JUDGMENT judgment of court was delivered by S. Ravindra Bhat J.-In these appeals under section 260A of Income-tax Act, 1961 (hereafter referred to as "the Act"), Revenue questions common order of Income-tax Appellate Tribunal dated July 16, 2013, in I. T. A. No. 6034/Del-2010 and connected appeals, by which order of Commissioner of Income-tax (Appeals) ("the CIT(A)") deleting interest levied under section 234B, was confirmed. Revenue argues that substantial question of law which arises for consideration is whether Income-tax Appellate Tribunal ("the ITAT") fell into error in holding that assessee could not be saddled with interest liability under section 234B of Act. Briefly, facts are that General Electric group was manufacturing equipment relating to oil and gas, energy, transportation and aviation for supply to customers in India. After survey under section 133A at premises of General Electric International Operations Co. Inc. ("GEIOC"), liaison office, reassessment proceedings were initiated against several entities of GE group for assessment years (AYs) 2000-01 till assessment year 2006-07, on March 31, 2008. respondents in these appeals are eight such entities ("the assessees"), i.e., GE Packaged Power Inc., GE Jenbacher Gmbh, Nuovo Pignone Spa, GE Engine Services Inc., GE Energy Parts Inc., GE Aircraft Engine Services Ltd., GE Engine Services Malaysia, and GE Japan Ltd., over various assessment years. assessees filed nil returns of income and sought reasons for reopening assessment, which were duly provided. Objections to reassessment were disposed of, and notice under section 143(2) was issued and final assessment order was issued. Assessing Officer ("the AO") found that assessees had permanent establishment ("PE") in India. taxable income of assessees was computed by attributing some percentage of sale price/consideration received as profits to permanent establishment; interest under sections 234A and 234B of Act was also levied. assessees appealed against order of Assessing Officer; Commissioner of Income-tax (Appeals) disposed of appeals by his order of September 30, 2010, confirming reopening of assessment, finding on existence of permanent establishments in India, and attribution of profits to permanent establishments. However, on question of interest under section 234B for failure to pay advance tax in terms of sections 208 and 209, Commissioner of Income-tax (Appeals) applied interpretation to section 234B of Act, given in DIT v. Jacabs Civil Incorporated [2011] 330 ITR 578 (Delhi) and deleted interest, therefore, holding in favour of assessees. Before Income-tax Appellate Tribunal, Revenue argued that position of law, as held by Supreme Court in CIT v. Anjum M. H. Ghaswala [2001] 252 ITR 1 (SC), was that interest under section 234B is mandatory, and that Assessing Officer is not vested with any discretion in that regard. appeals by Revenue before Income-tax Appellate Tribunal were dismissed, by its order of July 16, 2013, on ground that position of law in Jacabs (supra) was applicable squarely and that judgment sought to be relied upon by Revenue in Anjum M. H. Ghaswala (supra) was also considered in Jacabs (supra). Revenue is in appeal before this court against said order of Income-tax Appellate Tribunal. Revenue argues that Income-tax Appellate Tribunal's reliance on Jacabs (supra) in impugned order was misplaced as proposition that interest, under section 234B, is not chargeable cannot be unqualified, because regard must be had to role of assessee/payee in nondeduction or short-deduction of tax at source. Mr. Balbir Singh for Revenue argues that relevance of assessee's role was made clear in DIT (International Taxation) v. Alcatel Lucent USA Inc., by Division Bench of this court in I. T. A. No. 327 of 2012, dated November 7, 2013[2014] 2 ITR-OL 276 (Delhi), in which it was held that interest could be imposed on assessee-foreign company which denies tax liability, for non-payment of advance tax because there exists presumption that assessee had represented to Indian payer that tax should not be deducted from remittances made to it. In Alcatel Lucent (supra), foreign assessee first contested permanent establishment status but later, during appellate stage, in volte face, admitted that it was permanent establishment and that its income was chargeable to tax in India. In such situation, if payer does not deduct tax, assessee is assumed to have played some role in non-deduction of tax at source by payer, and interest under section 234B is payable by assessee. Specific reliance was sought to be placed by Revenue on court's emphasis that assessee claiming its income not to be taxable in India, unlike one that admits its tax liability from outset, cannot argue that it is responsibility of payers to deduct tax, and at same time benefit from tax credit under section 209(1)(d). It was argued that this case was akin to Alcatel Lucent (supra), in that assessees had denied their tax liability initially (by filing nil returns after section 148 notice), and, therefore, could not take shelter under Jacabs (supra), to now argue that payer had absolute liability to deduct tax from remittance to non-resident payee. Indian payer could not possibly have been responsible for deducting tax from remittances made to assessees, under such circumstances. case of assessees is that they are non-resident companies and payment received by them should have suffered tax deduction at source, by payer, who was required so to do by section 195 of Act. Placing reliance on Jacabs (supra), it is argued that obligation upon payer to deduct tax at source, before making remittances to non-resident assessee, was absolute. This was evident from terms of preamended section 209(1)(d), by which assessee was not liable to pay advance tax, owing to tax credit that it was entitled to for tax that was "deductible" at source, in computing its advance tax. In other words, in computing its own advance tax liability, it was entitled to reduce that tax deductible