M/s Avestagenome Projects International Pvt Ltd , Bangalore V. The Deputy Commissioner of Income Tax(TDS) Circle-16(1), Bangalore

ITA 426/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5028 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Assessee Lawyers: H N KHINCHA
• Keywords: Recovery proceedings; Non-deduction of tax
• Section: 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH 'A' BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO.426, 429, 432 & 436/ BANG/2018 (ASST. YEAR 2008-09, 2009-10, 2010-1 1 & 2012-13) AVESTAGEN QUALITY AGRICULTURAL PVT. LTD., (ITA NOS. 429,432 & 436) AVESTAGENOME PROJECT INTL. PVT. LTD., (ITA NO.426) REGUS-UB CITY, CONCORDE, 15 TH FLOOR, VITTAL MALLYA ROAD, BENGALURU. . APPELLANT PAN - BLRD00606E. (ITA NOS.429,432 & 436) PAN BLRA07291E. (ITA NO.426) VS. THE DY. COMMISSIONER OF INCOME-TAX, (TDS), CIRCLE-16(1), BENGALURU. . RESPONDENT ASSESSEE BY : SHRI H.N K HINCHA, C.A REVENUE BY : SHRI B.R R AMESH, JCIT DATE OF HEARING : 19-07-2018 DATE OF PRONOUNCEMENT : 01-08-2018 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER: THESE FOUR APPEALS BY THE ABOVE MENTIONED TWO ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT(A)- 13, BANGALORE ALL DATED 30/11/2017 FOR ASST. YEARS 2008-09, 2009- 10, 2010-11 AND 2012-13. AS CONNECTED/COMMON ISSUE S ARE ITA NOS.426, 429, 432 & 436 2 INVOLVED, THESE APPEALS WERE HEARD TOGETHER AND AR E BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE. 2. BRIEFLY SATED, THE FACTS OF THE CASE ARE AS UNDE R:- 2.1 THESE ASSESSEE COMPANIES ARE ENGAGED IN THE BUS INESS OF RESEARCH IN THE FIELD OF BIO-SCIENCES. SURVEY ACTI ON U/S 133A OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WERE CONDUCTED AT THE BUSINESS PREMISES OF BOTH THESE ASSESSEES ON 2 6/7/2013. IN THE COURSE OF SURVEY OPERATIONS, IT WAS NOTICED THA T THESE ASSESSEES HAD NOT REMITTED THE TAX DEDUCTED AT SOU RCE ON CERTAIN PAYMENTS MADE. REJECTING THE EXPLANATIONS PUT FORT H BY THE ASSESSEES, THE ASSESSING OFFICER (AO) PROCEEDED TO TREAT THE ASSESSEESS AS AN ASSESSEE IN DEFAULT U/S 201(1) O F THE ACT, DETERMINED THE TAX LIABILITY THEREON AND CHARGED IN TEREST U/S 201(1A) OF THE ACT IN ORDERS DATED 30/6/2014. 2.2 ON APPEAL, THE CIT(A)-13, BANGALORE VIDE THE IM PUGNED ORDERS DATED 31/11/2017ALLOWED THE ASSESSEES PARTI AL RELIEF. 3.1 AGGRIEVED BY THE ORDERS OF THE CIT(A)-13, BANGA LORE FOR ASST. YEARS 2008-09, 2009-10, 2010-11 AND 2012-13 A LL DATED 31/11/2017, THE ABOVE TWO ASSESSEES HAVE FILED THE SE APPEALS FOR THE AFORESAID ASST. YEARS RAISING THE FOLLOWING IDE NTICAL GROUNDS CHALLENGING THE ACTION OF THE LD CIT(A) IN UPHOLDIN G THE CHARGING OF INTEREST U/S 201(1A) OF THE ACT:- 1. THE LEARNED INCOME-TAX OFFICER HAS ERRED IN PASSING THE ORDER IN THE MANNER PASSED ANDTHE LEARNED CIT (A) -13 HAS ERRED IN ITA NOS.426, 429, 432 & 436 3 CONFIRMING THE SAME. THE IMPUGNED ORDER BEING BAD IN LAW AND IS LIABLE TO BE QUASHED. 