Calcutta High Court
M/S Outotec (Canada) Ltd Pan : ... vs Income Tax Settlement Commission on 27 September, 2016
Author: Debangsu Basak
Bench: Debangsu Basak
ORDER SHEET
WP 184/2012
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
M/S OUTOTEC (CANADA) LTD PAN : AABCO2985L
Versus
INCOME TAX SETTLEMENT COMMISSION,
ADDITIONAL BENCH, KOL & ORS.
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
Date : 27th September, 2016.
Appearance :
Mr.J.P. Khaitan, Sr. Adv.
Mr.Nilanjana Banerjee Pal, Advs.
Md. Nizamuddin, Adv.
The Court : The petitioner has assailed an order passed by the settlement commission. The challenge to the order of the settlement commission is limited to the imposition of interest under Sections 234B and 234C of the Income Tax Act, 1961.
The learned Senior Advocate appearing for the petitioner has submitted that, the assessee is not liable to pay interest for the defaults of the deductor during the relevant period. He has relied upon a Division Bench judgment of the Hon'ble Delhi Court reported at [2015]373ITR65(Delhi) in (Director of Income-Tax (International Taxation) Vs. GE Packaged Power Inc). He has submitted that, the 2 issues raised in the present writ petition were considered in such judgment. They were answered in favour of the assessee. Similar view may be taken by this Hon'ble Court.
The learned Advocate for the department has referred to paragraph 23 of GE Packaged Power Inc. (supra) and has submitted that, a similar direction may be issued in the facts of this case.
I have considered the rival contentions and the materials made available on record.
The imposition of interest for the relevant period under Sections 234B and 234C by the settlement commission is under challenge in the present case. In GE Packaged Power Inc. (supra) the following issue was considered:
"The question that arises for consideration is whether interest should be levied on the assessee under section 234B, on the ground of non- payment of advance tax. The case of the Revenue, in short, is that the position of law in Alcatel Lucent (supra) is applicable since the assessee, having denied tax liability during reassessment, caused the payer to erroneously refrain from deductiing tax under section 195; it must thus suffer an interest for non-payment of advance tax. The case of the assessees, on the other hand, is that the position of law in Jacabs (supra) must apply and that the obligation was upon the payer to deduct tax at source before making remittances to them; the payer's failure to do so cannot invite an interest upon the payees".
It has been held that the primary liability of deducting tax for the period concerned since the law has undergone a change after Finance Act, 2012 is that of the payer. The payer will be an assessee in default, on failure to discharge the obligation to deduct tax, under Section 201 of the Income Tax Act, 1961. Further 3 directions were issued in GE Packaged Power Inc. (supra) in paragraph 23 thereof.
Following GE Packaged Power Inc. (supra) it must be said that since the primary liability of deducting tax for the concerned period is that of the payer, the assessee is not liable to pay interest as charged by the settlement commission under Sections 234B and 234C of the Income Tax Act, 1961 and to such extent such demand is, therefore, set aside.
This order will not, however, prevent the department from proceeding in terms of paragraph 23 of GE Packaged Power Inc. (supra) so far in the present case is concerned.
With the aforesaid directions, WP No.184 of 2012 is disposed of.
(DEBANGSU BASAK, J.) sd/