or collectible at source by payer. amendment of proviso to section 209(1) in Finance Act, 2012, prescribing that nonresident assessee can take credit only for amount of tax actually deducted by payer, was with effect from April 1, 2012, having been made expressly prospective. Consequently, during assessment years in question, no interest was leviable under section 234B. Alcatel Lucent (supra) was sought to be distinguished, on ground that that decision turned on volte face of assessee as to whether its income was taxable in India, at appellate stage. There being no admission here of tax liability, it is argued that obligation rests upon payer to deduct tax at source. Reliance was also placed on CIT v. Madras Fertilizers Ltd. [1984] 149 ITR 703 (Mad); DIT (International Taxation) v. NGC Network Asia LLC [2009] 313 ITR 187 (Bom); (International Taxation) v. NGC Network Asia LLC [2009] 313 ITR 187 (Bom); CIT v. Sedco Forex International Drilling Co. Ltd. [2003] 264 ITR 320 (Uttaranchal); Motorola Inc. v. Deputy CIT [2005] 95 ITD 269 (Delhi) [SB] and Qualcomm Incorporated v. Addl. DIT [2013] 23 ITR (Trib) 239 (Delhi); [2013] 153 TTJ 513 (Delhi), for this proposition. question that arises for consideration is whether interest should be levied on assessee under section 234B, on ground of non-payment of advance tax. case of Revenue, in short, is that position of law in Alcatel Lucent (supra) is applicable since assessee, having denied tax liability during reassessment, caused payer to erroneously refrain from deducting tax under section 195; it must thus suffer interest for nonpayment of advance tax. case of assessees, on other hand, is that position of law in Jacabs (supra) must apply and that obligation was upon payer to deduct tax at source before making remittances to them; payer's failure to do so cannot invite interest upon payees. Section 195(1) envisages deduction of tax at source by "any person responsible for paying" to foreign company, "any other sum chargeable" under provisions of Act at time of credit of such income to account of payee. court, in Jacabs (supra), interpreted this obligation of payer to deduct tax as absolute, in these terms (page 586 of 330 ITR): "The scheme of Act in respect of non-residents is clear. Section 195 of Act puts obligation on payer, i.e., any person responsible for paying to non-resident, to deduct income-tax at source at rates in force from such payments excluding those incomes which are chargeable under head'Salaries'. Therefore, entire tax is to be deducted at source which is payable on such payments made by payee to non-resident. Section 201 of Act lays down consequences of failure to deduct or pay. These consequences include not only liability to pay amount which such person was required to deduct at source from payments made to non- resident but also penalties, etc. Once it is found that liability was that of payer and said payer has defaulted in deducting tax at source, Department is not remedy-less and therefore can take action against payer under provisions of section 201 of Income-tax Act and compute amount accordingly. No doubt, if person (payer) who had to make payments to non-resident had defaulted in deducting tax at source from such payments, non-resident is not absolved from payment of taxes thereupon. However, in such case, non-resident is liable to pay tax and question of payment of advance tax would not arise. This would be clear from reading of section 191 of Act along with section 209(1)(d) of Act. For this reason, it would not be permissible for Revenue to charge any interest under section 234B of Act." To understand whether section 234B may be had recourse to, for failure to pay advance tax, one must understand scheme of advance tax payment. One obligation is imposed upon payer of sum to foreign company, requiring deduction of tax at source under section 195. second obligation is directly imposed upon assessee, by requiring it to compute its advance tax liability as stipulated under section 209. However, foreign company assessee that receives remittances that are attributable as business profits to permanent establishment in India, is permitted tax credit while computing its advance tax liability under section 209, since tax is deductible at source under section 195. Section 209(1)(d), prior to Finance Act, 2012, read: "209. Computation of advance tax.-(1) amount of advance tax payable by assessee in financial year shall, subject to provisions of sub- sections (2) and (3), be computed as follows, namely:-... (d) income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by amount of incometax, which would be deductible or collectible at source during said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing current income or, as case may be, total income aforesaid; and amount of income-tax as so reduced shall be advance tax payable." position in law, therefore, was that assessee was entitled to, in its computation of its advance tax liability, take tax credit of that amount which was deductible or collectible, regardless of whether amount was actually deducted or collected. As Jacabs (supra) noted, reason for this was because advance tax is to be computed either based on previous year's assessment, or on estimate of income to be earned that year which is to be made much before final assessment. There is no possible way in which provision could allow tax credit of amount deducted or collected because actual deduction takes place at later point in time, i.e., at point at which payment is actually made to assessee. This provision unsurprisingly opened window for assessee to take tax credit of amount that was deductible, even if it was not actually deducted. There were several reasons why amount actually deducted could be less than amount deductible by payer. Despite not suffering deduction, position of law permitted assessee to take credit of amount deductible. Of course, such amount which was not actually deducted could later be brought to tax under section 191. None