2.1 THE AUTHORITIES BELOW HAVE ERRED IN A) NOT APPRECIATING THAT; I. INTEREST U/S. 201(1A) IS COMPENSATORY IN NATURE. II. THE RECIPIENT OF INCOME HAVING FILED LOSS RETURNS NO TAXES WERE PAYABLE TO THE GOVERNMENT. III. NO TAXES BEING PAYABLE TO THE GOVERNMENT, THE QUESTION OF DELAY IN RECOVERY OF TAXES AND INTEREST FOR DELAY DOES NOT ARISE. B) LEVYING /CONFIRMING THE INTEREST U/S 201(1 A) OF THE ACT. 2.2 THE ACTION OF THE AUTHORITIES BELOW BEING CONTRARY TO FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW APPLICABLE IS TO BE NEGATED. 2.3 THE LEVY OF INTEREST U/S. 201(1 A) BEING WITHOUT PROPER APPRECIATION OF LAWS AND CONTRARY TO VARIOUS JUDICIAL PRONOUNCEMENTS IS TO BE DELETED. 3. IN ANY CASE AND WITHOUT PREJUDICE THE CALCULATION OF INTEREST AS DONE IS ERRONEOUS AND EXCESSIVE. 4. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST INTEREST LEVIED/CONFIRMED U/S. 201(1A) BE DELETED. 3.2 IN THESE COMMON GROUNDS, RAISED IN THE FOUR AP PEALS BEFORE US (SUPRA), THE SUM AND SUBSTANCE OF THE ASSESSEES CONTENTIONS ARE THAT THE AUTHORITIES BELOW HAVE ERRED IN CHARGI NG/ CONFIRMING THE INTEREST U/S 201(1A) OF THE ACT WITHOUT PROPER APPRECIATION OF LAW, JUDICIAL PRONOUNCEMENTS AND THE FACT THAT THE RECIPIENT OF THE ITA NOS.426, 429, 432 & 436 4 INCOME HAS FILED LOSS RETURNS OF INCOME AND NO TAXE S WERE PAYABLE TO THE GOVERNMENT. 3.3.1 WE HAVE HEARD BOTH PARTIES AND PERUSED THE MA TERIAL ON RECORD. IT WAS FAIRLY AGREED TO BY THE COUNSEL OF BOTH THE ASSESSEE AND REVENUE THAT THE ISSUE BEFORE US I.E W HETHER THE ASSESSEES ARE LIABLE TO PAY INTEREST U/S 201(1A) O F THE ACT HAS BEEN CONSIDERED AT LENGTH AND HELD AGAINST THE ASSE SSEE BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF POWER AND CONTROL SYSTEMS IN ITA NOS.883 TO 887/BAN G/2018 DATED 4/6/2018 HOLDING AS UNDER AT PARAS 3 TO 11 TH EREOF:- 3. THE PLEA OF THE ASSESSEE IN THE PROCEEDINGS INIT IATED U/S 201(1) AND 201(1A) OF THE ACT WAS THAT THE PAYEE NO N-RESIDENT SUFFERED LOSSES AND HAS FILED RETURNS OF INCOME DEC LARING LOSS, THEREFORE, ASSESSEE CANNOT BE TREATED AS AN ASSESS EE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE BECAUSE NO TAX IS DUE TO THE EXCHEQUER. THIS PLEA WAS ACCEPTED BY TH E REVENUE. THE REVENUE, HOWEVER PROCEEDED TO LEVY IN TEREST U/S 201(1A) OF THE ACT. THE PROVISIONS OF SEC.201( 1A) OF THE ACT READS THUS: '(LA) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SE CTION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPA NY AS IS REFERRED TO IN THAT SUB-SECTION DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST, (I) AT ONE PER CENT FOR EVERY MONTH OR PART OF A MO NTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS DED UCTED; AND (II) AT ONE AND ONE-HALF PER CENT FOR EVERY MONTH O R PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON ITA NOS.426, 429, 432 & 436 5 WHICH SUCH TAX WAS DEDUCTED TO THE DATE ON WHICH SU CH TAX IS ACTUALLY PAID, AND SUCH INTEREST SHALL BE PAID B EFORE FURNISHING THE STATEMENT IN ACCORDANCE WITH THE PRO VISIONS OF SUB-SECTION (3) OF SECTION 200.' PROVIDED THAT IN CASE ANY PERSON INCLUDING THE PRINCIPAL OFFICER OF A COMPANY FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RES IDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT BUT IS NOT DEEMED TO BE AN ASSESSEE-IN-DE FAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1), THE INTEREST UNDER CLAU SE (I) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WA S DEDUCTIBLE TO THE DATE OF FURNISHING OF RETURN OF I NCOME BY SUCH RESIDENT. 4. THE PROVISO TO SECTION 201(1A) WAS INSERTED BY FINANCE ACT, 2012 W.E.F. 01.07.2012. PRIOR TO THE INSERTION TO THIS PROVISO, THE SECTION CONTEMPLATED ONLY ONE SITUATION WHERE T HE TAX WAS ACTUALLY PAID BELATEDLY BY THE DEDUCTOR. IN 2007, T HE JUDGMENT OF HON'BLE SUPREME COURT, IN THE CASE OF HINDUSTAN COC O COLA BEVERAGES PVT. LTD. (SUPRA) WIDENED THE SCOPE TO IN CLUDE A SITUATION WHERE THE PAYMENT OF TAX IS MADE BY THE D EDUCTEE. THE RELEVANT PART OF THE DECISION IS REPRODUCED BELOW:- '10. BE THAT AS IT MAY, CIRCULAR NO. 2751201195-IT( B) DATED 29.01.1 997 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, IN OUR CONSIDERED OPINION, SHOULD PUT AN END TO THE CONTROVERSY. THE CIRCULAR DECLARES 'NO DEMAND VISUALIZED UNDER SECTION 201(1) OF THE INCOM E TAX ACT SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR H AS SATISFIED THE OFFICER IN CHARGE OF TDS, THAT TAXES DUE HAVE BEEN PAID BY THE DEDUCTEE ASSESSEE. HOWEVER, T HIS WILL NOT ALTER THE LIABILITY TO CHARGE INTEREST UND ER SECTION 201(1-A) OF THE ACT TILL THE DATE OF PAYMEN T OF TAXES BY THE DEDUCTEE ASSESSEE OR THE LIABILITY FOR PENALTY UNDER SECTION 271-C OF THE INCOME TAX. [EMPHASIS SUPPLIED] ITA NOS.426, 429, 432 & 436 6 5. W.E.F. 01.07.2012, IN A SITUATION WHERE THE TAX IS PAID BY THE DEDUCTEE, THE INTEREST IS TO BE COMPUTED UP TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH DEDUCTEE. THIS PROVISO MAK ES NO DISTINCTION WHETHER THE DEDUCTEE FILES A RETURN WITH POSITIVE I NCOME, NIL INCOME OR EVEN LOSSES. STARTING DATE FOR COMPUTING THE INT EREST LIABILITY IS THE DATE ON WHICH THE TAX WAS DEDUCTABLE AND -THE TERMI NAL DATE IS THE DATE OF FURNISHING OF RETURN OF INCOME BY THE PAYEE /DEDUCTEE. 