The Chief Commissioner Of Income Tax-I121, Mahatma Gandhi Roadchennai - 600 034(Presently Commissioner Of Income Tax (International Taxation)Room v. Https://Www.mhc.tn.gov.in/Judis

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.06.2022 CORAM THE HONOURABLE MR. JUSTICE R. MAHADEVANand THE HONOURABLE MR.JUSTICE J.SATHYA NARAYANA PRASAD W.A.Nos. 979 of 2018 and 2811 of 2021 and C.M.P. Nos. 8348 of 2018 & 18588 of 2021 --- W.A. No. 979 of 2018 The Chief Commissioner of Income Tax-I121, Mahatma Gandhi RoadChennai - 600 034(Presently Commissioner of Income Tax (International Taxation)Room No.401, IV Floor, Tower-1BSNL Building, No.16, Greams RoadChennai - 600 006 .. Appellant Versus M/s. Van Oord ACZ Marine Contractors BVformerly called as Van Oord ACZ BVhaving its registered office atJan Blankenweg 2, 4207 MN GorinchemThe NetherlandsC/o. CNGEN & Associates, Chartered Accountants"Agastiar Manor"New No.20, Old No.13, Raja StreetT. Nagar, Chennai - 600 017 .. Respondent WA Nos. 979/2018 & 2811/2021 W.A. No. 2811 of 2021 1. Commissioner of Income Tax-VI No.121, M.G. Road Chennai - 600 034 2. The Assistant Commissioner of Income Tax Business Ward-III No.121, M.G. Road Chennai - 600 034 .. Appellants Versus 1. Mr. John Baptist Lasrado No.26, 3[rd] Seaward Road Valmiki Road Thiruvanmiyur Chennai - 600 041 2. Income Tax Settlement Commission Additional Bench No.640, Anna Salai, Nandanam Chennai - 600 035.. Respondents W.A. No. 979 of 2018:-Appeal filed under Clause 15 of Letters Patent against the Order dated 03.01.2018 passed in W.P. No. 14165 of 2009 on the file of this Court. W.A. No. 2811 of 2021:- Appeal filed under Clause 15 of Letters Patent against the Order dated 27.11.2017 passed in W.P. No. 18472 of 2009 on the file of this Court. For Appellant : Mrs. Hema Muralikrishnan for WA.No.979/2018 Mr.A.P.Srinivas for WA.2811/2021 Senior Standing Counsel For Respondents: Mr. R.Sivaraman in both WAs WA Nos. 979/2018 & 2811/2021 COMMON JUDGMENT R.MAHADEVAN, J. Both these appeals are filed by the appellants / Revenue, assailing the separate orders dated 03.01.2018 and 27.11.2017 passed by the learned Judge in the respective writ petitions viz., WP.Nos.14165 of 2009 and 18472 of 2009. 2.As the issues arise for consideration in both the appeals are common, they were taken up for hearing together and disposed of by this common judgment. Facts relating to WA No. 979 of 2018 (WP No. 14165 of 2009) 3.1.The respondent herein, a non-resident company registered in Netherlands, is engaged in the business of dredging and marine contractors. According to them, during the course of such business, in the year 1996, Chennai Port Trust floated a tender for the Break Water Construction at Ennore Port titled "Ennore Coal Port Project". The respondent participated in the said tender as a joint venture company along with an Indian company known as Hindustan Construction Company Limited. The bid offered by the respondent was accepted by Chennai Port Trust and the contract was awarded https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 Facts relating to WA No. 979 of 2018 (WP No. 14165 of 2009) 3.1.The respondent herein, a non-resident company registered in Netherlands, is engaged in the business of dredging and marine contractors. According to them, during the course of such business, in the year 1996, Chennai Port Trust floated a tender for the Break Water Construction at Ennore Port titled "Ennore Coal Port Project". The respondent participated in the said tender as a joint venture company along with an Indian company known as Hindustan Construction Company Limited. The bid offered by the respondent was accepted by Chennai Port Trust and the contract was awarded https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 in their favour. For the purpose of execution of the project, the respondent opened a project office in India with the permission of the Reserve Bank of India dated 23.01.1998. The entire contractual work was completed during the year 2000 and the profit derived thereof have been shared by the respondent with their business partner as per the agreement and receipt of such payment is protected under Section 195 of the Income Tax Act, 1961 (in short, “the Act”). Subsequently, the respondent made an application under Section 195 of the Act on 05.11.1998 to the Deputy Commissioner of Income Tax, Company Circle, in Form 15D with a request that no tax be deducted from the payments made by Chennai Port Trust, since the respondent is adopting the completed contract method of accounting. Alternatively, it was also requested that suitable direction be given to Chennai Port Trust to withhold income at 1.55% from the payments made in respect of the contract bills furnished for the work done by the respondent. In response, a letter dated 15.12.1998 was addressed to Chennai Port Trust calling upon them to make payment to the respondent for the contractual work completed by them, after deducting Tax Deducted at Source (TDS) at the rate of 7.1% thereon under Section 195 of the Act. However, Chennai Port Trust, by their letter dated 30.01.1999 informed that the contract has been taken up by HCC Oord ACZ JV of which M/s. HCC is the domestic company and lead partner of the joint venture. Therefore, https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 payments were made only to the lead partner as per the contract and necessary tax was deducted at source while making payment to the Joint Venture. It was also stated that the TDS if applicable to the respondent is to be done by the joint venture company. 