less in recognition of this anomalous situation, Parliament inserted proviso in Finance Act, 2012, with prospective effect from April 1, 2012, to section 209(1) in following terms: "Provided that for computing liability for advance tax, income-tax calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by aforesaid amount of income-tax which would be deductible or collectible at source during said financial year under any provision of this Act from any income, if person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by person responsible for collecting tax without collection of such tax." This court is of opinion that law prior to 2012 amendment must be read to prevent such anomalies from arising. With this background, this court has to examine applicability of position of law in Alcatel Lucent (supra). facts in Alcatel Lucent (supra) were that assessee was non-resident company which supplied some equipment to Indian consumers, and received payment for it in assessment year 2007-08. Based on materials found in survey at premises of Alcatel Lucent India Ltd., Indian subsidiary, Assessing Officer for Alcatel Lucent France concluded that assessee had permanent establishment in India. Reassessment proceedings were initiated against assessee for assessment years 2004-05 to 2007-08. assessee maintained position that it was not liable to tax in India, as it did not have permanent establishment in India. Consequently, it filed nil returns. However, Assessing Officer found that percentage of its income was taxable in India, attributable to its permanent establishment and levied interest under section 234A, section 234B and section 234C. In appeal to Commissioner of Income-tax (Appeals), assessee claiming, inter alia, first, that computation of income, by attributing business profits to permanent establishment, was incorrect, and second, that interest levied under section 234B was incorrect since whole consideration received by it was liable to tax deduction at source under section 195, thus precluding any advance tax liability on its part. However, it did not press first ground in proceedings. Commissioner of Income-tax (Appeals) ultimately deleted interest under section 234B, on ground that while non-resident assessee was liable to tax, it could not be held to be liable to advance tax, as first, obligation was absolute upon payer to deduct tax at source, under section 195, read with section 201 (which permitted recovery from payer, as assessee-in-default, of both tax as well as interest, for not deducting tax) and second, whether or not any tax was actually deducted, assessee was allowed tax credit of that amount of tax that was deductible or collectible at source, by pre-amended section 209(1)(d), thus negating assessee's liability to pay advance tax. Income-tax Appellate Tribunal, on appeal by Revenue, confirmed view of Commissioner of Income-tax (Appeals). Division Bench of this court however, held in favour of Revenue, reasoning (page 289 of 2 ITR-OL): "The other argument on behalf of assessee that liability of payer under section 201 is absolutely different from liability of non-resident assessee under section 234B need not be examined and for purpose of present case it would not make any difference, on account of peculiar facts of present case. It may be recalled that argument put forth by Revenue before Income-tax Appellate Tribunal was that at time of receipt of monies from India, assessee took plea that it did not have any receipt of monies from India, assessee took plea that it did not have any permanent establishment in India and, therefore, payment was not chargeable to tax in India, with consequence that section 195(1) was not applicable, whereas in appeals before Commissioner of Income-tax (Appeals), contradictory stand was adopted by assessee, by accepting fact that it had permanent establishment in India and by admitting that income earned in India was chargeable to tax. It was further argued by Revenue that such contradictory plea cannot be permitted to be taken by assessee. It was pointed out that consistent with stand taken in return, assessee would have told Indian payer that no tax should be deducted from remittance and it was, therefore, not open to assessee, merely because at first appeal stage it chose not to contest assessment of income attributable to Indian permanent establishment, to turn around and say that since it has now accepted its liability to pay tax on Indian income, it was for Indian payers to have deducted tax and if they had not done so assessee cannot be held liable for interest. This argument of Revenue was rejected by Tribunal on ground that there was no material in support of plea that assessee represented to Indian payers not to deduct tax, nor did any such facts or circumstances emerged from impugned orders. We are unable to uphold this part of decision of Tribunal. It must be remembered that in note appended to return assessee was quite categorical in denying its liability to be assessed in India. It relied on double taxation avoidance agreement between India and USA and pointed out that there was no permanent establishment in India. It further stated that telecom equipment were sold outside India and payments were also received outside India and thus assessee did not have any taxable presence in India so as to be liable for tax on its Indian income. If this was stand of assessee, it is not impermissible or unreasonable to visualise situation where assessee would have represented to its Indian telecom dealers not to deduct tax from remittances made to it. On contrary, it would be surprising if assessee did not make any such representation; such representation would only be consistent with assessee's stand regarding its tax liability in India. Moreover, no purpose would have been served by assessee taking such categorical stand regarding its tax liability in India and at same time suffering tax deduction under section 195(1). Therefore, in our opinion, even though there may not be