6. ACCORDING TO THE REVENUE, EVEN IN A CASE WHERE T HE RECIPIENT OF INCOME HAD NO TAX LIABILITY EMBEDDED IN SUCH PAYMEN TS, WILL THERE BE ANY INTEREST LIABILITY; BECAUE OF LOSSES, THE PERSO N MAKING PAYMENT WILL BE LIABLE TO PAY INTEREST ON TAX NO DEDUCTED A T SOURCE FROM THE DATE ON WHICH TAX OUGHT TO HAVE BEEN DEDUCTED TILL THE DUE DATE OF FILING OF RETURN OF INCOME BY THE PAYEE. THE CIT(A ) IN COMING TO THE ABOVE CONCLUSIONS RELIED ON THE DECISION OF THE HON 'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT(TDS) CHANDIGA RH VS. PUNJAB INFRASTRUCTURE DEVELOPMENT BOARD 76 TAXMANN.COM 365 (P & H) WHEREIN, IT WAS HELD THAT DE-HORS THE AMENDMENT W.E .F 1/7/2012 BY INSERTION OF FIRST PROVISO TO SEC. 201(1A) OF THE A CT, THE ASSESSEE WOULD BE LIABLE TO PAY INTEREST U/S 201(1A) AND THA T THE INTEREST U/S 201(1A) OF THE IT ACT HAS TO BE CALCULATED FROM THE DATE ON WHICH TAX SHOULD HAVE BEEN DEDUCTED TILL THE DATE ON WHICH TH E DEDUCTEE SHOULD HAVE FILED RETURN. THE HONBLE PUNJAB & HARYANA HC HAD FOLLOWED THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF CIT VS. RAMESH ENTERPRISES 250 ITR 465 (MAD) AND CIT VS. CH ENNAI METROPOLITAN WATER SUPPLY AND SEWERAGE BOARD, 348 I TR 530 (MAD). THE RELEVANT EXTRACT FROM THE JUDGMENT OF THE HONB LE PUNJAB & HARYANA HIGH COURT IS AS BELOW:- '13. THE LANGUAGE OF SECTION 201 IS CLEAR AND UNQUA LIFIED. IT INDEED DOES NOT PERMIT AN ASSESSEE TO DECIDE FOR IT SELF WHAT THE LIABILITY OF THE DEDUCTEE ASSESSEE IS OR IS LIK ELY TO BE. THAT ITA NOS.426, 429, 432 & 436 7 IS A MATTER FOR THE ASSESSING OFFICER WHO ASSESSES THE RETURNS OF THE DEDUCTEE ASSESSEE. IT IS IN FACT NOT EVEN PO SSIBLE FOR HIM TO DO SO. HE CANNOT ASCERTAIN WITH ANY DEGREE OF CE RTAINLY AS TO THE FINANCIAL POSITION OF THE DEDUCTEE ASSESSEE. A VIEW TO THE CONTRARY WOULD ENABLE AN ASSESSEE TO PROLONG TH E MATTER INDEFINITELY. IF ACCEPTED, IT MAY EVEN ENTITLE THE ASSESSEE TO CONTEND THAT IT IS NOT LIABLE TO PAY INTEREST TILL THE FINALISATION OF THE ASSESSMENT OF THE DEDUCTEE ASSESSEE. THIS CO ULD NEVER HAVE BEEN CONTEMPLATED BY THE LEGISLATURE. THE LANG UAGE OF SECTION 201 DOES NOT EVEN SUGGEST SUCH AN INTENTION . 14. EVEN IF THE ASSESSEE IS IN A POSITION TO ASCERT AIN THE TAX LIABILITY OF THE DEDUCTEE ASSESSEE, IT WOULD MAKE N O DIFFERENCE FOR THE REASONS ALREADY STATED. THE SECTION DOES NO T DISTINGUISH BETWEEN CASES WHERE AN ASSESSEE IS IN A POSITION TO DETERMINE THE TAX LIABILITY OF THE DEDUCTEE ASSE SSEE AND CASES WHERE IT IS NOT IN A POSITION TO DO SO. THIS VIEW IS SUPPORTED BY THE FOLLOWING FURTHER OBSERVATIONS OF THE MADRAS HIGH COURT IN THE ABOVE JUDGMENT: '10. THE