No penalty to be levied on payee when payer who was liable to deduct TDS failed to deduct the same
IN THE INCOME TAX APPELLATE TRIBUNAL
The Relevant Text of the Order as follows :
6. Under this issue the assessee has challenged the levy of interest u/s 234B of the Act of Rs.79,49,35,017/-. The Ld. Representative of the assessee has argued that the payer is under obligation to deduct the tax at source and on account of failure of payer to deduct the tax at source, the penalty interest u/s 234B cannot be imposed on the payee. In support of this contention, the Ld. Representative of the assessee has relied upon the law settled by Hon’ble Bombay High Court Director of Income Tax (International Taxation) Vs. Ngc Network Asia LLC (2009) 222 CTR
85 (Bom). In the instant case also the assessee received the payment without deduction of TDS. No doubt, the payer was liable to be deduct the TDS who failed to do so, therefore, the penalty is not leviable to be payee in view of the law settled in Director of Income Tax (International Taxation) Vs. Ngc Network Asia LLC (2009) 222 CTR 85 (Bom). Therefore, in the said circumstances, it is quite clear that the interest and penalty cannot be imposed upon the payer. Accordingly, we decide this issue in favour of the assessee against the revenue.
7. In the result, the appeal filed by the assessee is hereby ordered to be allowed.