any positive or direct evidence to show that assessee did make representation to its Indian telecom dealers not to deduct tax from remittances, such representation or informal communication of request can be reasonably inferred or presumed. Tribunal ought to have accorded due weightage to strong possibility or probability of such request having been made by assessee to Indian payers since otherwise denial of its tax liability on its Indian income would have served little purpose for assessee... Tribunal, keeping in mind above observations, underlined by us, ought to have drawn inference that Indian payers did not deduct tax under section 195(1) because of request made by assessee, consistent with its stand that it was not liable to be taxed in India." (emphasis added) court went on to state in paragraph 25 (page 292 of 2 ITR-OL): "It is open to assessee to deny its liability to tax in India on whatever grounds it thinks fit and proper. Having denied its tax liability, it seems unfair on part of assessee to expect Indian payers to deduct tax from remittances. It is also open to assessee to change its stand at first appellate stage and submit to assessment of income. When it does so, all consequences under Act follow, including its liability to pay interest under section 234B since it would not have paid any advance tax. Such liabilities would arise right from time when income was earned. Advance tax was introduced as PAYE Scheme-'pay as you earn'. It is not open to assessee, after accepting assessment at first appellate stage to claim that Indian payers ought to have deducted tax irrespective of fact that assessee itself claimed Indian income to be not taxable. We can understand assessee who admits its tax liability right from beginning to contend that it was responsibility of payers to deduct tax and if they did not, even then tax which ought to have been deducted by them should be set off against assessee's advance tax liabilities." (emphasis1 added) Apparently, it is this part of decision that Revenue seeks to rely upon, in arguing that view in Alcatel Lucent (supra) did not turn on volte face by assessee as to its permanent establishment status but instead on fact that, at time of assessment, assessee denied its tax liability altogether. This court, upon consideration, is of view that fact that was central to decision of this court in Alcatel Lucent (supra) is assessee's initial denial of permanent establishment status, and, consequently, of its tax liability, that was aggravated by its subsequent volte face by way of its admission that it was permanent establishment liable to tax in India. This resulted in court's view that assessee had played role in influencing payer's non- deduction of tax at source and was thus required to compensate for such volte face, by paying interest under section 234B. This court respectfully cannot apply view taken in Alcatel Lucent (supra) to this case. This is because if payer deducts tax at source only when assessee admits tax liability, then deductions would not be made in cases where assessee either falsely or under bona fide mistake denies tax liability. Tax obligations cannot be founded on assertions of interested parties. In such cases, payer's obligation to deduct tax would depend on payee's opinion of whether it is liable to tax, which may differ from its actual liability to tax as determined by Assessing Officer's final order. This effectively authorises assessee and payer to contract out of statutory obligation to deduct tax at source, which in this case, is located in section 195(1). Surely this could not be Parliamentary intent. If such were case, there would have been no need to treat payer as assessee-in-default for failure to deduct tax at source under section 201. This court is thus in agreement with position of law in Jacabs (supra), that obligation of payer to deduct tax is absolute. implication of absolute obligation upon payer to deduct tax at source under section 195(1) is that it becomes responsibility of payer to determine amount it ought to deduct from remittance to be paid to assessee, towards tax. This determination would depend directly on income of assessee that is taxable in India on account of being attributable to its permanent establishment in India. That this determination is responsibility of payer is provided for, in statute, in section 195(2), which reads: "(2) Where person responsible for paying any such sum chargeable under this Act other than salary to non-resident considers that whole of such sum would not be income chargeable in case of recipient, he may make application to Assessing Officer to determine, by general or special order, appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted under sub-section (1) only on that proportion of sum which is so chargeable." Thus, assessee's liability to tax does not depend on its own view of its permanent establishment status, or its admission or denial of tax liability. If assessee files nil returns at stage of assessment, and maintains that it is not liable to tax in India, payer is obliged to apply to Assessing Officer to determine what portion, if any, of its remittance to assessee, is liable to be deducted at source towards tax. view of this court finds confirmation in position of law as it stands at present, after Finance Act, 2012; should situation akin to that in Alcatel Lucent (supra) arise, payer would be treated as assessee-in-default according to section 201, and payee/assessee would not be permitted tax credit under proviso in section 209(1)(d). Clearly, anomaly of assessee denying tax liability (whether under bona fide mistake or by deceit), thereby not suffering tax deduction at source, and still being permitted tax credit for tax deductible, is remedied after Finance Act, 2012. Alcatel Lucent (supra), in any event, can be distinguished on ground that court was persuaded to confirm levy of interest under section 234B, only on account of equities that needed to be balanced in those peculiar