CBDT via Circular No. 11/2017 dated 24-03-2017 has issued guidelines to reduce or waived off the interest charged under section 201(1A)(i) in case of assessee’s failure to deduct tax at source in some specified cases.
The cases in which the reduction or waiver of interest under section 201(1A)(i) can be considered are as follows:
1) In case where books of account and other documents necessary for making TDS were seized by the department due to which assessee was not able to deduct tax within due time.
2) Where no tax was deducted on any sum paid or payable on the basis of any order passed by the jurisdictional High Court and subsequently such order was reversed by any retrospective amendment or by a decision of Supreme Court or by a larger bench of jurisdictional High Court.
3) In respect of payment made to non-resident, where:
a) dispute regarding the tax payable in India in respect of the said payment had been referred to the Competent Authority in India as mentioned in Rule 44H.
b) such reference had been received within a period of two years of the date on which the notice of demand determining the tax payable was received by the assessee;
c) the dispute has been settled by way of a resolution arrived at under the Mutual Agreement Procedure (MAP) provided in the said agreement; and
d) the assessee has given his acceptance to the resolution and has withdrawn his appeal(s) pending on the issue within one month of the date on which the resolution is communicated to him.
In cases where assessee has already paid interest under section 201(1A)(i), assessee is entitled to get refund of such interest amount if the waiver order has been passed by the authority.