Joginder Singh, J.M. & R.C. Sharma, A.M.

ORDER-R.C. SHARMA, A.M. :

These are appeals filed by the assessee against the order of learned CIT(A) dt. 12th April, 2012 for the asst. yr. 2009-10, in the matter of order passed under s. 201(1)/201(1A) of the IT Act, 1961.

2. At the outset, it is pertinent to mention here that a writ petition was filed by M/s Ssangyong Engg. & Construction Co. Ltd. before the Hon'ble M.P. High Court against the recovery proceedings initiated by the Department for short deduction of tax by the assessee National High Authonty of India (in short 'NHAI). The Hon'ble M.P. High Court vide order dt. 7th Aug., 2013 directed this Tribunal to decide the appeals of the assessee expeditiously as far as possible within a period of three months from the date of communication of the order. While disposing of the writ petition, the Hon'ble High Court has also granted permission to M/s. Ssangyong Engg. & Construction Co. Ltd., to move applications seeking intervention and also for stay of recovery of payment before the Tribunal. In compliance with the direction given by the Hon'ble High Court m Its order dt. 7th Aug., 2013, we have taken the appeals of the assessee and are going 'lo decide the issue on merits as under; intervention is also allowed to Mis Ssangyong Engg. & Construction Co. Ltd., South Korea.
3. From the record, we find that the Asstt. CIT (TDS) vide his orders under s. 201(1) and 201(lA) in respect of seven quarters falling in the financial year 2008-09 relevant to asst. yr. 2009-10 has held the assessee. as person responsible for making payments to foreign contractor deducting tax at source and filing return under s. 206 of the Act. On verification, it was noticed that the assessee had made payment of contract worth Rs. 19,61,36,514 and Rs. 56,18.92,676 from 1st April. 2008 to 30th June. 2008 financial year 2008-09 to M/~ Ssangyong Engg. & Construction Co Ltd., South Korea. The Asstt. Crr (TDS) held these payments were made without proper deduction of tax at source. On being asked to explain the reasons, it was stated on behalf of the assessee that the payments were made with lower deduction of tax at source as a consequence of the order issued under s. 195/197 by their AO, New Delhi. The assessee also furnished copies of these orders. The Asstt. CIT (TDS) on going through the details of payments made by the assessee found that a sum of Rs. 19,61,36,513 represented payments made from 10th April, 2008 to 24th June. 2008. The Asstt. CIT (TDS) has stated in his order that at the time of making such payment or crediting such payment, there was no certificate available. The orders had been passed on 5th March. 2011 for M/s Ssangyong Engg. Const. Co. The Asstt, CIT (TDS) found that for this company for all these payments the assessee had deducted tax @ 2.27 per cent on contract payment, which was lower than the rate prescribed under the Act. In reply to a query on why lower TDS was deducted, the counsel of the assessee submitted that TDS was made on request of the payee, deductor had acted bona frdely, deductor did not have an idea that it was required to deduct tax at full rate and return of deductee has already been processed under s. 143(1). The Asstt. CIT (TDS) did not agree with these contentions. In view of s. 197, he was of the opinion that if the logic and reasoning advanced by the learned counsel were given effect, the whole scheme of deduction of tax at source would be rendered nugatory and redundant, for all asses sees liable to deduct tax at source would take the plea of taxes having been paid by the payees themselves. That the return of income was processed under s. 143(1) only and the payee had not fulfilled the conditions laid down in Instruction No. 275/201/95-IT(B), dt. 29th Jan., 1997. He also held that the issuance of order on 30th June, 2008 for lower deduction of. tax at source was only prospective and no benefit of it could have been allowed to the assessee for the payments made prior to the date of issuance of the certificates and that certificate issued under s. 197(1) of the Act is effective only prospectively and not retrospectively. The Asstt. CIT (TDS) held that when the amount was paid. default had already been committed as it was before the issue of certificate, which does not have retrospective effect. He also held that if the contentions of the counsel are accepted. it would mean that the payer is' at liberty to determine for himself whether the company to whom he is making the payment would have taxable income or not and then may decide not to deduct the tax at source and claim that this defiance of specific provisions of s. 197(3) and (2) was bona fide and in good faith. He also held that being unaware of the law is no excuse as the assessee is a regular assessee and was well aware of the legal provisions. After referring to Circular No. 774 dt. 17th March. 1999 [(1999) 152 CTR (St) 219], the AO held the deductor to be an assessee in default @ 42.23 per cent for short deduction of Rs. 31.03.54,504 for asst. yr. 2009-10 and levied interest under s. 201(1A) @ 1 per cent of Rs 10,86,24,076 (asst. yr. 2009-10). Against this order of Asstt. CIT (TDS), the assessee approached to learned CIT(A).

