{"id":2139,"date":"2010-10-12T18:30:28","date_gmt":"2010-10-12T13:00:28","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=2139"},"modified":"2010-10-12T18:30:28","modified_gmt":"2010-10-12T13:00:28","slug":"dit-vs-jacabs-civil-incorporated-delhi-high-court-non-residents-are-not-liable-to-pay-interest-us-234b-s-234d-applies-from-ay-2004-05-and-is-not-retrospective","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/dit-vs-jacabs-civil-incorporated-delhi-high-court-non-residents-are-not-liable-to-pay-interest-us-234b-s-234d-applies-from-ay-2004-05-and-is-not-retrospective\/","title":{"rendered":"DIT vs. Jacabs Civil Incorporated (Delhi High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (jacabs_234B_234D.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n

Non-residents are not liable to pay interest u\/s 234B. S. 234D applies from AY 2004-05 and is not retrospective
\n<\/strong><\/p>\n

The assessee, a foreign company, filed a return declaring income of Rs.96 lakhs. Pursuant to the assessment, the AO levied interest u\/s 234B on the ground that the assessee had not paid adequate advance-tax. The AO rejected the submission of the assessee that as the payer was liable to deduct tax at source, the assessee was not liable to pay advance tax<\/em>. The AO also levied interest u\/s 234D despite the assessee\u2019s claim that s. 234D only applied from AY 2004-05 and not for earlier years. The assessee\u2019s appeal was allowed by the CIT (A) and the Tribunal. On appeal by the department, HELD dismissing the appeal:<\/p>\n

(i) U\/s 209(1)(d), the tax \u201cdeductible or collectible at source\u201d has to be reduced from the advance-tax payable. S. 195 puts an obligation on the payer to deduct tax at source. Therefore, the entire tax is to be deducted at source which is payable on such payments made by the payee to the non-resident. The non-resident recipient is not liable to pay advance-tax<\/strong>. Though in Anjum Ghaswala<\/strong> 252 ITR 1 it was held that s. 234B is mandatory, the present is a case where s. 234B does not apply at all. Accordingly, it is not permissible for the Revenue to charge interest u\/s 234B. Sedco Forex International Drilling Co. Ltd<\/strong> 264 ITR 320 NGC Network Asia<\/a><\/strong> 313 ITR 187 (Bom) followed;<\/p>\n

(ii) S. 234D inserted by the FA 2003 w.e.f. 1.6.2003 is in the nature of a substantive provision and applies only for the AY 2004-05 and onwards and is not retrospective<\/strong>. A provision by which an authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount<\/em>. ITO vs. Ekta Promoters<\/strong> 305 ITR 1 (SB) (Del) approved)<\/p>\n

\n Note<\/strong>: On s. 234D the same view has been taken by the Bombay High Court in CIT vs. Bajaj Hindustan<\/a><\/strong>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Non-residents are not liable to pay interest u\/s 234B. S. 234D applies from AY 2004-05 and is not retrospective<\/p>\n

Read more ›<\/a><\/div>\n

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