUENCES WOULD FOLLOW AS HELD BY THE HON'BLE SUPREME COURT W HILE REMANDING THESE APPEALS TO THIS COURT.' 21. A COURT'S TASK IS TO UNRAVEL THE LEGISLATIVE INTEN T, IF IT IS NOT DISCERNABLE. WHERE, HOWEVER, THE PROVISIONS ARE CLE AR, THE COURT'S DUTY IS TO ADMINISTER THE LAW IN ITS TERMS. IT IS BOUND TO ADHERE TO ITS PRECEDENTS; YET ITS DEVOTION TO A PREVIOUS HOLDING CANNOT BLIND IT TO THE CLEAR TERMS OF THE STATUTE, WHEREVER FOUND. IF ALCA TEL LUCENT USA INC(SUPRA) IS CORRECT AND IS TO BE APPLIED IN ALL S ITUATIONS, THERE WOULD BE DISSIMILAR AND ASYMMETRICAL RESULTS ENTIRELY DEP ENDENT ON THE FACTS PRESENTED IN EACH CASE. IT IS UNCLEAR WHAT WOULD BE THE OUTCOME WHERE THE PAYEE IS, IN FACT, UNDER THE BONA FIDE BELIEF T HAT IT DOES NOT HAVE A PE, OR HOW THE PAYER IS TO DISCERN THAT A PAYEE'S A SSERTION IS INTENDED TO DEFEAT THE LAW. THIS COURT THEREFORE, NOTES THAT THIS PRECISE QUESTION WAS ADDRESSED IN SAMSUNG ELECTRONICS CO. LTD. (SUPR A) BY THE SUPREME COURT, WHILE REMITTING THE MATTER FOR RECONSIDERATI ON BY THE HIGH COURT. THE COURT PERCEPTIVELY HELD THAT: 'HENCE, APART FROM SECTION 9(1), SECTIONS 4, 5, 9, 90, 91 AS WELL AS THE PROVISIONS OF DTAA ARE ALSO RELEVANT, WHILE APPLYIN G TAX DEDUCTION AT SOURCE PROVISIONS. REFERENCE TO ITO (TDS) UNDER SEC TION 195(2) OR 195(3) EITHER BY THE NON-RESIDENT OR BY THE RESIDEN T PAYER IS TO AVOID ANY FUTURE HASSLES FOR BOTH RESIDENT AS WELL AS NON RESIDENT. IN OUR VIEW, SECTIONS 195(2) AND 195(3) ARE SAFEGUARDS. THE SAID PROVISIONS ARE OF PAGE 12 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 PRACTICAL IMPORTANCE. THIS REASONING OF OURS IS BAS ED ON THE DECISION OF THIS COURT IN TRANSMISSION CORPORATION(SUPRA) IN WH ICH THIS SAFEGUARD. FROM THIS IT FOLLOWS THAT WHERE A PERSON RESPONSIBL E FOR DEDUCTION IS FAIRLY CERTAIN THEN HE CAN MAKE HIS OWN DETERMINATI ON AS TO WHETHER THE TAX WAS DEDUCTIBLE AT SOURCE AND, IF SO, WHAT SHOUL D BE THE AMOUNT THEREOF.' 22. THIS COURT, THEREFORE, HOLDS THAT JACABS CIVIL INCORPORATED/MITSUBISHI CORPORATION (SUPRA) APPLIES IN SUCH SITUATIONS; ALCATEL LUCENT USA INC (SUPRA) CAN BE E XPLAINED AS A DECISION TURNING UPON ITS FACTS; ITS SEEMINGLY WIDE OBSERVATIONS, LIMITED TO THE CIRCUMSTANCES OF THE CASE. THIS COURT, THERE FORE, HOLDS THAT THE VIEW TAKEN BY ITAT WAS CORRECT; THE PRIMARY LIABILI TY OF DEDUCTING TAX (FOR THE PERIOD CONCERNED, SINCE THE LAW HAS UNDERG ONE A CHANGE AFTER THE FINANCE ACT, 2012) IS THAT OF THE PAYER. THE PA YER WILL BE AN ASSESSEE IN DEFAULT, ON FAILURE TO DISCHARGE THE OB LIGATION TO DEDUCT TAX, UNDER SECTION 201 OF THE ACT. 23. FOR THE ABOVE REASONS, THIS COURT FINDS THAT NO IN TEREST IS LEVIABLE ON THE RESPONDENT ASSESSEES UNDER SECTION 234B, EVE N THOUGH THEY FILED RETURNS DECLARING NIL INCOME AT THE STAGE OF REASSE SSMENT. THE PAYERS WERE OBLIGED TO DETERMINE WHETHER THE ASSESSEES WER E LIABLE TO TAX UNDER SECTION 195(1), AND TO WHAT EXTENT, BY TAKING RECOURSE TO THE MECHANISM PROVIDED IN SECTION 195(2) OF THE ACT. TH E FAILURE OF THE PAYERS TO DO SO DOES NOT LEAVE THE REVENUE WITHOUT REMEDY; THE PAYER MAY BE REGARDED AN ASSESSEE-IN-DEFAULT UNDER SECTIO N 201, AND THE CONSEQUENCES DELINEATED IN THAT PROVISION WILL VISI T THE PAYER. THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED WITH OUT ANY ORDER AS TO COSTS. 7) THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF HO NOURABLE DELHI HIGH COURT IN CASE OF DIT V G E PACKAGED POWER ( SUPRA) WE HOLD THAT ON THE PAYMENTS RECEIVED BY THE ASSESSEE THE PAYER WERE REQUIRED TO DEDUCT TAX AT SOURCES U/S 195 OF THE ACT AND AS THE TAX WAS DEDUCTIBLE U/S 195 OF THE ACT THERE IS NO FAILURE ON PART OF THE ASSESSEE IN PAYMENT OF ADVANCE TAX. THEREFORE, ASSESSEE CANNOT BE SADDLED WITH THE BURDEN OF INTEREST U/S 234B OF THE ACT. HENCE, WE CONFIRM TH E ORDER OF THE LD. CIT (A) IN DELETING PAGE 13 OF 13 ITA 3316 DEL 2012 ADIT V PARPOOL LIMITED AY 2001_02 INTEREST UNDER SECTION 234 B OF THE INCOME TAX ACT 1961 IN CASE OF CASE OF THE ASSESSEE. IN THE RESULT, SOLITARY GROUND OF APPEAL OF THE REVENU E IS DISMISSED. 8) IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/ 06/2 016. SD/- SD/- (H.S. SIDHU) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 3 RD JUNE, 2016 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER AR REGISTRAR