3.2.According to the respondent, as per Article 23 of the Joint Venture, the profits earned by the respondent was taxable in its own hands and no income was taxable in the status of joint venture. However, contrary to Article 23, Chennai Port Trust deducted tax only in the status of joint venture and refused to deduct tax at source for the profits earned by the respondent. In such circumstances, the respondent was forced to file an application under Section 245Q of the Act to the Authority of the Advance Ruling (AAR) during the year 1999. The ARR by order dated 14.09.2000 in A.R. No. 469 of 1999 concluded that the respondent is liable to be assessed on its own profits separately and not in the status as AOP. Thus, the ARR held that the income of the respondent has to be assessed in its own hands and not in the status of joint venture. Pursuant to the said order dated 14.09.2000, the respondent submitted its return of income for the assessment year 2000-2001 on 23.10.2000, by paying self-assessment tax of Rs.1,60,73,205/- under Section 140A. Such return was processed under Section 143 (1) of the Act on 28.03.2002 and the Assessing Officer also accepted the return of income disclosed by the https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 respondent. However, the Assessing Officer concluded that for non-payment of advance tax and deferred advance tax, interest has to be paid under Section WA Nos. 979/2018 & 2811/2021 respondent. However, the Assessing Officer concluded that for non-payment of advance tax and deferred advance tax, interest has to be paid under Section 234B and 234C of the Act to the tune of Rs.23,55,882/- and Rs.12,17,545/-. On such demand, the respondent submitted an application for waiver of the interest on 26.02.2003 before the appellant. However, the appellant, without appreciating the background facts of the case, passed an order dated 09.02.2009, rejecting the application of waiver of interest and directed the Assessing Officer to collect interest from the respondent. Aggrieved by the same, the respondent filed this writ petition to quash the order dated 09.02.2009 passed by the appellant herein and consequently direct the appellant to waive the interest under Sections 234B and 234C of the Act. 4.A counter affidavit was filed by the appellant, inter alia stating that the non-payment of advance tax, especially when most of the contract receipts, after tax deduction, were received by the respondent well before 31.03.2000, would liable them to pay interest. According to the appellant, the respondent has filed the application seeking waiver only to cover up their default in making advance payments for the relevant assessment year. When the respondent is fully aware of their obligation to pay advance tax, the non-payment of the same cannot be justified on any count. As per Section 44BBB https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 of the Act, in case of a foreign company engaged in any business in India, a sum equal to ten per cent of the contract receipts, shall be deemed to be profits and such amount is chargeable to tax. When there is no justification on the part of the respondent in tendering the advance tax, they are liable to pay interest. Therefore, the appellant prayed for dismissal of the writ petition. Facts of the case in WA No. 2811 of 2021 (WP No. 18472 of 2009) 5.1.The first respondent is employed in a Multinational company called Columbia Sportswear (Inc) of USA, which has a liaison office at Chennai, where he was posted as the Head of Indian Operations of the company. According to this respondent, a part of salary was received by him in India, while the other part has been received outside India. For the salary received in India, tax was deducted at source by his employer, but the same was not done insofar as it relates to the salary which he received outside India. For a portion of salary payable to him out of India, his employer has granted stock option, as per which shares will be purchased for and on behalf of the respondent in American Stock Exchange and they were also sold by the respondent on various dates. 5.2.For the assessment years 1996-1997 to 2005-2006, the first respondent filed his returns disclosing only the amount which he earned in https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 India and not the earnings received outside India, though the same are also liable to be taxed. On coming to know about the requirement to pay tax for the entire earnings received in India as well as out of India, he had approached the Settlement Commission and offered all income which he earned in India as well as out of India by way of salary. The aggregate income offered by the respondent for various years worked out to Rs.9,45,27,328/-. Considering the application submitted by the respondent, the Settlement Commission, by order dated 16.06.2006, admitted the application. Subsequently, the said application was taken up for final disposal and after hearing both sides, the Commission passed an order dated 05.02.2008 accepting the additional income offered by the respondent herein under Section 245D(4) of the Act. However, while passing the order dated 05.02.2008, the Commission directed the respondent to pay interest under Section 234B on the excess of the assessed tax over and above the advance tax for all the assessment years. 