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TMI Blog2015 (2) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Supreme Court in the case of GE India Technology Cen. (P) Ltd. v. CIT [2010] 327 ITR 456 r.w. instruction No.2/2014 dated 26.02.2014 issued by the Board. Therefore, with the consent of both the representatives, we heard the appeals itself. 2. The common question involved in all the appeals is whether the appellants can be treated in default for not deducting the TDS while making payments to the non resident Mrs.Zohra Moidin, resulting the demand of tax against the assessees as well as interest u/s 201(1A) of the Income Tax Act. 3. The brief facts of the case are that Mr. Ahmed Mohiuddin and Mrs. Shahanaz Mohiuddin are the directors of the Company M/s Sami Reality and Infrastructures (P) Ltd. They have jointly executed a purchase de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has observed that section 195 contain in itself a procedure where an assessee feels necessity of any clarification on account of non deduction of taxes, he can move an application u/s 195(2) or 195(3). Section 195(1) mandate the assessee to deduct the TDS while making payment to any non resident. With regard to assessee's contention that element of income ought to be involved in the payment is concerned, the learned Assessing Officer has observed that there is a perceptional difference between construction of this expression available in section 195(1) of the Act, the expression "sum chargeable to tax", is not dependent upon the ultimately payment of tax by the receipient. There can be so many reasons, where receipient can be exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his investment was made within the window period for claiming exemption u/s 54 of the Act. Therefore, when they sold the property they were aware that the amount which the vendors are receiving will not be charged to capital gain tax. The assessee was also aware that the payments does not involve any sum upon which taxes would be levied. In such situation, the assessee cannot be treated in default u/s 201 of the Income Tax Act. 7. The learned DR on the other hand relied upon the assessment order. He pointed out that there is a basic difference between the taxes required to be paid ultimately by an assessee vis-à-vis the income accrued or arising to such an assessee. In the payments made by the assessees, the element of income was v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out that no liablity of taxes would be there. Therefore, no need to deduct the TDS. The facts of the present case ought to be seen by the learned CIT (A) in the light of the circular issued by the Board because before the Assessing Officer the circular was not in the picture. The circular read as under: "Instruction No. 02/2014, Dated 26.02.2014 Sub: Deduction of tax at source under Section 195 read with Sections 201 of the Income-tax Act, 1961 relating to payment made to a non-resident-reg. Section 195 of the Income-tax Act (hereafter referred to as 'the Act') provides that any person, responsible for paying to a non-resident not being a company or to a foreign company, any sum chargeable under the provisions of this Act, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmine the appropriate proportion of the sum chargeable to tax as mentioned in subsection (1) of section 195 to ascertain the tax liability on which the deductor shall be deemed to be an assessee in default under section 201 of the Act, and the appropriate proportion of the sum will depend on the facts and circumstances of each case taking into account nature of remittances, income component therein or any other fact relevant to determine such appropriate proportion. 4. The undersigned is directed to state that the above position may be brought to the notice of all officers concerned. F. No. 500/33/2013-FTD-I Yours faithfully, (Satya Pal Kumar) Under Secretary-1(2) [FT&TR-l]" 9. If we examine the facts of the present case in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty comprising land only has been sold for a consideration of Rs. 2,00,00,000/- and the second property comprising residential buildign and land has been sold for a consideration of Rs. 57,24,000/-. The total capital gains has been shown at Rs. 2,25,55,466/- after claiming expenses incurred for conversion fees and brokerage to the extent of Rs. 8,00,000/- and indexed cost of acquisition of Rs. 23,68,534/-. The assessee has declared her share (2/3) of LTCG at Rs. 1,50,36,977/-. As she has purchased a residential house with land for Rs. 1,50,00,000/- within one year (on 26.05.2011) before the date of sale (16.09.2011) of the said properties for which she has incurred stamp and registration charges of Rs. 12,30,475/- she has declared the to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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