TRIBUNAL WAS CLEARLY IN ERROR IN ACCEPTING THE CASE PLEADED FOR THE ASSESSEE THAT IT HAD NO DUTY TO PAY TAX AT SOURCE SOLELY ON THE GROUND THAT ONE OF ITS SISTER CONCERNS HAD FILED A LOSS RETURN AND THE OTHER SISTER CONCERN HAD CLAIMED REFUND. THE CONCERN WHICH HAD FILED THE LOSS RETURN WAS AT THE TIME OF ASSESSMENT FOUND LIABLE TO PAY TAX AND THE CONCERN WHICH HAD CLAIMED REFUND AT THE TIME OF ORIGINAL ASSESSMENT WAS FOUND NOT ENTITLED TO TH E REFUND, THOUGH SUCH REFUND WAS DIRECTED IN APPEAL. THE ASSESSEE HAD A DUTY TO DEDUCT TAX AT SOURCE. IT APPARENTLY DID NOT DO SO AS PAYMENTS WERE MADE TO ITS OWN SISTER CONCERNS AND IT DID NOT WISH TO PART WITH ANY PART OF THAT INTEREST TO THE REVENUE AT TH AT POINT OF TIME. THAT HOWEVER CANNOT BE AN ACCEPTABLE REASON FOR ITS FAILURE TO DEDUCT TAX AT SOURCE AND REMIT THE SAME TO THE GOVERNMENT. 15. THIS JUDGMENT WAS FOLLOWED BY ANOTHER JUDGMENT OF A DIVISION BENCH OF THE MADRAS HIGH COURT IN CIT V. C HENNAI METROPOLITAN WATER SUPPLY & SEWERAGE BOARD [20121 3 48 ITR 530 (MAD). IT WAS CONTENDED THAT AS THE RECIPIENT I .E. THE DEDUCTEE ASSESSEE WAS A LOSS-MAKING ENTITY, THE QUE STION OF PAYMENT OF INTEREST DID NOT. ARISE. THE CONTENTION WAS NEGATED ITA NOS.426, 429, 432 & 436 8 ON THE BASIS OF THE JUDGMENT IN RAMESH ENTERPRISES (SUPRA). PARAGRAPHS 15 TO 18 OF THE JUDGMENT, READ AS UNDER: 15. AS FAR AS THE PRESENT CASE IS CONCERNED, WHILE THE ASSESSEE HAD SHORT DEDUCTED THE TAX UNDER SECTION 1 95 OF THE INCOME TAX ACT, IT DID NOT MAKE GOOD THE SHORTF ALL ON THE GROUND THAT THE PAYEE COMPANY WAS A LOSS MAKING COMPANY AND HAD FILED A RETURN SO. IN THE CIRCUMSTA NCES, THE QUESTION OF IT FURTHER MAKING A DEDUCTION AND REMITTING TO THE STATE DID NOT ARISE. THE CIRCULAR REFERRED TO RECOGNISES THE FACT THAT ONCE THE PAYEE REMITS T HE DIFFERENTIAL TAX THE QUESTION OF FURTHER RECOVERY O F THE SELF-SAME SUM FROM THE PAYER DID NOT ARISE AND TILL THE PAYMENT MADE BY THE,(UTEE ASSESSEE, INTEREST WOULD BE CHARGED. 16. APPLYING THE SAID CIRCULAR HEREIN, WITH NO LIAB ILITY THUS ARISEN AT THE HANDS OF THE PAYEE, THE TERMINAL POINT AS REGARDS THE CALCULATION OF INTEREST NECESSARILY HAS TO BE GIVEN A MEANINGFUL INTERPRETATION. GIVEN THE FAC T THAT THE INTEREST LEVY IS AN AUTOMATIC ONE, THE DETERMIN ATION ON THE ULTIMATE LIABILITY OF THE PAYEE COMPANY TO P AY OR NOT TO MAKE PAYMENT BEING A PROCEDURAL EXERCISE HAS NOTHING TO DO WITH THE LIABILITY OF THE ASSESSEE TO DEDUCT TDS. AS SUCH, THE LOSS RETURN FILED BY THE PAYEE CO MPANY CANNOT BE TREATED AS A CIRCUMSTANCE TO BE TAKEN IN IN FAVOUR OF THE ASSESSEE COMPANY FROM NOT APPLYING TH E PROVISIONS OF SECTION 201(JA) OF THE INCOME TAX ACT . ON THE FACTS HEREIN, THE ONLY REASONABLE INTERPRETATIO N ONE CAN GIVE TO THE PROVISION UNDER SECTION 2010A) AS REGARDS THE TERMINAL POINT UPTO WHICH INTEREST HAS TO BE CALCULATED WOULD BE THE DATE ON WHICH THE RETURN HA S TO BE FILED BY THE PAYEE, SO THAT THE CALCULATION OF I NTEREST UNDER SECTION 201(1A) OF THE INCOME TAX ACT IN SUCH CASE WOULD REALLY BE MEANINGFUL. 