5.3.On receipt of the said order, the respondent filed a Miscellaneous Petition on 31.12.2008 praying to modify the order dated 05.02.2008, stating that he is not liable to pay interest under Section 234B of the Act. The Commission, by order dated 06.07.2009, rejected the said Miscellaneous Petition. Challenging the same, the respondent filed this writ petition, to quash the order dated 06.07.2009 passed by the Settlement Commission and https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 consequently direct the first appellant to delete the levy of interest under Section 234B of the Act for the block period in question. 6.Opposing the writ petition, the appellants filed a counter affidavit stating that the additional income offered by the respondent before the Settlement Commission has never suffered tax, either by way of TDS or by way of advance tax. The respondent is fully aware of the liability to pay tax in respect of his earnings outside India for his employment in India. A substantial part of the additional income offered before the Commission, is therefore, liable to be taxed together with interest. The respondent is duty bound to pay advance tax and his failure to do so would only render him liable to pay interest as contemplated under Section 234B of the Act. Stating so, the appellants prayed for dismissal of the writ petition. 7.1.The learned Judge, on consideration of the rival submissions, concluded that the issue relating to levy of interest under Sections 234 (A), 234 (B) and 234 (C) of the Act is covered by the decision of the Special Division Bench in Sumit Bhattacharya v. Asstt. CIT [2008 (300) ITR 347 (Mumbai) (SB) (AT)]wherein it was held that interest charged under Section 234B of the Act is compensatory in nature and not as a penalty and the very same view holds good for Section 234C of the Act. The learned Judge also https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 placed reliance on various other decisions and held that the Settlement Commission is not justified in directing the assessee to pay interest for non-payment of advance tax and such a view is erroneous. Accordingly, the learned Judge allowed WP No.18472 of 2009 on 27.11.2017, which is impugned in Writ Appeal No.2811 of 2021. 7.2.By referring to the order dated 27.11.2017 passed in WP No.18472 of 2009, mentioned supra, the learned Judge allowed the writ petition viz., WP No.14165 of 2009 on the same lines on 03.01.2018, which is the subject matter of challenge in W.A.No.979 of 2018. Submissions of the counsels 8.1.Mrs.Hema Muralikrishnan, learned Senior Panel Counsel for the appellant in W.A.No.979 of 2018 would contend that the respondent / assessee filed an application seeking waiver of interest under Section 234B and 234C of the Act. Such an application for waiver was dismissed on 09.02.2009. However, the learned Judge placing reliance on the decision of the Division Bench of this Court in the case ofChennai Port Trust v. ITO, TDS VIII [(2012) 25 Taxmann.com 261 (Mad.)] held that there was conflict and confusion persisting till the Advance Ruling Authority passed an order and https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 Submissions of the counsels 8.1.Mrs.Hema Muralikrishnan, learned Senior Panel Counsel for the appellant in W.A.No.979 of 2018 would contend that the respondent / assessee filed an application seeking waiver of interest under Section 234B and 234C of the Act. Such an application for waiver was dismissed on 09.02.2009. However, the learned Judge placing reliance on the decision of the Division Bench of this Court in the case ofChennai Port Trust v. ITO, TDS VIII [(2012) 25 Taxmann.com 261 (Mad.)] held that there was conflict and confusion persisting till the Advance Ruling Authority passed an order and https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 therefore, the respondent/assessee is not liable to pay interest under Section 234B and 234C of the Act. While so, the learned Judge failed to take note of the fact that the respondent/assessee is now attempting to hide under the smoke screen of confusion and conflict to escape from the consequences of default and from payment of interest. The liability of payment of interest under Section 234B of the Act by the tax payer is towards delay in paying the advance tax. The respondent was fully aware of their obligations to pay advance tax, but they have not chosen to pay. The respondent/assessee was also aware that TDS was not deducted on their total income and therefore, they are liable to pay advance tax. Besides this, they were also aware of the fact that Chennai Port Trust has been deducting tax only to the extent of 2% on payments made to it. However, they deliberately did not make payment of advance tax with an intention to conceal income and evade payment of