COMMISSIONER OF INCOME TAX Vs. MARUBENI INDIA (P) LTD.
HIGH COURT OF DELHI
COMMISSIONER OF INCOME TAX
Marubeni India (P) Ltd.
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R.S.MURALIDHAR, J. -
(1.) 10 and 11/Del/2002 whereby the appeals filed by the respondent -assessee were allowed and the order passed by the CIT(A) for the asst. yrs. 1999 -2000 and 2000 -01 levying interest under s. 201(1A) of the IT Act, 1961 ('Act') were set
(2.) THE respondent -assessee, a private limited company incorporated in India, employs foreign nationals. The respondent deducted tax on the salary paid to its employees and was depositing the same in accordance with the law. Some of the
expatriate employees of the respondent, who were also in receipt of income from certain foreign companies, informed
company had made a TDS declaration of Rs. 8.09 crores towards additional tax and interest payable on overseas
allowances paid to the expatriate employees for the financial years 1988 -89 to 1997 -98. While making this declaration,
the company had itself calculated and paid interest under s. 201(1A) for late deposit of tax for all those years.
Accordingly, the Dy. CIT opined that the company could not be excused for the year under consideration and levied
interest under s. 201(1A) in the sum of Rs. 23,90,762 towards the short deduction of TDS at the average rate applicable
under s. 192(1) of the Act.
(3.) IN regard to the financial year 1999 -2000, the explanation offered to the Dy. CIT by the company was that it was deducting TDS from the monthly salary of the employees on an average rate and that the performance incentive in the
incentive could not be gauged while estimating the salary income, there was a short -deduction of the TDS. This
Explanation was not accepted by the Dy. CIT on the ground that the expatriate employees were full -time employees of
the company and were "rendering services only to the deductor company and no one else. Whatever salary they are
getting in India or outside India is for the services to the deductor company itself or on its behalf." Accordingly, interest
in the sum of Rs. 12,87,078 on the short -deduction of TDS was levied under s. 201(1A) for the asst. yr. 2000 -01.
CIT(A) dismissed the appeals on the ground that the performance incentive was paid every year and was in the
knowledge of the company. It was held that the TDS ought to have been deducted by the company on that basi;
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