facts, in favour of taxability. This is evident from following words of court (page 292 of 2 ITR-OL): "It further seems to us inequitable that assessee, who accepted tax liability after initially denying it, should be permitted to shift responsibility to Indian payers for not deducting tax at source from remittances, after leading them to believe that no tax was deductible. assessee must take responsibility for its volte face. Once liability to tax is accepted, all consequences follow; they cannot be avoided. After having accepted liability to tax at first appellate stage, it is unfair on part of assessee to invoke section 201 and point fingers at Indian payers. argument advanced by learned counsel for assessee that Indian payers failed to deduct tax at their own risk seems to us to be only argument of convenience or despair. As we have pointed out earlier, it is difficult to imagine that Indian telecom equipment dealers of assessee would have failed to deduct tax at source except on being prompted by assessee. It may be true that general rule is that equity has no place in interpretation of tax laws. But we are of view that when facts of particular case justify it, it is open to court to invoke principles of equity even in interpretation of tax laws. Tax laws and equity need not be sworn enemies at all times. rule of strict interpretation may be relaxed where mischief can result because of inconsistent or contradictory stands taken by assessee or even Revenue. Moreover, interest is, inter alia, compensation for use of money. assessee has had use of money, which would otherwise have been paid as advance tax, until it accepted assessments at first appellate stage. Where Revenue has been deprived of use of monies and thereby put to loss for no fault on its part and where loss arose as result of vacillating stands taken by assessee, it is not expected of assessee to shift responsibility to Indian payers. We are not to be understood as passing value-judgment on assessee's conduct. We are only saying that assessee should take responsibility for its actions." (emphasis added) This court finds that no need is made out in these facts to balance any equities in these facts, as assessee has not vacillated in its stand as to existence of permanent establishment in India or otherwise. In any event, as observed earlier, position of law itself requires that tax be deducted at source, whatever may be assessee's stance, failing which payer is treated as assessee-in-default under section 201, and payee is required to discharge its liability to pay tax that was not deducted under section 191. This court also notices that Madras High Court decision in Madras Fertilizers Ltd. (supra) and that of Uttaranchal High Court in Sedco (supra) was considered and affirmed by Bombay High Court in DIT (International was considered and affirmed by Bombay High Court in DIT (International Taxation) v. NGC Network Asia LLC [2009] 313 ITR 187 (Bom) that (page 190): "We are clearly of opinion that when duty is cast on payer to pay tax at source, on failure, no interest can be imposed on payee-assessee". important decision is that of Karnataka High Court in CIT v. Samsung Electronics Co. Ltd. [2012] 345 ITR 494 (Karn), which also considered same issue, i.e., obligation under section 195(1). High Court in first instance had rejected Revenue's appeal; Supreme Court remitted matter-for determination as to whether income by way of royalty had been made out in facts of case. High Court decision first set out order of Supreme Court, inter alia, as to nature of obligation cast upon payer under section 195 (page 507): "While remanding matter, hon'ble Supreme Court has made certain observations while analysing provisions of section 195 of Act as follows (page 460): 'Under section 195(1), tax has to be deducted at source from interest (other than interest on securities) or any other sum (not being salaries) chargeable under Income-tax Act in case of non-residents only and not in case of residents. Failure to deduct tax under this section may disentitle payer to any allowance apart from prosecution under section 276B. Thus, section 195 imposes statutory obligation on any person responsible for praying to nonresident, any interest (not being interest on securities) or any other sum (not being dividend) chargeable under provisions of Income-tax Act to deduct income-tax at rates in force unless he is GE India Technology Centre P. Ltd. v. CIT [2010] 327 ITR 456 (SC). liable to pay income-tax thereon as agent. Payment to non-residents by way of royalty and payment for technical services rendered in India are common examples of sums chargeable under provisions of Income-tax Act to which aforestated requirement of tax deduction at source applies. tax so collected and deducted is required to be paid to credit of Central Government in terms of section 200 of Income-tax Act read with rule 30 of Incometax Rules, 1962. Failure to deduct tax or failure to pay tax would also render person liable to penalty under section 201 read with section 221 of Income-tax Act. In addition, he would also be liable under section 201(1A) to pay simple interest at 12 per cent. per annum on amount of such tax from date on which such tax was deductible to date on which such tax is actually paid. most important expression in section 195(1) consists of words "chargeable under provisions of Act". person paying interest or any other sum to non-resident is not liable to deduct tax if such sum is not chargeable to tax under Income-tax Act. For instance, where there is no obligation on part of payer and no right to receive sum by recipient and that payment does not arise out of any contract or obligation between payer and recipient but is made voluntarily, such payments cannot be regarded as income under Income-tax Act. It may be noted that section 195 contemplates not merely amounts, whole of which are pure income payments, it also covers composite payments which has element of income embedded or incorporated in