tax. When Chennai Port Trust had made it clear that it had deducted tax at source only at 2%, much before the due date for payment of advance tax, it was the duty of the respondent-assessee to have paid appropriate amount towards advance tax. In such circumstances, the respondent company is not liable to get immunity from their liability to pay interest under Section 234B of the Act, which is mandatory in nature and ascertained on the basis of default in payment of advance tax.https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/20218.2.Referring to Sections 234A, 234B and 234C of the Act, the learned Senior Panel Counsel would submit that these are three types of interest receivable from a tax payer. According to him, Section 234A relates to payment of interest for belated filing of returns, Section 234B provides for payment of interest for belated remittance of advance tax. Similarly, Section 234C of the Act also provides for payment of interest for deferred advance payment of tax. In the present case, the respondent company did not pay advance tax and therefore, they squarely fall within the scope and ambit of Section 234B of the Act. Thus, levy of interest under Sections 234A, 234B and 234C of the Act is mandatory and waiver of interest can be considered only in those circumstances, which are enumerated in the notifications / circulars issued by the Central Government from time to time. In this context, the learned Senior Panel Counsel placed reliance on the decision of the Division Bench of this Court in Chief Commissioner of Income Tax v. Rajanikant and sons [2017 (83) Taxmann.com 179] wherein it was held that the discretion available to the Chief Commissioner of Income Tax for waiving interest under Sections 234A, 234B and 234C is confined to the circumstances, adverted to in paragraph 2(a) to 2(d) of the Circular issued by the Central Government and if the case does not fall within the parameters laid down therein, then no waiver of interest can be granted.https://www.mhc.tn.gov.in/judis of WA Nos. 979/2018 & 2811/2021 8.3.As regards the decision relied on by the learned Judge in the case of WA Nos. 979/2018 & 2811/2021 8.3.As regards the decision relied on by the learned Judge in the case of DIT v. NGC Network Asia LLC [313 ITR 187], the learned Senior Panel counsel would submit that as against the said judgment, an appeal was preferred and it was dismissed by the Hon'ble Supreme Court at the admission stage itself and therefore, the said judgment ought not to have been relied on by the learned Judge. Similarly, in the case of G.E. Energy Parts Inc., [(2015) 56 Taxmann.com 190] relied on by the learned Judge, an appeal has been filed as against the said Judgment in C.A.No.7325 of 2016 and it was admitted and pending before before the Hon'ble Supreme Court. Therefore, the reliance placed by the learned Judge on the said decisions is not proper. Therefore, the learned Senior Panel Counsel prayed for allowing this appeal. 9.Mr.A.P.Srinivas, learned senior panel counsel for the appellants in W.A.No.2811 of 2021, submitted that the respondent/assessee is an employee in India earning income from India and also from abroad. The respondent did not disclose the income earned in foreign countries for the block period in question. Ultimately, he filed an application before the Income Tax Settlement Commission and disclosed his income for the assessment years from 1996-1997 to 2005-2006 and the Settlement Commission directed him to pay the tax together with interest. The respondent/assessee filed a miscellaneous https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021application to modify the order relating to interest under Section 234B. The said application was rejected by the Settlement Commission on the ground that the Settlement Commission can only rectify a mistake, which is apparent on the face of record and cannot adjudicate on debatable issues after discussingthe provisions and recording its interpretations. When the order passed by the Settlement Commission was challenged before the learned Judge, reliance was placed on the decision of Hindustan Coca Cola Beverage (P) Limited vs. Commissioner of Income Tax [2017 (293) ITR 226 (SC)] as well as various other judgments. However, the learned Judge, placed reliance on those judgments without regard to the fact that those judgments are factually and legally distinguishable. The judgments relied on by the respondent relates to a case where amounts have been received by non-residents, which are subject to 100% tax deduction at source. In the present case, the respondent / assessee's status is 'resident-individual' and the employer failed to deduct any tax at source. In any event, the respondent / assessee was aware that TDS is not deducted nor made advance payment of tax on major part of his income. While so, the respondent ought to have remitted advance tax in time and non-payment of advance tax would render him liable to pay interest. Therefore, the learned Senior Panel Counsel prayed this Court to allow this Writ Appeal by setting aside the order of the learned Judge. https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 10.1. Per contra, Mr.R.Sivaraman, learned counsel for the respondent(s)/assessee(s) would