4. Before the learned CIT(A), it was contended that the levy of tax @ 42.23 per cent is contrary to the certificate of lower rate of tax issued to the payees and the said levy also overlooks the fact that there is no taxable income of the payee in any of the assessment years prior to, during or even after the year involved demonstrated by the assessment orders for asst. yr. 2009-10 in the case of M/s Ssangyong Engg. & Construction Co. Ltd. Submitting further, that the mandate of the apex Court has been violated wherein, it has been categorically held time and again that the provisions relating to TDS apply, only if there is any sum chargeable to tax under the Act and that the Department has never cancelled the certificates granted to the petitioner and, therefore, the said certificates were valid for the periods specified therein. Another fact that is relevant in this context is the fact that the payee M/s Ssangyong Engg. & Construction Co. Ltd. has been incurring losses year after year and for two years i.e. 2007-08 and 2008-09. It has been duly assessed at a loss; the petitioner had no sum chargeable to tax under the provisions of the IT Act. Relying on the Supreme Court in the case of Transmission Corporation of A.P. Ltd. us. CIT (1999) 155 CTR (SC) 489 : (1999) 239 ITR 587 (SC), it was stated that TDS represents tentative deduction, this tentative deduction is subject to a final assessment. It is further submitted that s. 197 provides that the certificate shall be issued by the AO, if he is satisfied that the circumstances of the case justify a lower or nil deduction of tax at source. It is further submitted that the said certificates were never cancelled at any point of time, s. 197(2) states that the certificate shall have validity for the financial year mentioned therein. Payments were made during the validity of the certificate. The action of the assessee NHAI was, thus. in compliance of the directions issued through the certificate issued by the AO. The payment having been made in accordance with the certificate in force, there should be no occasion to warrant a conclusion that NHAI was in default in terms of s. 201 for the pending application. In view of the fact that there were no changes in the facts and circumstances that for similar payments a certificate had been granted earlier and for the unpaid amounts also, a certificate for 0.75 per cent withholding had been granted, there was no occasion or need not to issue the certificate. True copies of the certificate issued under. s .. 197 from financial year 2006-07 to financial year 2009-1 0 and clarifications issued in 2008-09 were submitted before the lower authorities.

5. It was further contended before learned CIT(A) that in the instant case, the applications were disposed of by AO authorising the reimbursement by deduction of tax at source @ 0.75 per cent and 1 .per cent. The certificate cannot be invalidated on the ground that It was Issued subsequent to the passing of the accounting entries by the payer. It was further elaborated that it is not mandatory under s. 197(1) that the certificate should have been obtained or the application made before the date of credit. As is required under the second proviso to s. 194C(3), a certificate obtained after the date of credit but in accordance with the mandate of the provisions of law should consequently be regarded as valid, effective and binding. The directions under certificate would, therefore. enure to the benefit of both the payer as well as payee. As a result, the certificate obtained under s. 197(1) would continue to govern the transaction and the payments should be made in accordance With the mandate of the certificate.

6. In the impugned order. learned CIT(A) upheld the order of the AO to the effect that learned Asstt. CIT had correctly considered the effectiveness of the certificate from the date of its issue and applying the rate of 42.23 per cent on short deduction of tax holding the assessee to be in default under s. 201(1) and 201(IA). Against the above order of learned CIT(A), assessee is in further appeal before the Tribunal on the following grounds :

"I. That, the learned CIT(A), J abalpur has erred both in law arid in facts in holding that the certificate issued by the competent authority dt. 30th June, 2008 will not have retrospective impact and will have no effect on the payment made prior to 30th June, 2008 and being issued in defiance of provision under r. 28AA therefore rendered the appellant erred in deducting the tax at source @ 2.12 per cent and @ 1 per cent on the payment of Rs. 19,61,56,513 and Rs. 56.18,92,676 covering the period 10th April, 2008 to 24th June, 2008 and 1st July. 2008 to 31st March, 2009 respectively ..

