Director of Income-tax New Delhi Vs Mitsubishi Corporation
Date-17th September,2021
Forum-Supreme Court of India

Subject-Whether interest u/s 234B for default in payment of advance tax due to non deduction of tax at source by the payer is liable to be paid for AY 2012-13 and earlier years (as the law was amended with effect from AY 2012-13 to specifically provide for levy of interest u/s 234B).

An interesting question arose before the apex court in this case when the Japanese company in an assessment order which was passed levying taxes under the Article 4,5 and 6 of the Double Taxation Avoidance Agreement(DTAA) between India and Japan, filed an appeal only regarding the levy of interest up/s 234B of the Act contending that as the tds which was deductible was not deducted, following Section 209(1)(d), the company was not liable to pay interest u/s 234B for default in payment of advance tax. The Apex court relying on judgement of Madras High Court in the case of CIT, Tamilnadu-I, Madras Vs Madras Fertilisers Limited (1984) 149 ITR 703(Mad) held that as the provisions Section 209(1)(d) warranted payment of advance tax of an amount by reducing the amount deductible or collecting as tax at source, the Japanese company could not have been faulted for non payment of advance tax. The Court was also mindful of the fact that the revenue was not remedy less as it could have roped in the payer to pay interest for default in payment/non deduction of TDS.

This judgement is an important judgement from academic point of view and for those cases where the assessees are still fighting such cases for AY 2012-13 and earlier years.

Ramesh Patodia
21-09-2021