contend that the issue involved in these writ appeals centres around the question as to whether the respondents/assessees are eligible for waiver of interest levied under Section 234B and 234C of the Act. In this context, reliance was placed on the decision of the Delhi High Court in the case of Director of Income Tax v. Jacabs Civil Incorporated/Mitsubishi Corporation [2010 (194) Taxman 495 (Delhi)] which gives a fitting answer to this issue. In that decision, it was held as follows:- https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 10.1. Per contra, Mr.R.Sivaraman, learned counsel for the respondent(s)/assessee(s) would contend that the issue involved in these writ appeals centres around the question as to whether the respondents/assessees are eligible for waiver of interest levied under Section 234B and 234C of the Act. In this context, reliance was placed on the decision of the Delhi High Court in the case of Director of Income Tax v. Jacabs Civil Incorporated/Mitsubishi Corporation [2010 (194) Taxman 495 (Delhi)] which gives a fitting answer to this issue. In that decision, it was held as follows:- "7. Section 2 (1) of the Act defines 'advance tax' to mean the advance tax payable in accordance with the provisions of Chapter XVII-C of the Act. These provisions are contained from Section 207 onwards. Section 209 falls under this Chapter. Sub-section (1) thereof deals with four situations under which the advance tax payable by the assessee is to be computed. Admittedly, these cases do not concern with clauses (a) to (c). Clause (d)of sub-section (1) of Section 209, which is relevant reads as under:- .............. 8. This clause categorically uses the expression 'deductible or collectible at source' and it is this clause which is incorporated by the Uttranchal High Court in the said judgment (supra) in the manner already pointed above. The scheme of the Act in respect of non-residents is clear. Section 195 of the Act puts an obligation on the payer, i.e., any person responsible for paying to a non-resident, to deduct income-tax at source at the rates in force from such payments excluding those incomes which are chargeable under the head 'salaries'. Therefore, the entire tax is to be deducted at source which is payable on such payments made by the payee to the non-resident. Section 201 of the Act lays down the consequences of failure to deduct or pay. These consequences include not only the liability to pay the amount which such a person was required to deduct at source from the payments made to a non-resident but also penalties etc., Once it is found that the liability was that of the payer and the said payer has defaulted in deducting the tax at source, the Department is not remedy-less and, therefore, can take action against the payer under the provisions of Section 201 of the Income-tax Act and compute the amount accordingly. No https://www.mhc.tn.gov.in/judis doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments, the non-resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of Section 191 of the Act along with section 209 (1) (d) of the Act. For this reason, it would not be permissible for the revenue to charge any interest under Section 234B of the Act." 10.2. The learned counsel for the respondent(s)/assessee(s) also placed reliance on the decision of the Bombay High Court in the case of Commissioner of Income Tax, Pune vs. Emillio Ruiz Berdejo [(2010) 186 Taxman 390 (Bombay)]in which also, the right of the Department to demand interest was considered and rejected in para Nos. 24 and 25, as follows:- 10.2. The learned counsel for the respondent(s)/assessee(s) also placed reliance on the decision of the Bombay High Court in the case of Commissioner of Income Tax, Pune vs. Emillio Ruiz Berdejo [(2010) 186 Taxman 390 (Bombay)]in which also, the right of the Department to demand interest was considered and rejected in para Nos. 24 and 25, as follows:- "24.The Apex Court also had an occasion to consider the very same question with regard to the nature of liability of interest in the case of Dr.Prannoy Roy (supra), wherein the Apex Court was pleased to hold that interest charged under Section 234A of the Act is not by way of penalty. It is levied to compensate revenue in order to avoid from being deprived of payment of tax on the due date. Interest held to be payable where the tax had not been deposited prior to the due date of filing of the income tax return. In other words, it was held that where tax already paid by the assessee was not less than the tax payable on the return income which was accepted, the question of levy of interest under Section 234A does not arise.” 10.3. By pointing out the above decisions and the decision of this Court in Commissioner of Income-tax v. Madras Fertilisers Ltd [(1985) 20 taxman 349 (Mad)], the learned counsel for the respondent(s)/ assessee(s) would submit that issue involved in these writ appeals is no longer res integra. The learned Judge also, on appreciation of the factual as well as legal position, https://www.mhc.tn.gov.in/judisrightly allowed the writ petitions filed by the respondent(s)/ assessee(s) and WA Nos. 979/2018 & 2811/2021 therefore, interference of this Court to the orders impugned herein, is not required. 