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2008] 306 ITR 260 [2008] 172 TAXMAN 13 (DELHI) HIGH COURT OF DELHI Commissioner of Income-tax * v. Mitsubishi Corpn. MADAN B. LOKUR AND V.B. GUPTA, JJ. IT APPEAL NO. 1129 OF 2005â-  MARCH 25, 2008 Section 201 of the Income-tax Act, 1961 - Deduction of tax at source - Consequence of failure to deduct or pay - Assessment years 1995-96 to 1997-98 - Assessee, a non-resident company, had a liaison office in Delhi which employed local staff as well as expatriate employees deputed from parent company in Japan - During survey carried out at office premises of assessee, it was found that assessee was not deducting tax at source in respect of certain payments made to expatriate employees - Assessee gave its explanation but in any event, it suo motu paid taxes and interest thereon without any demand being raised by revenue - However, later on Deputy Commissioner, without adjusting tax and interest paid by assessee, worked out its tax and interest liability - On appeal, Commissioner (Appeals) upheld order of Deputy Commissioner - On second appeal, Tribunal set aside order of Commissioner (Appeals) and directed Assessing Officer to adjust tax and interest amount already paid by assessee - Whether Tribunal was justified in doing so - Held, yes FACTS The assessee was a non-resident company incorporated in Japan. It had a liaison office in Delhi which employed local staff as well as expatriate employees deputed from the parent company in Japan. During the survey carried out at office premises of the assessee, it was found that the assessee was not deducting tax at source in respect of certain payments made to the expatriate employees. The assessee gave its explanation, but in any event, it suo motu paid taxes and interest for a period of ten years, i.e., for the financial years 1988-89 to 1997-98 without any demand being raised by the revenue. By an order dated 30-3-2000, the Deputy Commissioner worked out tax liability and interest liability of the assessee without adjusting the tax and interest already paid by it. On appeal, the Commissioner (Appeals) upheld the order of the Deputy Commissioner. On second appeal, the Tribunal held that the demand pertaining to the…

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