2. That, the learned CIT(A), Jabalpur has erred both in law and in facts in dismissing the ground that the learned ACIT (TDS), Jabalpur has exceeded his jurisdiction in rejecting the order passed under s. 1.97(1) holding the same being issued wrongly by the competent authority in defiance of provisions under r. 28M on the ground that the same being not communicated to the payer and has been passed in utter violation of Board's Circular No. 774 dt. 17th March, 1999 without appreciating the settled position of law in this regard.

3. That, the learned CIT(A), Jabalpur has erred both in law and in facts in not holding that an order cannot he invalidated and continue to have effect until withdrawn or cancelled by a process known to law and such order once issued, r. 28AA(5) mandated deduction of tax in accordance with the certificate so issued therefore remedy not concerned with the validity or otherwise of the order j certificate,

4. That the learned CIT(A), Jabalpur has erred both in law and in facts in not holding that the learned Asstt. CIT (TDS), Jabalpur grossly erred in treating the very same order passed under s. 197(1) and rejecting the same being invalid on the one hand and being passed erroneously under s. 195(3) on the other hand thus erroneously held that the whole of the payment of Rs. 75,80,29,189 liable to TDS ® 42.23 per cent.

5. That the learned CIT(A), Jabalpur has erred both in law and in facts in holding that the learned Asstt. CIT (TDS), Jabalpur has not committed any error of law or facts in ignoring the return filed by the payeejdeductee for asst. yr. 2009-10, wherein the payee has disclosed its net result declared in the return is loss and the whole amount of TDS which has been deducted by the appellant NHAI has been refunded to the payeejdeductee Mjs SangYong Engineering Construction Company Ltd.

6. That, the learned CIT(A), Jabalpur has erred both in law and in facts in holding that the determination of short deduction of TDS amounting to Rs, 31,03,54,504 and interest under s. 201(1) amounting to Rs. 10,86,24,076 is not erroneous, arbitrary or unjustified and therefore learned Asstt. CIT (TDS), Jabalpur has not erred either in law or facts in imposing interest @ 1 per cent under s. 201 (1 A) ofIT Act in the impugned order passed for the year in question amounting to Rs, 10,86,24,076 on the short deduction of tax of Rs. 3,61,03,54,504 on the payments covering period of 35 months from April, 2008 to February, 2011, made to the payeejdeductee M/s Ssang Yong Engg. & Constn. Co. Ltd., New Delhi during the financial year 2008-09.

7. That learned CIT(A) has further erred in not allowing the alternate plea to the extent it pleaded before it therefore without prejudice to allowance of aforesaid alternate plea in the appellate order as raised before learned CIT(A) and without prejudice to grounds aforesaid at Sr. No. 1 to 6 and without admitting any default, even if it is assumed that certificate dt. 30th June, 2008 is applicable prospectively, even then the default should be confined only to 42.23 per cent of Rs. 19,61,36,513 which works out to Rs. 8,28,28.449 only from which tax deducted ofRs. 41.42,335 is to be further reduced and the interest under s. 201(1A) could have been levied  only on the amount of Rs. 7,86,86,114 (8,28,28,449 less 41,42,335) and that too only till the date of payee has filed its return for asst. yr. 2009-10.

8. That learned CIT(A), Jabalpur has grossly erred in not entertaining the issues raised in and plea put forth in the rejoinder to the remand report dt. February, 2012.

9. That the judicial pronouncements relied upon by the appellant before the first appellate authority either not considered or even not mentioned or if mentioned did not comment upon.

10. That the findings in the order impugned have been given in reference to the first appellate order dt. 11 th Oct., 2011 in appellant's own case in J/CIT(A)-I/Asstt. CIT (TDS)j456 to 459 and 446 to 455/2011-12 without appreciating that the submissions and plea put forth in the case in hand if not entirely different were not identical either and having little similarity with the submission and plea put forth in the aforesaid appeals even though most of the issues are identical."