11.We have heard the learned counsel for both sides and perused the materials placed on record. 12.The appeal in W.A 979/2018 arises out of decision on a waiver application before the appellant and the appeal in W.A 2811/2021 arises out of decision in a miscellaneous petition before the Income Tax Settlement Commission to rectify the mistakes. Both the appeals carry a common question of law viz., whether interest is to be paid under Section 234B of the Act, when no advance tax is payable by the assessee and when the deductor/ the employer abroad, had not deducted tax at source, but has subsequently paid the tax with interest and whether the assessee/payee can be charged with interest?. The Learned Judge has colossally considered the Judgments in (i)Hindustan Coca Cola Beverage (P) Ltd v. Commissioner of Income Tax, [(2007) 293 ITR 226 (SC)], (ii) Commissioner of Income Tax v. Emilio Ruiz Berdejo & Ors [(2010) 320 ITR 0190 (Bombay)], (iii) Director of Income Tax v. Jacabs Civil Incorporated [(2011) 330 ITR 0578 (Delhi)], (iv) Chennai Port Trust v. Income Tax Officer [(2012) 25 taxmann.com 261 https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 (Mad)] (v) CIT v. Sedco Forex International Drilling Company Ltd [(2003) 264 ITR 320 (Uttaranchal)] and referred to the judgments in (vi) DIT (International Taxation) v. NGC Network Asia [(2009) 18 DTR 203 (Bom)] and ultimately held that no interest is chargeable under Section 234B. The point that the interest under Sections 201 and 234B operate under different circumstances and on different persons, has also been considered and held in favour of the assessee. The judgment of the Division Bench of the Delhi High Court in Director of Income Tax, International Taxation v. GE Packaged WA Nos. 979/2018 & 2811/2021 (Mad)] (v) CIT v. Sedco Forex International Drilling Company Ltd [(2003) 264 ITR 320 (Uttaranchal)] and referred to the judgments in (vi) DIT (International Taxation) v. NGC Network Asia [(2009) 18 DTR 203 (Bom)] and ultimately held that no interest is chargeable under Section 234B. The point that the interest under Sections 201 and 234B operate under different circumstances and on different persons, has also been considered and held in favour of the assessee. The judgment of the Division Bench of the Delhi High Court in Director of Income Tax, International Taxation v. GE Packaged Power Inc. [(2015) 56 taxmann.com 190 (Delhi)] also addresses the same issue in favour of the assessee. The civil appeal in C.A No 7325 of 2016 preferred against the order of the Delhi High Court has been dismissed as withdrawn and the connected Civil Appeal in C.A.No.1354 of 2016 was also dismissed on 28.02.2020. Further, the view of the Bombay High Court in NGC Network Asia and the Uttaranchal High Court in Sedco Forex International Drilling Co.Ltd has been upheld by the Hon’ble Apex Court by order dated 17.09.2021 in C.A.No 1262 of 2016 (Batch), Director of Income Tax, New Delhi v. Mitsubishi Corporation by holding as under: “13. The main point argued on behalf of the Revenue relates to the interpretation of Section 209 (1) (d) of the Act, with stress on the words “deductible or collectible at source”. The contention of the Revenue is based on the fact that an assessee, who has received any payment without the payer deducting tax on such payment, cannot be permitted to escape liability in payment of advance tax and consequent interest for such non-https://www.mhc.tn.gov.in/judispayment under Sections 191 and 234B of the Act. It was contended that as interpretation of Section 209 (1) (d) of the Act, with stress on the words “deductible or collectible at source”. The contention of the Revenue is based on the fact that an assessee, who has received any payment without the payer deducting tax on such payment, cannot be permitted to escape liability in payment of advance tax and consequent interest for such non-https://www.mhc.tn.gov.in/judispayment under Sections 191 and 234B of the Act. It was contended that as all the Assesses in the matters before us were fully aware of the receipt of amounts without deduction of taxes at source, they should not be allowed to then rely on Section 201 of the Act to reduce their advance tax liability. In this connection, it was submitted by the Revenue that the expression “would be deductible or collectible” would not include amounts, which had not been deducted at the time of payment and, in fact, were paid to the assessee by the payer. 