them. Thus, where amount is payable to non-resident, payer is under obligation to deduct TAS in respect of such composite payments. obligation to deduct TAS is, however, limited to appropriate proportion of income chargeable under Act forming part of gross sum of money payable to non-resident. This obligation being limited to appropriate proportion of income flows from words used in section 195(1), namely, "chargeable under provisions of Act". It is for this reason that, vide Circular No. 728, dated October 30, 1995 ([1995] 216 ITR (St.) 141), Central Board of Direct Taxes has clarified that tax deductor can take into consideration effect of DTAA in respect of payment of royalties and technical fees while deducting TAS. It may also be noted that section 195(1) is in identical terms with section 18(3B) of 1922 Act. In CIT v. Cooper Engineering Ltd. [1968] 68 ITR 457 (Bom), it was pointed out that if payment made by resident to non-resident was amount which was not chargeable to tax in India, then no tax is deductible at source even though assessee had not made application under section 18(3B) (now section 195(2) of Income-tax Act). application of section 195(2) pre-supposes that person responsible for making payment to non-resident is in no doubt that tax is payable in respect of some part of amount to be remitted to non-resident but is not sure as to what should be portion so taxable or is not sure as to amount of tax to be deducted. In such situation, he is required to make application to Income-tax Officer (TDS) for determining amount. It is only when these conditions are satisfied and application is made to Income-tax Officer (TDS) that question of making order under section 195(2) will arise. In fact, at one point of time, there was provision in Income-tax Act to obtain NOC from Department that no tax was due. That certificate was required to be given to RBI for making remittance. It was held in case of Czechoslovak Ocean Shipping International Joint Stock Co. v. ITO [1971] 81 ITR 162 (Cal) that application for NOC cannot be said to be application under section 195(2) of Act. While deciding scope of section 195(2) it is important to note that tax which is required to be deducted at source is deductible only out of chargeable sum. This is underlying principle of section 195. Hence, apart from section 9(1), sections 4, 5, 9, 90, 91 as well as provisions of DTAA are also relevant, while applying tax deduction at source provisions. Reference to Income-tax Officer (TDS) under section 195(2) or 195(3) either by non-resident or by resident 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. said provisions are of practical importance. This reasoning of ours is based on decision of this court in Transmission Corporation of A. P. Ltd. v. CIT [1999] 239 ITR 587 (SC) in which this court has observed that provision of section 195(2) is safeguard. From this it follows that where person responsible for deduction is fairly certain then he can make his own determination as to whether tax was deductible at source and, if so, what should be amount thereof.' Supreme Court, after considering submissions of learned counsel appearing for parties regarding validity of order passed by this court dated September 24, 2009, has observed as follows (page 462 of 327 ITR): 'One more aspect needs to be highlighted. Section 195 falls in Chapter XVII which deals with collection and recovery. Chapter XVII-B deals with deduction at source by payer. On analysis of various provisions of Chapter XVII one finds use of different expressions, however, expression "sum chargeable under provisions of Act" is used only in section 195. For example, section 194C casts obligation to deduct TAS in respect of "any sum paid to any resident". Similarly, sections 194EE and 194F, inter alia, provide for deduction of tax in respect of "any amount" referred to in specified provisions. In none of provisions we find expression "sum chargeable under provisions of Act", which, as stated above, is expression used only in section 195(1). Therefore, this court is required to give meaning and effect to said expression. It follows, therefore, that obligation to deduct TAS arises only when there is sum chargeable under Act. Section 195(2) is not merely provision to provide information to Income-tax Officer (TDS). It is provision requiring tax to be deducted as source to be paid to Revenue by payer who makes payment to non-resident. Therefore, section 195 has to be read in conformity with charging provisions, i.e., sections 4, 5 and 9. This reasoning flows from words "sum chargeable under provisions of Act" in section 195(1). fact that Revenue has not obtained any information per se cannot be ground to construe section 195 widely so as to require deduction of TAS even in case where amount paid is not chargeable to tax in India at all. We cannot read section 195, as suggested by Department, namely, that moment there is remittance obligation to deduct TAS arises. If we were to accept such contention it would mean that on mere payment income would be said to arise or accrue in India. Therefore, as stated earlier, if contention of Department was accepted it would mean obliteration of expression "sum chargeable under provisions of Act" from section 195(1). While interpreting section one has to give weightage to every word used in that section. While interpreting provisions of Income-tax Act one cannot read charging sections of that Act de hors machinery sections. Act is to be read as integrated code. Section 195 appears in Chapter XVII which deals with collection and recovery. As held in case of CIT v. Eli Lilly and Co. (India) P. Ltd. [2009] 312 ITR 225 (SC) provisions for deduction of TAS which are in Chapter XVII dealing with collection of taxes and charging provisions of Income-tax Act form one single integral, inseparable code and, therefore, provisions relating to TDS apply only to those sums which are "chargeable to tax" under Income-tax Act. It is true that judgment in Eli Lilly (supra) was confined to section 192 of Income-tax Act. However, there is some similarity between two. If one looks at section 192 one finds that it imposes statutory obligation on payer to deduct TAS when he pays any income "chargeable under head'Salaries'". Similarly, section 195 imposes statutory obligation on any person responsible for paying to non-resident any sum "chargeable under provisions of Act", which expression, as stated above, do not find place in other sections of Chapter XVII. It is in this sense that we hold that Income-tax Act constitutes one single integral inseparable code. Hence, provisions relating to TDS applies only to those sums which are chargeable to tax under Income-tax Act. If contention of Department that any person making payment to nonresident is necessarily required to deduct TAS then consequence would be that Department would be entitled to appropriate moneys deposited by payer even if sum paid is not chargeable to tax because there is no provision in Income-tax Act by which payer can obtain refund. Section 237 read with section 199 implies that only recipient of sum, i.e., payee could seek refund. It must, therefore, follow, if Department is right that law requires tax to be deducted on all payments. payer, therefore, has to deduct and pay tax, even if so-called deduction comes out of his own pocket and he has no remedy whatsoever, even where sum paid by him is not sum chargeable under Act. interpretation of Department, therefore, not only requires words "chargeable under provisions of Act" to be omitted, it also leads to absurd consequence. interpretation placed by Department would result in situation where even when income has no territorial nexus with India or is not chargeable in India, Government would none less collect tax. In our view, section 195(2) provides remedy by which person may seek determination of "appropriate proportion of such sum so chargeable" where proportion of sum so chargeable is liable to tax. entire basis of Department's contention is based on administrative convenience in support of its interpretation. According to 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 case of Department that section 195(2), as interpreted by High Court, would plug loophole as said interpretation requires payer to make declaration before Income-tax Officer (TDS) of payments made to non-residents. In other words, according to Department, section 195(2) is provision by which payer is required to inform Department of remittances he makes to non-residents by which Department is able to keep track of remittances being made to non-residents outside India. We find no merit in these contentions. As stated hereinabove section 195(1) uses expression "sum chargeable under provisions of Act". We need to give weightage to those words. Further, section 195 uses word "payer" and not word "assessee". payer is not assessee. payer becomes assessee in default only when he fails to fulfil statutory obligation under section 195(1). If payment does not contain element of income payer cannot be made liable. He cannot be declared to be assessee in default. abovementioned contention of Department is based on apprehension which is ill-founded. payer is also assessee under ordinary provisions of Income-tax Act. When payer remits amount to non-resident out of India he claims deduction or allowances under Income-tax Act for said sum as "expenditure". Under section 40(a)(i), inserted, vide Finance Act, 1988, with effect from April 1, 1989, payment in respect of royalty, fees for technical services or other sums chargeable under Income-tax Act would not get benefit of deduction if assessee fails to deduct TAS in respect of payments outside India which are chargeable under Income-tax Act. This provision ensures effective compliance with section 195 of Income-tax Act relating to tax deduction at source in respect of payments outside India in respect of royalties, fees or other sums chargeable under Income-tax Act. In given case where payer is assessee he will definitely claim deduction under Income-tax Act for such remittance and on inquiry if Assessing Officer finds that sums remitted outside India comes within definition of royalty or fees for technical service or other sums chargeable under Income-tax Act then it would be open to Assessing Officer to disallow such claim for deduction. Similarly, vide Finance Act, 2008, with effect from April 1, 2008, sub-section (6) has been inserted in section 195 which requires payer to furnish information relating to payment of any sum in such form and manner as may be prescribed by Board. This provision is brought into force only from April 1, 2008. It will not apply for period with which we are concerned in these cases before us. Therefore, in our view, there are adequate safeguards in Act which would prevent revenue leakage.'" Karnataka High Court first addressed this question and stated that Karnataka High Court first addressed this question and stated that (page 518 of 345 ITR): "It is clear from scrutiny of material on record and contentions of parties viz., Revenue and respective respondent in these cases that fact that payments have been made by respondent herein to non- resident for having imported shrink wrapped software/off-the-shelf software is not disputed. There is also no dispute that no tax was deducted at source by respondent under section 195(1) of Act in respect of such payments on ground that same were made for purpose of purchase of shrink wrapped software/off-the-shelf software. It is contended by respondent that since there is no permanent establishment of non-resident in India, said payments have to be treated as income from business and is not taxable under Income-tax Act in India and consequently, there is no obligation on part of respondent to deduct advance tax under section 195 of Act and also consequential proceedings would not be attracted. Therefore, dispute between Revenue and respondent in these cases is whether payments made by respondent to