Agence Frances Press v. Asst. Director of Income-tax
[Citation -2015-LL-0323-15]

Citation 2015-LL-0323-15
Appellant Name Agence Frances Press
Respondent Name Asst. Director of Income-tax
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 23/03/2015
Judgment View Judgment
Keyword Tags bona fide belief • levy of interest • non-resident
Bot Summary: On the strength of that decision the ITAT upheld interest liability under Section 234B. In Alcatel Lucent, this Court had distinguished a previous decision of another Division Bench i.e. DIT V. Jacabs Civil Inc. 330 ITR 578. The decisions in Jacabs Civil Inc. and Alcatel Lucent were considered by the Karnataka High Court in Commissioner of Income Tax V. Samsung Electronics 345 ITR 494, which had been decided after a remand by the Supreme Court. The Supreme Court s observation in respect of order dated 24.9.2009 had inter alia indicated the approach which had to be considered. In the light of the above directions and after considering the submissions of the parties, the Karnataka High Court decided the matter finally in Samsung Electronics. A Court's task is to unravel the legislative intent, if it is not discernable. Where the provisions are clear, the Court's duty is to administer the law in its terms. 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 applying tax deduction at source provisions.


IN HIGH COURT OF DELHI AT NEW DELHI Decided on 23rd March, 2015 + ITA 222/2015 + ITA 223/2015 + ITA 224/2015 + ITA 225/2015 AGENCE FRANCES PRESS ..... Appellant Through Mr. Kaanan Kapur and Mr. Bhushan Kapur, Advs. versus ASST. DIRCTOR OF INCOME TAX ..... Respondent Through Mr. N P Sahni, sr. standing counsel CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K.GAUBA MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) % CM Nos.5382/2015, 5386/2015, 5387/2015 and 5388/2015 Exemption is allowed subject to all just exceptions. applications are disposed of. ITA Nos.222/2015, 223/2015, 224/2015 and 225/2015 1. Admit. 2. Mr. N P Sahni, sr. standing counsel accepts notice. 3. With consent of counsel matter was finally heard. 4. question of law which arises in this case is whether appellant was liable to pay interest under Section 234B of Income Tax Act, 1961 in facts and circumstances of this case. 5. appellant, non-resident companies, were sought to be taxed for their activity of distribution of news. In assessment proceedings right up ITA 222/2015 & conn. Page 1 to ITAT, levy of interest under Section 234B was upheld. 6. It was pointed out that ITAT relied upon Division Bench judgment of this Court in Director of Income Tax, International Taxation V. Alcatel Lucent USA Inc. (ITA No.327/2012 dated 7.11.2013). 7. On strength of that decision ITAT upheld interest liability under Section 234B. In Alcatel Lucent (supra), this Court had distinguished previous decision of another Division Bench i.e. DIT V. Jacabs Civil Inc. 330 ITR 578. 8. decisions in Jacabs Civil Inc. and Alcatel Lucent were considered by Karnataka High Court in Commissioner of Income Tax V. Samsung Electronics (2012) 345 ITR 494, which had been decided after remand by Supreme Court. Supreme Court s observation in respect of order dated 24.9.2009 had inter alia indicated approach which had to be considered. 9. 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. 9. In light of above directions and after considering submissions of parties, Karnataka High Court decided matter finally in Samsung Electronics (supra). 10. This Court had taken note of relevant part of Supreme Court s order after which Karnataka High Court decided matter on merits in ITA 222/2015 & conn. Page 2 Samsung Electronics (supra). This Court thereafter on 12.01.2015 decided in Director of Income Tax V. GE Packaged Power Inc. and Ors. as follows : 21. Court's task is to unravel legislative intent, if it is not discernable. 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 PE, 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: "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 ITO (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 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." 22. 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 ITA 222/2015 & conn. Page 3 observations, limited to circumstances of case. This Court, therefore, holds that view taken by ITAT 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. 23. 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-in-default under Section 201, and consequences delineated in that provision will visit payer. appeal of Revenue is accordingly dismissed without any order as to costs. 11. present appeals are, therefore, entitled to succeed in view of reasoning in GE Packaged Power Inc. and Ors (supra). 12. substantial question of law is answered in favour of assessee and against revenue. Appeals are allowed in terms of directions extracted above. S. RAVINDRA BHAT (JUDGE) R.K.GAUBA (JUDGE) MARCH 23, 2015/vld ITA 222/2015 & conn. Page 4 Agence Frances Press v. Asst. Director of Income-tax
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