14. The primary issue before us pertains to the interpretation of Section 209 (1) (d). A proviso was inserted to Section 209 (1) (d) by the Finance Act, 2012, which reads as under: 209 (1) (d). A proviso was inserted to Section 209 (1) (d) by the Finance Act, 2012, which reads as under: “Provided that for computing liability for advance tax, income-tax calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income, if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by the person responsible for collecting tax without collection of such tax.” calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income, if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by the person responsible for collecting tax without collection of such tax.” 15. Notes to the memorandum explaining the provisions in the Finance Bill, 2012 are as under: “Liability to pay advance tax in case of non- deduction of tax Under the existing provisions of section 209 of the Income-tax Act, the amount of advance tax payable is computed by reducing the amount of income-tax which would be deductible or collectible during the financial year from income- tax on estimated income. Therefore, in cases where the assessee receives or pays any amount (on which the tax was deductible or collectible) without deduction or collection of tax, it has been held by courts that he is not liable to pay advance tax to the extent the tax is deductible or collectible from such amount. In order to make an assessee liable for payment of advance tax in respect of income which has been received or paid without deduction or collection of tax, it is proposed to amend the aforesaid section to provide that where a person has received any income without deduction or collection of tax, he shall be liable to pay advance tax in respect of such income. This amendment will take effect from the 1st April, 2012 and would, accordingly, apply in relation to advance tax payable for the financial year 2012- 13 and subsequent financial years.” Under the existing provisions of section 209 of the Income-tax Act, the amount of advance tax payable is computed by reducing the amount of income-tax which would be deductible or collectible during the financial year from income- tax on estimated income. Therefore, in cases where the assessee receives or pays any amount (on which the tax was deductible or collectible) without deduction or collection of tax, it has been held by courts that he is not liable to pay advance tax to the extent the tax is deductible or collectible from such amount. In order to make an assessee liable for payment of advance tax in respect of income which has been received or paid without deduction or collection of tax, it is proposed to amend the aforesaid section to provide that where a person has received any income without deduction or collection of tax, he shall be liable to pay advance tax in respect of such income. This amendment will take effect from the 1st April, 2012 and would, accordingly, apply in relation to advance tax payable for the financial year 2012- 13 and subsequent financial years.” 16. The proviso is in the nature of an exception to Section 209 (1) (d), as an assessee, who has received any income without deduction or collection of tax, is made liable to pay advance tax in respect of such income. It is relevant to note that the amendment was brought into effect from 1stApril, 2012 and was made applicable to cases of advance tax payable in the financial year 2012-13 and thereafter. All the appeals before us pertain to the period prior to assessment year 2013-14.assessee, who has received any income without deduction or collection of tax, is made liable to pay advance tax in respect of such income. It is relevant to note that the amendment was brought into effect from 1stApril, 2012 and was made applicable to cases of advance tax payable in the financial year 2012-13 and thereafter. All the appeals before us pertain to the period prior to assessment year 2013-14. 17. In Cape Brandy Syndicate v. I.R.C., Lord Sterndale M.R. had said: 17. In Cape Brandy Syndicate v. I.R.C., Lord Sterndale M.R. had said: “I think it is clearly established in Attorney General v. Clarkson that subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation if it proceeded on an erroneous construction of previous legislation cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier Act”. that subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation if it proceeded on an erroneous construction of previous legislation cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier Act”. 18. This Court in State of Bihar v. S.K. Roy.... had upheld the well-recognised principle that in dealing with matters of construction, subsequent legislation may be looked at in order to see what is the proper interpretation to be put upon the earlier Act, where the earlier Act is obscure or ambiguous or readily capable of more than one interpretation. While construing sub-section 2(b) of Section 80-HHC of the Act, as it stood prior to its amendment and thereafter, this Court in Gem Granites v. Commissioner of Income Tax, T.N. held as follows: “13. The introduction of the phrase “other than” in clause (b) of sub-section (2) of Section 80-HHC in 1991, in our opinion, indicates the carving out of a specific class from the generic class of “minerals and ores”. This means that were it not for the exception, the specified processed minerals and ores would have been covered by the words “minerals and ores”. It also indicates that only the minerals and ores subjected to the process of cutting and polishing would be entitled to the benefit of Section 80-HHC meaning thereby that all other species of processed minerals and ores would continue to be covered by the general exclusion applicable to the generic class. The 1991 amendment to Section 80-HHC thus conclusively demonstrates that the words “minerals and ores” must be construed widely and in an unrestricted manner. As has been held in Municipal Committee v. Manilal [(1967) 2 SCR 100 : AIR 1967 SC 1201] and Pappu Sweets and Biscuits v. Commr. of Trade Tax [(1998) 7 SCC 228]subsequent legislation may be looked into to fix the proper interpretation to be put on the statutory provisions as they stood earlier. The benefit of Section 80-HHC has beenextended by the amendment to a specific kind of mineral and was introduced for the first time in 1991. If we were to hold that the word “minerals” in sub-section (2)(b) never included processed minerals then the 1991 amendment excepting processed minerals from the exclusionary effect of the sub-section would be rendered meaningless and an exercise in futility. 