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2020 (6) TMI 819 - AT - Income TaxTDS u/s 195 - Levy of interest u/s. 201(1) - CIT-A concluded assessee is not bound to deduct tax at source as per provisions of section 201(1) because the vendors / recipients were not liable for LTCG tax since they had claimed deduction U/s. 54F of the Act by depositing the entire sale proceeds in LTCG scheme account - if the assessee had deducted tax at source and remitted to the Government treasury then the Revenue would have been bound to refund the TDS to the vendors with interest U/s. 244A of the Act since the vendors do not have any liability towards LTCG tax by virtue of their claim of deduction U/s. 54F - CIT (A) deleted the demand raised by the DIT (IT) towards the charge U/s. 201(1) of the Act and levy of interest U/s. 201(1A) - HELD THAT:- Order of the ld. CIT (A) for deleting the demand raised by the DIT (IT) towards the charge U/s. 201(1) of the Act and levy of interest U/s. 201(1A) of the Act, without verifying the compliance of the relevant provisions of section 54F of the Act by the NRI vendors, is not justifiable. Since the Ld.DCIT had categorically mentioned in his Order that the NRI vendors had not remitted the sale proceeds in the LTCG Scheme account, the CIT(A) ought to have obtained a remand report from the Ld.DCIT before coming to the conclusion that the assessee had deposited the sale proceeds in the LTCG Scheme account. Decision cited by the assessee in the case of GE India Technology CEN Pvt Ltd [2010 (9) TMI 7 - SUPREME COURT] is not applicable to the case of the assessee because in that case it was well established at the time of receipts by the NR that they are not liable to tax in India with respect to the income earned out of such receipts. Similar, though not identical, are the facts with respect to the other cases cited by the Ld. AR. Accordingly, We hereby set aside the Order of the Ld.CIT(A). Assessee Company would be relieved from deducting tax at source from the NRI vendors to whom the assessee had made payment for purchase of their residential property as decided in the Cases cited by the LD.AR. Needless to mention that if the entire sale proceeds is deposited in the LTCG Scheme account, then the same would be under the control of the Revenue and the Revenue would be in a position to recover the LTCG tax arisen subsequently on the non- compliance of the other provisions of Section 54F - if the assessee Company had deducted tax and remitted to the Government Treasury then the same would be credited to the NRI’s account by the Revenue as tax paid and accordingly dealt with in the relevant assessment year while computing the tax liability of the NRI vendors. Therefore, in the interest of justice, we hereby remit the matter back to the file of the Ld.DIT(International Taxation) with directions to examine whether the assessee had complied with the first proviso U/s. 201(1) of the Act and whether the recipient NRI’s are not liable for LTCG tax during the relevant assessment year by virtue of their entire sale proceeds being deposited in the LTCG Scheme account within the stipulated period under the Act., during the relevant assessment year and if it is found to be in order then delete the demand raised on the assessee U/s. 201(1) and 201(1A) - Appeal of the Revenue is allowed for statistical purposes.
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