Assessee Not Liable To Pay Interest On Short Payment Of Advance Tax Due To Default Of Payer In Deducting TDS Before 2012-2013 FY: Supreme Court

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Assessee Not Liable To Pay Interest On Short Payment Of Advance Tax Due To Default Of Payer In Deducting TDS Before 2012-2013 FY

Case: Director of Income Tax, New Delhi v. M/s Mitsubishi Corporation

Coram: Justice L. NAGESWARA RAO & Justice ANIRUDDHA BOSE

Case No: Civil Appeal No.1262 of 2016

Court Observation: “…the proviso makes it clear that the assessee cannot reduce the amounts of income-tax paid to it by the payer without deduction, while computing liability for advance tax. The memorandum explaining the provisions of the Finance Bill, 2012 provides necessary context that the amendment was warranted due to the judgements of courts, interpreting Section 209 (1) (d) of the Act to permit computation of advance tax by the assessee by reducing the amount of income-tax which is deductible or collectible during the financial year. If the construction of the words “would be deductible or collectible” as placed by the Revenue is accepted, the amendment made to Section 209 (1) (d) by insertion of the proviso would be meaningless and an exercise in futility. To give the intended effect to the proviso, Section 209 (1) (d) of the Act has to be understood to entitle the assessee, for all assessments prior to the financial year 2012-13, to reduce the amount of income- tax which would be deductible or collectible, in computation of its advance tax liability, notwithstanding the fact that the assessee has received the full amount without deduction”

“As we have already held that prior to the financial year 2012-13, the amount of income-tax which is deductible or collectible at source can be reduced by the assessee while calculating advance tax, the Respondent cannot be held to have defaulted in payment of its advance tax liability. There is no doubt that the position has changed since the financial year 2012-13, in view of the proviso to Section 209 (1) (d), pursuant to which if the assessee receives any amount, including the tax deductible at source on such amount, the assessee cannot reduce such tax while computing its advance tax liability”.

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Keywords

Assessee, Interest On Short Payment, Tax, Default, Supreme Court