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2015 (7) TMI 655 - AT - Income TaxLevy of interest u/s 201(1A) - failure to deduct TDS - AO referring to CBDT Circular dated 29/01/07 vide Circular No. 275/201/95-IT(B), dated 29/01/1997 held that charging of interest u/s 201(1A) till the date of payment of taxes by deductee is mandatory - Jurisdiction of AO to levy interst - Held that:- As the present proceeding arises out of the direction of the Tribunal in the earlier round, wherein assessee’s ground on jurisdictional issue was not entertained, assessee cannot again raise the issue before this forum. In the aforesaid facts and circumstances, we decline to entertain assessee’s ground on jurisdiction. Applicability of section 115E to non-resident to whom assessee has made the payment - as submitted by assessee when the long term capital gain is not taxable at the hands of the recipient there is no requirement in law for the assessee to deduct tax on payment made to the non-resident - Held that:- we fail to understand the rationale or logic behind such argument of ld. AR. As could be seen, in course of proceeding before AO assessee took a specific plea that on the assurance of recipient-deductee that he will file his return declaring capital gain and pay tax, assessee did not deduct tax in terms with section 195 of the Act. This statement of the assessee clearly demonstrate, from the very beginning both the assessee as well as the recipient were conscious of the fact that payment made towards sale of property was subject to capital gain tax in India. In fact, keeping with the assurance given to assessee recipient deductee has filed a return of income declaring capital gain and also paid the taxes. When the recipient has not made any claim of exemption, assessee who is only payer of the money cannot assume upon itself the burden of deciding the taxability of payment at the hands of the non-resident recipient. At least, the statutory provision does not permit assessee to do so. Even otherwise also, after careful analysis of the relevant statutory provision we find the submissions of ld. AR unacceptable. On perusal of the definition of ‘long term capital gain’ as provided u/s 115C(d), it is seen that it only refers to foreign exchange assets, meaning thereby, any specified asset purchased with convertible foreign exchange. Therefore, ‘long term capital gain’ referred to in section 115E(a) will only apply to certain transactions as specified under Chapter XIIA and not to a transaction of the nature entered into between present assessee and non resident. Moreover, section 9 of the Act makes it clear that any income arising and received in India is taxable under the Income Tax Act. The nonresident recipient, in our view, having correctly understood the provisions of the Act has filed his return declaring capital gain. In the aforesaid facts and circumstances, assessee’s claim that capital gain is exempt from taxation at the hands of the non-resident recipient, is only a desperate attempt to escape from the rigours of section 201(1A). Whether the contention is correct that, as recipient has paid the entire tax by way of advance tax there is no loss to the revenue, hence, levy of interest u/s 201(1A) cannot be made? - Held that:- This issue to be decided against assessee in view of the ratio laid down in case of Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA) wherein held that liability to pay interest u/s 201(1A) till the date of payment of tax by deductee assessee remains unaltered. No reason to interfere with the order of ld. CIT(A)in sustaining the levy of interest u/s 201(1A). - Decided against assessee.
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