Law:

Section:

Section 234B, read with sections 192 and 208, of the Income-tax Act, 1961 - Interest, chargeable as - Whether liability to pay interest under section 234B arises only if assessee, who is liable to pay advance tax under section 208, has failed to pay such tax or where advance tax paid by assessee under provisions of section 210 is less than 90 per cent of assessed tax - Held, yes - Whether an assessee, whose income-tax is liable to be deducted at source, is not liable to pay advance tax under section 208 and, consequently, is not liable to pay interest under section 234B - Held, yes - Whether, therefore, if employer fails to deduct tax at source while paying any income chargeable under head 'Salaries', employee would not be liable to pay interest under section 234B; in such case employer would be responsible for payment of interest under section 201(1A) - Held, yes FACTS MCL was a non-resident company and had a contract for supply of technicians to the 'ONGC' in respect of which hire charges had been received by it. Under the terms of the contract, MCL supplied technicians to the ONGC. The department treated MCL as an agent of the employees and issued a notice under section 148. The Assessing Officer, after considering MCL as an agent of one of employees, assessed the income of the assessee (employee) under sections 143(3)/147 and 163 and held that since the income of the assessee under the head "Salaries" had not been subjected to tax deduction at source (TDS), the agent of the company was liable to pay interest under sections 234A and 234B. On appeal, the appellate authority partly allowed the appeal and remitted the matter to the Assessing Officer to reconsider the levy of interest under section 234B on the basis of the contention raised by the assessee relying upon a decision of the Division Bench in the case of CIT v. Sedco Forex International Drilling Co. Ltd. [2003] 264 ITR 320 /[2004] 134 Taxman 109 (Uttarakhand), wherein it was held that the assessee was not liable to pay interest under section 234B for the default committed by the employer, who was liable to deduct the tax at source. The Tribunal dismissed the revenue's appeal. On appeal to the High…

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