7. Various grounds have been taken in the appeals but the issue revolves around treating the assessee in default under s. 201(1)j201(1A) of the IT Act, 1961.

8. Shri Sumit Nema, learned counsel appeared on behalf of the intervenor and contended that Asstt. CIT (TDS) was not justified in holding that certificate issued by the competent authority dt. 30th June, 2008 will not have retrospective impact and will have no effect on the payment made prior to 30th June, 2008 and being issued in defiance of provision under r. 28AA, therefore, rendered the assessee in default in deducting the tax at source @ 2.12 per cent and @ 1 per cent on the payrvent covering the period 10th April, 2008 to 24th June, 2008 and 1st July, 2008 to 31st March, 2009. He further contended that Asstt. CIT (TDS) has exceeded his jurisdiction in rejecting the order passed under s. 197(1) holding the same being issued under r. 28AA on the ground that same being not communicated to the payer and has been passed in utter violation of Board's circular No. 774 dt. 17th March, 1999 without appreciating the settled position of law that an order cannot be invalidated and continued to have effect until withdrawn or cancelled by a process known to law and such order once issued, r. 28AA(5) mandated deduction of tax in accordance with the certificate so issued, therefore, remotely not concerned with the validity or otherwise of the order /certificate. It was also contended that Asstt. CIT (TDS) grossly erred in treating the very same order passed under s. 197( 1) and rejecting the same being invalid on the one hand and being passed erroneously under s. 195(3) on the other hand, thus, erroneously held that the whole of the payment was liable to TDS @ 42.23 per cent. As per learned counsel, in the return filed for the. asst. yr. 2009-10, the payee has disclosed the entire income in accordance with the provisions of the Act and the net result declared in the return was loss and the whole amount of TDS which was deducted by the assessee-National Highway Authority of India (NHAI)-has been refunded to the payee/deductee M/s SangYong Engineering Construction Company Ltd.

9. On the other hand, learned Senior Departmental Representative Shri Abhishek Sukla relied on the order passed by the lower authorities and contended that a certificate issued under s. 195/197 was operating only from the date of issue and not retrospective effect. He further contended that Asstt. CIT (IDS) had correctly considered the effectiveness of certificate from the date of its issue and applying the Tate of 42.23 per cent on the short deduction of tax at source holding the assessee to be in ?efault. As per learned senior Departmental Representative, charging of mterest under s. 201(1)/201(1A) is consequential and mandatory under the IT Act and, therefore, learned CIT(A) has correctly upheld the action of the AO to charge interest as per the provisions of the Act.

10. Rival contentions have been considered and records perused. We have also deliberated on the judicial pronouncements cited by learned Authonsed Representative and learned Departmental Representative before us in the context of factual matrix of the case. We have also perused the certificate for deduction of tax at lower rate issued under s. 195 of the Act dt. 23rd July, 2008. As per this certificate, assessee was to deduct TDS at 1 per cent from the gross amounts payable to M/ s Ssangyong Engineering & Construction Company Ltd., during financial year 2008-09. It was further clarified that 1 per cent TDS is inclusive of surcharge and education cess. We have also perused the certificate issued under s. 197 dt. 15th Dec., 2010 wherein it was clarified that certificate was issued for financial year 2008-09 and valid for payments made from 1st April, 2008 to 31st March, 2009 in respect of four contracts awarded by the assessee to M/ s Ssangyong Engineering & Construction Company Ltd. We have also verified the assessment order framed in the case of M/s Ssangyong Engineering & Construction Company Ltd., under s. 143(3) for the asst. yrs. 2007-08, 2008-09 and 2009-2010, wherein income was assessed at loss and tax deducted at source was refunded to M/s Ssangyong Engineering & Construction Company Ltd., with interest. In the instant case, assessee is a project implementation unit of NHAI. The assessee I.e. National Highway Authority of India had entered into contacts. for development of National Highway with M/ s Ssangyong Engineering & Construction Company Ltd. The deductee M/ s Ssangyong Engmeenng and Construction Company Ltd., with an intention to receive payment from NHAI after having it being subjected to provision ofTDS as provided under s. 195 at a marginal rate obtained orders under s. 197(1) from Its AO, ITO (TDS), Ward 2(1), International Taxation, New Delhi. The order was passed under s. 197(1) and entitled the deductee to receive payment from the assessee after being subjected to TDS provision under s. 195(1) at a marginal rate @ 2.1 per cent for financial year 2006-07, 2.112 per cent for financial year 2007-08 and 1 per cent for financial year 2008-09. The orders granted under s. 197(2) being operated for various financial years are detailed hereinbelow:

11. For the year in question, the assessee was subjected to provisions under s. 201(1) and 201(IA) in respect of payment made to M/s Ssangyong Engg. & Construction Co. Ltd., by deeming the assessee in default. Aggrieved the assessee has preferred the appeal before learned CIT(A), who confirmed the order of the AO. The deductee/payee in the instant case had applied for certificate under s. 197(1) for lower deduction of tax in respect of payment credited/made vide application dt. lOth June, 2008 in Form 13. In response to which certificate of lower deduction was issued vide order dt. 30th June, 2008 mentioning therein period of validity of the order as asst. yr. 2009-10. The Asstt: CIT (IDS) has questioned the applicability of the aforesaid order dt. 30th June, 2008 in respect of payment made prior to date of order I.e. 30th June, 2008 and further held that the order under s. 197(1) had to be given effect from the date of receipt only. Sec. 197(2) provides that where any such certificate is issued the person responsible for paying any amount until such certificate is cancelled by the AO deduct income-tax at the rate specified in such certificate or deduct no tax as the case may be. Once the certificate is issued the person responsible for making payment shall be required to deduct the tax at the rate specified in the certificate in respect of payment to be made or has already been made as the case may be for the period as mentioned in the certificate. Sec. 197 and rule corresponding thereto nowhere suggest that the certificate as issued under s. 197(1) would have no application in respect of payments which have been made prior to issuance of such certificate.

12. During the year under consideration, assessee had made certain payments to the deductee in pursuance of four contracts awarded by it to the deductee M/s Ssangyong Engg. & Construction Co. Ltd., and withheld tax at lower rate on the payments covering the period 1st April, 2008 to 31st March, 2009 by virtue of certificate for lower deduction of tax under s. 197(1) dt. 30th June, 2008. Subsequent to a show cause notice under s. 200(3), proceedings under s. 201(1)/201(IA) had been initiated deeming the assessee in default with respect to short deduction of tax on the payments made prior to issue of aforesaid certificate and also in respect of whole of the payments made during the financial year 2008-09 on the allegation of certain discrepancies in the said certificate. The thrust of arguments of learned Authorised Representative was that the recipient of income M/s Ssangyong Engg. & Construction Co. Ltd .. was not liable to tax and the return of income in the relevant assessment year duly incorporating the amount received from the assessee disclosed the net loss and even the tax already deducted at source were refunded by the Department with interest. Accordingly, it was pleaded that assessment of the recipient is having a direct bearing and nexus to , invoke the provisions of s. 201(1)/201(lA) of the IT Act. 1961. With respect to validity of certificate issued under s. 197, reliance was placed on the decision of Hon'ble Rajasthan I-:ligh Court in the case of Jaipur Udyog Ltd. us. CIT(1985) 155 ITR 476 (Raj).

13. Aniongst various contentions, the thrust of arguments of learned Authorised Representative was that since the recipient of the income has duly incorporated the income received from the assessee, which was not taxable as per the assessment framed under s. 143(3), there was no reason to hold the assessee in default uIlder s. 201(1) and 201(lA) of IT Act, in respect of income paid by the assessee to M/ s Ssangyong Engineering & Construction Company Ltd. Learned Authorised Representative also placed on record the decision of Tribunal, Jaipur Bench in the case of Jaipur Vidyut Vitran Nigam Ltd. us. Dy. CIT, order dt. 30th April, 2009 [reported at (2009) 26 DTR (Jp)(Trib) 154-Ed.], wherein, assessee was held to be not in default under s. 201(l)/201(IA). where the income of the recipient was not found to be taxable. In the case decided by the Jaipur Bench, similar payments have been made on which interest was charged for delay in deduction/payment of TDS. The Tribunal after considering all the facts held that no interest under s. 201 (IA) is leviable on the assessee. Following was the precise observation of the Bench:

"Tax deduction at source-Interest under s. 201 (IA)- Tax not payable by Payee-Where RVPV to whom transmission charges were paid by assessee had no tax liability and RVPN received refund of tax, out of payments made by others, there was, therefore, no loss of revenue to Department on account of non-deduction of TDS; no interest under s. 201 (1A) was, therefore, leviable.