19. The dispute relating to the interpretation of the words “would be deductible or collectible” in Section 209 (1) (d) of the Act can be resolved by referring to the proviso to Section 209 (1) (d), which was inserted by the Finance Act, 2012. The proviso makes it clear that the assessee cannot 19. The dispute relating to the interpretation of the words “would be deductible or collectible” in Section 209 (1) (d) of the Act can be resolved by referring to the proviso to Section 209 (1) (d), which was inserted by the Finance Act, 2012. 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. 20. We do not find force in the contention of the Revenue that Section 234B should be read in isolation without reference to the other provisions of Chapter XVII. The liability for payment of interest as provided in Section 234B is for default in payment of advance tax. While the definition of “assessed tax” under Section 234B pertains to tax deducted or collected at source, the pre-conditions of Section 234B, viz. liability to pay advance tax and non- payment or short payment of such tax, have to be satisfied, after which interest can be levied taking into account the assessed tax. Therefore, Section 209 of the Act which relates to the computation of advance tax payable by the assessee cannot be ignored while construing the contents of Section 234B. 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. We uphold the view adopted in the impugned judgement of the Delhi High Court in Civil Appeal No. 1262 of 2016 as well as by the Madras High Court in the Madras Fertilizers case (supra), that the Revenue is not remediless and there are provisions in the Act enabling the Revenue to proceed against the payer who has defaulted in deducting tax at source. 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. 21. As we have dealt with the submissions relating to Section 209 and Section 234B of the Act, we do not deem it necessary to deal with other contentions that have been raised on behalf of the Revenue. We have not dealt with the facts of each case before us, in view of our interpretation of the provisions of the Act germane to the question of law herein. 22. Accordingly, the Appeals filed by the Revenue are dismissed.” WA Nos. 979/2018 & 2811/2021 After dismissing the appeal filed by the revenue, the appeals of the Assesseeson the same issue were allowed referring to the above judgment. Therefore, this is no longer res integra and the claim of the assessees thus stands vindicated. 21. As we have dealt with the submissions relating to Section 209 and Section 234B of the Act, we do not deem it necessary to deal with other contentions that have been raised on behalf of the Revenue. We have not dealt with the facts of each case before us, in view of our interpretation of the provisions of the Act germane to the question of law herein. 22. Accordingly, the Appeals filed by the Revenue are dismissed.” WA Nos. 979/2018 & 2811/2021 After dismissing the appeal filed by the revenue, the appeals of the Assesseeson the same issue were allowed referring to the above judgment. Therefore, this is no longer res integra and the claim of the assessees thus stands vindicated. 13.Insofar as the contention regarding maintainability of the miscellaneous petition is concerned, as rightly held by the learned Judge, no appeal has been preferred by the Revenue against the finding in paragraph 8 of the order by the Income Tax Settlement Commission, even though ultimately the petition came to be dismissed, after discussing the law and on interpretation by the Income Tax Settlement Commission, which view as seen above, is no longer good law. It is pertinent to mention here that the revenue had all along contended that there was no error apparent and that, the dispute regarding interest under Section 234B was not raised in the original proceedings. Even in ground (h)of the memorandum of grounds of appeal filed before this Court, the revenue has conceded to the jurisdiction of the settlement commission by contending that the Commission would have powers under Section 245F(1) read with Section 154 to rectify any mistake apparent on the face of the record and cannot adjudicate of debatable issue, which in the view of this Court, is contrary to the ratio laid down in Brij Lal v. CIT, (2011) 1 SCC 1 . https://www.mhc.tn.gov.in/judis WA Nos. 979/2018 & 2811/2021 14.However, as held by us above, the revenue has not challenged the findings in paragraph 8 of the order in the Miscellaneous Petition dated 06.07.2009, as referred to in paragraphs 7 and 8 of the orders of the Learned Judge and no plea regarding