17. IN THE CIRCUMSTANCES, CONFORMING TO THE OBJECT OF THE PROVISIONS REGARDING THE LEVY OF INTEREST UNDER SEC TION 201(1A) OF THE INCOME TAX ACT ON THE FAILURE TO DED UCT TAX IN ACCORDANCE WITH SECTION 195 OF THE INCOME TA X ACT, THE STARTING POINT FOR THE LEVY OF INTEREST TH US TO COMMENCE FROM THE DATE ON WHICH THE ASSESSEE SHOULD HAVE DEDUCTED THE TAX, THE TERMINAL POINT HEREIN HA S TO BE TAKEN AS THE DATE ON WHICH THE PAYEE SHOULD HAVE FILED ITA NOS.426, 429, 432 & 436 9 ITS RETURN, SO THAT THE CALCULATION OF INTEREST UND ER THE SAID PROVISION DOES NOT SUFFER ANY ILLEGALITY. 18. AS ALREADY POINTED OUT, THE PAYEE COMPANY IS ST ATED TO HAVE FILED A LOSS RETURN. NEVERTHELESS, THIS FAC T NEEDS TO BE VERIFIED BY THE ASSESSING OFFICER AND IF IT I S FOUND TO BE SO, THE QUESTION OF FURTHER RECOVERY FROM THE HANDS OF THE ASSESSEE COMPANY HEREIN DOES NOT ARISE - VID E (2007) 293 ITR 226 (HINDUSTAN COCA COLA BEVERAGE P. LTD. V. COMMISSIONER OF INCOME-TAX). HOWEVER, AS FA R AS LEVY OF INTEREST IS CONCERNED, IT BEING AN AUTOM ATIC ONE, THE ORDER OF THE TRIBUNAL MERITS TO BE SET ASI DE AS FAR AS THIS ASPECT OF THE QUESTION IS CONCERNED. ACCORDINGLY, THE ASSESSMENT ORDER REGARDING LEVY OF INTEREST HAS TO UNDERGO NECESSARY MODIFICATION TO T HE EFFECT THAT INTEREST UNDER SECTION 201(JA) OF THE I NCOME TAX ACT HAS TO BE CALCULATED FROM THE DATE ON WHICH TAX SHOULD HAVE BEEN DEDUCTED TO THE DATE ON WHICH THE PAYEE SHOULD HAVE FILED ITS RETURN UNDER THE PROVIS IONS OF THE INCOME TAX ACT. ACCORDINGLY, BOTH THE TAX CASES STAND DISPOSED OF NO COSTS.' WE ARE IN RESPECTFUL AGREEMENT WITH THESE OBSERVATI ONS AS WELL. IN PARTICULAR, WE AGREE WITH THE JUDGMENT INSOFAR AS I T HOLDS THAT THE TERMINAL POINT HAS TO BE TAKEN AS A DATE ON WHICH T HE PAYEE/DEDUCTEE SHOULD HAVE FILED RETURNS. THUS, EVE N BEFORE AND DE HORS THE AMENDMENT OF 1ST JULY, 2012, THE ASSESSEE WOULD BE LIABLE TO PAY INTEREST UNDER SECTION 201(1A). 16. THE AMENDMENT WHICH INTRODUCED INTER-ALIA THE F IRST PROVISO TO SECTION 201(1) IS OF NO ASSISTANCE TO THE ASSESSEE EITHER. WE WOULD APPLY THE RATIO OF THE JUDGMENT IN CHENNAI METROPOL ITAN WATER SUPPLY & SEWERAGE BOARD (SUPRA) TO THE PROVISO TO S UB-SECTION (1A) OF SECTION 201.' 7. AGGRIEVED BY THE AFORESAID ORDERS OF THE CIT(A), THE ASSESSEE HAS PREFERRED PRESENT APPEALS BEFORE THE T RIBUNAL. 