The provision of the Act is a measure to compensate the Revenue for delay in payment of taxes. In the present case, RVPN to whom transmission charges are paid are assessed, with the same AO with whom the assessee is assessed with RVPN has regularly filed, its return of income for asst. yrs. 2005-06 to 2008-09 declaring nil income and having substantial carry forward, of unabsorbed depreciation. For asst. yrs. 2005-06 and 2006-07, RVPN is assessed under s. 143(3) at nil income with substantial carry forward of unabsorbed depreciation. Thus, RVPN has no tax liability and it has been allowed the refund of tax which was deducted at source on some other payments by some other parties. Thus, there is no loss of revenue to the Department by not deducting tax at source by the assessee on the transmission payment (para 11) In the present case, from the copy of the IT return for asst. yrs. 2005- 06 to 2008-09 and copy of the assessment order for asst. yrs. 2005-06 and 2006-07, it is noted that whatever tax was deducted at source has been claimed/allowed, as refund to RVPN. Therefore, no interest under s. 201(lA) for earlier years is leviable on the assessee. (Para 11) Circular No. 275/101/95IT(B), dt 29th Jan., 1997 clarifies that where the deductee assessee has paid the tax, demand under s. 201 is not visualized but this will not alter the liability of interest under s. 201(1A) till the date of payment of taxes by the deductee assessee. This circular supports the case of the assessee, inasmuch as this' circular visualises the liabilities of interest till the payment of taxes by deductee assessee. If deductee assessee has no liability of payment of taxes no interest liability under s. 201(1A) is visualised. In the present case, the deductee assessee, I.e., RVPN has no liability of tax and, therefore, the liability of interest under s. 201 (IA) would not arise since no tax is payable by the RVPN (para 11.1). In view of above and particularly in the facts of the present case no interest under s. 201(IA) is leviable on the assessee. Hence, this ground is allowed."

14. After considering the above decision on similar facts, the Co-ordinate Bench of Tribunal, Indore in the case of Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Ltd. us. Asstt. CIT (2012) 20 ITJ 594 (lncl) have held as under:

"7. Facts of the instant case are also pari materia, wherein interest has been levied for non deduction/delay in deposit of TDS, whereas contention of the assessee all along'is that recipient of income has no liability of taxes and all the assessments of TRANSCO-recipient of. income have been made under s. 143(3), and 'nil' tax liability was assessed. Assessment orders under s. 143(3) wherein nil income-tax liability was assessed for asst. yr. 2005-06 to 2008-09 were also placed on record. His further contention was that the learned AO failed to appreciate that in the present case there was no liability to pay tax on the deductee assessee. Even otherwise under s. 201(IA), the interest is payable 'from the date on which such tax was deductible to the date on which such tax is actually paid'. The legislature has used the words 'actually paid' therefore, where there is no liability to pay any tax, there shall be liP actual payment, resultantly, no interest is payable under s. 201 (IA) of the Act. Therefore, once the levying of interest on the assessee for delay in deduction/payment of tax is not justified. In this regard, we found that the CBDT has issued a Circular No. 275/201/95-IT(b) dt. 21st Jan.,1997, which was relied upon by the Supreme Court, in the case of Hindustan Coca Coin Beverage (P) Ltd. us. CIT (2007) 211 CTR (SC) 545 : (2007) 293 ITR 226, (SC) that 'no demand visualized under s. 201 (1) of the IT Act, 1961, should be enforced after the tax deductor has satisfied the officer in charge of TDS that taxes due have been paid by the deductee assessee. However, this will not alter the liability to charge interest under s. 201 (1A) of the Act till the date of payment of taxes by the deductee assessee or the liability for penalty under s. 271 C of the IT Act'.