non-resident would constitute'royalty' or'income from business' and if it is to be treated as 'Income from business', whether non-resident is required to have permanent establishment in India. Further, in absence of any permanent establishment of non-resident in India, is there no obligation on part of payee, respondent herein to deduct tax at source under section 195 of Act. Therefore, fact that payments made by payee, respondent herein to non-resident would constitute income of non-resident is indisputable. However, dispute is as to whether such income in hands of non-resident is to be treated as sale and income from business covered under article 7 of DTAA with respective countries or whether payments would amount to royalty in hands of non-resident, for which no permanent establishment is required for making payment in India. There is also no dispute that if payments made by respondent are held to be'royalty' and not 'income from business', there is obligation on part of payee, respondent herein to deduct tax at source and in default, respondent herein would be considered as default assessee. Once there is obligation to deduct tax at source under section 195 of Act, which imposes statutory right on any person responsible for paying to non-resident, any interest (not being interest on securities) or any other sum (not being dividend) chargeable under provisions of Act to deduct income-tax at rates in force unless he is liable to pay income-tax thereon as agent. Payment to non- residents by way of royalty and payment for technical services rendered in India are common examples of sums chargeable under provisions of Act to which aforestated requirement of TDS applies. tax so collected and deducted is required to be paid to credit of Central Government in terms of section 200 of Act read with rule 30 of Income-tax Rules, 1962. Failure to deduct tax or failure to pay tax would also render person liable to penalty under section 201 read with section 221 of Act. In addition, he would also be liable under section 201(1A) to pay simple interest at 12 per cent. per annum on amount of such tax from date on which such tax was deductible to date on which such tax is actually paid. Therefore, if amount is held to be royalty, other consequences as referred to above would follow." After holding that transaction in that case amounted to royalty and, therefore, taxable, court ruled that obligation to deduct tax was with payer (page 528 of 345 ITR): "In any view of matter, in view of provisions of section 90 of Act, agreements with foreign countries DTAA would override provisions of Act. Once it is held that payment made by respondents to non-resident companies would amount to 'royalty' within meaning of article 12 of DTAA with respective country, it is clear that payment made by respondents to non-resident supplier would amount to royalty. In view of said finding, it is clear that there is obligation on part of respondents to deduct tax at source under section 195 of Act and consequences would follow as held by hon'ble Supreme Court while remanding these appeals to this court." court's task is to unravel legislative intent, if it is not discernible. Where, however, provisions are clear, court's duty is to administer law in its terms. It is bound to adhere to its precedents; yet its devotion to previous holding cannot blind it to clear terms of statute, wherever found. If Alcatel Lucent (supra) is correct and is to be applied in all situations, there would be dissimilar and asymmetrical results entirely dependent on facts presented in each case. It is unclear what would be outcome where payee is, in fact, under bona fide belief that it does not have permanent establishment, or how payer is to discern that payee's assertion is intended to defeat law. This court, therefore, notes that this precise question was addressed in Samsung Electronics (supra) by Supreme Court, while remitting matter for reconsideration by High Court. court perceptively held that (page 509 of 327 ITR): "Hence, apart from section 9(1), sections 4, 5, 9, 90, 91 as well as provisions of DTAA are also relevant, while applying tax deduction at source provisions. Reference to Income-tax Officer (TDS) under section 195(2) or 195(3) either by non-resident or by resident 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. said provisions are of practical importance. This reasoning of ours is based on decision of this court in Transmission Corporation (supra) in which this court has observed that provision of section 195(2) is safeguard. From this it follows that where person responsible for deduction is fairly certain then he can make his own determination as to whether tax was deductible at source and, if so, what should be amount thereof." This court, therefore, holds that Jacabs (supra) applies in such situations; Alcatel Lucent (supra) can be explained as decision turning upon its facts ; its seemingly wide observations, limited to circumstances of case. This court, therefore, holds that view taken by Income-tax Appellate Tribunal was correct; primary liability of deducting tax (for period concerned since law has undergone change after Finance Act, 2012) is that of payer. payer will be assessee in default, on failure to discharge obligation to deduct tax, under section 201 of Act. For above reasons, this court finds that no interest is leviable on respondent-assessees under section 234B even though they filed returns declaring nil income at stage of reassessment. payers were obliged to determine whether assessees were liable to tax under section 195(1), and to what extent, by taking recourse to mechanism provided in section 195(2) of Act. failure of payers to do so does not leave Revenue without remedy; payer may be regarded assessee-indefault under section 201, and consequences delineated in that provision will visit payer. appeal of Revenue is accordingly dismissed without any order as to costs. *** Director of Income-tax (International Taxation) v. GE Packaged Power Inc