8. THE SHORT ARGUMENT OF THE LD COUNSEL FOR THE ASS ESSEE WAS THAT INTEREST IS COMPENSATORY AND IS LEVIED ONLY FO R THE RIGHT LOST BY ITA NOS.426, 429, 432 & 436 10 THE REVENUE FOR USING MONEY DUE TO THE GOVT. BY WAY OF TAX. WHEN NO TAX IS PAYABLE THERE CANNOT BE ANY LOSS TO THE E XCHEQUER AND, THEREFORE, LEVY OF INTEREST WHICH IS COMPENSATORY I N NATURE CANNOT BE SUSTAINED. IN THIS REGARD, THE LD COUNSEL FOR T HE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- 9. IN PARTICULAR RELIANCE WAS PLACED ON THE DECISIO N OF THE CALCUTTA TRIBUNAL IN THE CASE OF HALDIA PETRO CHEMI CAL LTD. (SUPRA), WHEREIN THE TRIBUNAL HELD THAT WHEN THE PR IMARY CONDITIONS TO BE SATISFIED BEFORE TREATING THE PAYE R ASSESSEE AS 'ASSESSEE IN DEFAULT' AND WHEN NO TAX AT ALL PAYABL E AT ANY POINT IN TIME, CONSEQUENT INTEREST U/S 201(1A) OF T HE ACT CANNOT BE LEVIED ON THE ASSESSEE. THE COMPUTATION M ECHANISM ITSELF FAILS IN SUCH A SITUATION. ITA NOS.426, 429, 432 & 436 11 7. THE LD DR PLACED RELIANCE ON THE ORDER OF THE CI T(A) AND ALSO DISTINGUISHED THE CASES RELIED UPON BY THE LD COUNSEL FOR THE ASSESSEE. 8. WE HAVE GIVEN A CAREFULLY CONSIDERATION TO THE R IVAL SUBMISSION. SECTION 201(1A) OF THE ACT HAS UNDER G ONE A STATUTORY AMENDMENT BY THE FINANCE ACT OF 2012 W.E .F 1/7/2012. A PROVISO WAS INTRODUCED TO SEC. 201(1A) OF THE ACT WHICH PROVIDES AS FOLLOWS:- [PROVIDED THAT IN CASE ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIO NS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON TH E SUM CREDITED TO THE ACCOUNT A RESIDENT BUT IS NOT DEEME D TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO S UB- SECTION (1), THE INTEREST UNDER CLAUSE (1) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO T HE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH RESI DENT.] 9. PRIOR TO THE INSERTION OF THE PROVISO, THE HONB LE MADRAS HIGH COURT IN THE CASE OF CHENNAI METROPOLITAN WA TER SUPPLY AND SEWERAGE BOARD, 348 ITR 530 TOOK THE SAME VIEW WHICH IS NOW STATUTORILY RECOGNIZED AS A PROVISO TO SEC. 201 (1A) OF THE ACT. THE HONBLE MADRAS HIGH COURT DEALT WITH THE C ASE OF THE ASSESSEE SUFFERING LOSS AND STILL CAME TO THE CONC LUSION THAT LIABILITY TO PAY INTEREST U/S 201(1A) OF THE ACT IS MANDATORY. 10. IT IS NO DOUBT TRUE THAT IN THE CASE OF THE HAL DIA PETRO CHEMICAL LTD., (SUPRA), THE KOLKATA ITAT HAS MADE A REFERENCE TO THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CWSSB (SUPRA) BUT HAS NOT ELABORATED ON THE PRINCIP LE LAID DOWN IN THE AFORESAID DECISION. IN ALL THE DECISIO NS CITED ON ITA NOS.426, 429, 432 & 436 12 BEHALF OF THE ASSESSEE, THE ASSESSMENT INVOLVED WER E PRIOR TO ASSESSMENT YEAR 2012-13 I.E PRIOR TO THE STATUTOR Y AMENDMENT TO SEC. 