8. In view of the above discussion, we restore the matter back to the file of AO for deciding afresh by keeping in view the decision of Co-ordinate Bench as well as decision of Hon'ble Supreme Court, discussed hereinabove. The AO is to find out if the recipient of income have no tax liability as per assessment framed under s. 143(3), then no interest is leviable on the assessee for non-'deduction/delay in deposit ofTDS. Even though the learned Authorised Representative has also argued on the technical nature of services for which payment was made and applicability of provisions of s. 194J /194- I of IT Act, 1961. Since we have decided the issue on the main plea, we are not deliberating upon the other aspects. We direct accordingly."

15. The Hon'ble Supreme Court has dealt the issue of assessee's liability under s. 201 (IA) in the case of Hindustan Coca Cola Beverage (P) Ltd. vs. CIT (2007) 211 CTR (SC) 545 : (2007) 293 ITR 226 (SC) and held that since the deductee has already paid tax on their income, recovery of short amount of TDS from the deductor amounts to double taxation of the same income. However, interest for delay in deposit of tax was held to be leviable from the date tax was due to be deducted till the date of actual payment of tax by the deductee.

16. In the instant case before us. we found that assessment in the case of to M/ s Ssangyong Engineering & Construction Company Ltd .. for the asst. yr. 2009-10 was completed under s. 143(3) vide order dt. 30th March, 20 II, wherein the income was determined at a loss of Rs. 56,62,17,630. Thus, it is clear that recipient of income from the assessee was not required to pay any tax in view of its losses for the asst. yr . 2009-10, as per the assessment framed under s. 143(3). Once it is held that there is no tax liability on the recipient of income i.e. to M/s Ssangyong Engineering & Construction Company Ltd., in respect of its entire income including the income paid by the assessee, there is no reason to treat the assessee in default under s. 201(1) of the Act in respect of payment made to M/ s Ssangyong Engineering & Construction Company Ltd. Since it is finally held that income of M/ s Ssangyong Engineering & Construction Company Ltd. was not liable to tax, there is no reason for payment of tax by M/ s Ssangyong Engineering & Construction Company Ltd. Interest under s. 201(IA) is being charged for delay in payment of tax and same is consequential in nature. As per the decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. (supra), interest under s. 201(IA) is payable "from the date on which such tax was deductible to the date on which such tax i~ actually paid". It means even if the assessee is not found to be in def8:u~t under s. 201(1), its liability under s. 201(IA) will be there and interest will be payable from the date on which such tax was deductible to the date on which such tax is actually paid. However, in a situation where deductee is not required to pay any tax on its income, there is no reasion to hold the deductor in default under s. 201(IA) since deductee is not required to pay any tax on its income which is, in fact, a loss. In the instant case before us, since the deductee M/s Ssangyong Engmeenng 8r Construction Company Ltd., is being assessed at loss, no tax is payable by the deductee. Accordingly, no occasion will arise for chargin9 interest from the date on which such tax was deductible to the date on Which such tax is actually paid. Direction of charging of interest under s: 201(IA) in the instant case will not serve any purpose insofar as the recipient of income was held to be not liable to pay any tax on its income as per assessment framed under s. 143(3). Therefore, any payment of TDS by the assessee in respect of payment made to deductee M/s Ssangyong Enginee.ring & Construction Company Ltd. will entitle the deductee to get back such TDS with interest at the time of framing assessment under s. 143(3) of the Act. Thus, it is not a fit case for holding the assessee deductor in default under s. 201(1) nor for interest under s. 2,01(IA) of the Act.

17. In view of above discussion,' respectfully following the decision Of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. (supra) and also the decision of Co-ordinate Bench in the case of Jaipur Vidyut Vitran Nigam Ltd. (supra) and Madhya Pradesh Madhya Ksheq-a Vidyut Vitaran Company Ltd. (supra), we do not find any reason to uphold the action of lower authorities for holding the assessee in default under s. 201(1) and 201(IA) of the Act.

18. In the result, appeals filed by assessee are allowed.