201(1A) OF THE ACT. WE ARE ALSO OF THE VIE W THAT THERE IS A DIFFERENCE BETWEEN CASE WHERE THE AMOUNT PAID IS CHARGEABLE TO TAX BUT THE PAYEE HAS SUFFERED LOSS OR DOES NOT HAVE POSITIVE INCOME AND A CASE WHERE THE PAYMENTS MADE ARE NOT CHARGEABLE TO TAX AT ALL. THE ARGUMENT MADE ON BEH ALF OF THE ASSESEE CAN BE CONSIDERED ONLY WHERE THE PAYMENT IN QUESTION IS NOT CHARGEABLE TO TAX AT ALL. BUT IN A CASE WHE RE PAYMENT IN QUESTION IS CHARGEABLE TO TAX BUT THE PAYEE HAS SUF FERED LOSS OR DOES NOT HAVE POSITIVE INCOME THEN THE PERSON MAKIN G THE PAYMENT IS OBLIGED TO DEDUCT TAX AT SOURCE. THE FA CT THAT THE PAYEE DOES NOT HAVE POSITIVE INCOME WILL ABSOLVE TH E PERSON MAKING PAYMENT FROM BEING TREATED AS AN ASSESSEE I N DEFAULT FOR NOT DEDUCTING TAX AT SOURCE BUT CANNOT ABSOLVE THE PAYEE FROM PAYING INTEREST U/S 201(1A) OF THE ACT. 11. IN OUR VIEW, THIS VITAL DISTINCTION HAS NOT BEE N NOTICED IN THE DECISIONS CITED BY THE LD COUNSEL FOR THE ASSES SEE BEFORE US, ESPECIALLY IN THE CASE OF HALDIA PETROCHEMICALS LTD ., (SUPRA). IN ANY EVENT, THE DECISION OF THE HONBLE MADRAS HI GH COURT BEING A DECISION OF THE HONBLE HIGH COURT WHICH HA S ALSO BEEN FOLLOWED BY THE HONBLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF CIT (TDS) VS. PUNJAB INFRASTRUCTURE DEVEL OPMENT, 76 TAXMANN.COM 365 (P & H), WE ARE OF THE VIEW THAT TH E DECISIONS OF THE HIGH COURT SHOULD BE FOLLOWED. WE, THEREFOR E, CONCUR WITH THE VIEW OF THE CIT(A) AND DISMISS ALL THE APP EALS OF THE ASSESSEE. ITA NOS.426, 429, 432 & 436 13 3.3.2 RESPECTFULLY FOLLOWING THE AFORESAID DECIS ION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE M/S POW ER AND CONTROL SYSTEMS (SUPRA) WHICH FOLLOWED THE DECISION S OF THE HONBLE MADRAS HIGH COURT IN CIT VS. RESEARCH ENTER PRISES (250 ITR 465) (MAD) AND CIT VS. CIT VS. CHENNAI METROPOL ITAN WATER SUPPLY AND SEWERAGE BOARD (348 ITR 530) (MAD) AND HONBLE PUNJAB & HARYANA HIGH COURT IN PUNJAB AND INFRASTRUCTURE DEVELOPMENT 76 TAXMANN.COM 365 (P&H) ; WE CONCUR WITH AND UPHOLD THE VIEW OF THE LD CIT(A). CONSEQUENTLY, ALL FOUR APPEALS OF THESE TWO ASSESSE ES ARE DISMISSED. 4. IN THE RESULT, ALL FOUR APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST AUGUST, 2018 . SD/- SD/- (LALIET KUMAR) (JAS ON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE DATED : 1/8/2018 VMS COPY TO :1.THE ASSESSEE 2.THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETAR Y, ITAT, BANGALORE ITA NOS.426, 429, 432 & 436 14 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR. P.S... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WE BSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT.. 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..