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New Vistas Constructions, Hyderabad. Versus Income Tax Officer – II, (International Taxation) , Hyderabad.

2015 (7) TMI 655 - ITAT HYDERABAD

Levy 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 .....

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ent 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 Indi .....

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tutory 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 asses .....

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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 assess .....

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appeal relates to levy of interest of ₹ 19,68,283 u/s 201(1A) of the Act. 3. Briefly the facts relating to the issue in dispute are, on the basis of information on record, it was found that assessee during the relevant PY purchased a house property bearing No. 12-2-710 to 712 admeasuring 8850 sq.yds. with ground and first floor in Sy. No. 289/7, Ward No. 21, Block C, situated at Gudimalkapur, Asifnagar Mandal, Hyderabad from Sri Murali Mohan Kosaraju, a non-resident Indian for a total con .....

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submitted as under: The sale deed in respect of the property acquired by the firm was executed and registered on 09-04-2008. In the sale deed, the description of the vendor was mentioned as ………..at present resident of H. No .. 12-2-71/A, Berban, Hyderabad. In view of the above description, the firm treated the Vendor as an Indian Resident and no tax was deducted from the payment Further the Vendor has given us an oral assurance and under taking that he would pay the tax due .....

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ve held. "That it was not in' dispute that RB on whose behalf tax was to be deducted and paid u/s.194C of the Act, has paid more amount of tax by way of Advance tax, than what was payable and has also paid tax on self Assessment. There was no question of levying any interest on the assessee as the amount which was payable to the revenue has been duly paid" . Since the vendor has paid the entire tax due on the Capital gains earned by him sufficiently in advance before the due date o .....

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#8377; 27.60 lakhs, which he has claimed as refund. Thus, it was submitted that as there is no loss of revenue to the department, interest u/s 201(1A) should not be levied. In support of such contention, assessee also relied upon a number of judicial precedents. AO after considering the submissions of assessee and verifying the facts and materials on record, accepted that the purchaser of the property has not only paid the taxes on the capital gain, but, has also filed return of income before th .....

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Hindustan Coca Cola Beverage P. Ltd. Vs. CIT, 293. Thus on the basis of the aforesaid observations, AO holding that assessee is liable to pay interest u/s 201(1A) of the Act quantified interest chargeable u/s 201(1A) at ₹ 19,68,283. 3.1 Being aggrieved of the levy of interest u/s 201(1A), assessee preferred appeal before ld. CIT(A). Ld. CIT(A) having confirmed levy of interest, assessee preferred appeal before us. Ld. AR in course of hearing of appeal before ITAT, apart from challenging t .....

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u/s 115E(a)(i) of the Act, there is no requirement to deduct tax u/s 195. 4. In pursuance to the directions of the Tribunal, appeal was again heard by ld. CIT(A). After hearing the submissions of assessee on the issue of applicability of provisions of section 115E(1)(a), ld. CIT(A) did not find any merit in the same and accordingly, rejected assessee s claim with regard to non-application of provisions of section 195 in view of the provision contained u/s 115E(a)(i) of the Act. 5. Ld. AR submit .....

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total income of assessee, but, no tax can be levied as Clause (i) of section 115E only prescribes the rate of calculation of income tax in respect of investment income referred to in clause (a) and is totally silent about the long term capital gain. Thus, ld. AR submitted, when no rate for taxation of long term capital gain is prescribed u/s 115E, which is applicable to a non-resident, provisions of section 195 will not apply. Therefore, he submitted, when the capital gain itself is not taxable .....

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s: 1. Madhav Marbles and Granites Vs. ITAT & Anr, [2014] 362 ITR 674 (Raj.) 2. Indian News Paper Vs. ITO & Anr., [2011] 339 ITR 365 (Bom.) 3. CIT Vs. Rishikesh Apartments Cooperative Housing Society Ltd., [2002] 253 ITR 310 (Guj.) 4. CIT Vs. Rajasthan Rajya Vidyut Prasaran Nigam Ltd., [2006] 287 ITR 354 ( Raj. [Jaipur Bench) 6. Ld. DR, on the other hand, submitted, assessee being a non resident, capital gain accruing to him is chargeable to income tax as per section 9 of the Act as the i .....

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e definition of specified asset in clause (f) of 115C, submitted, long term capital gain under the said chapter specifically refers to a capital asset being a foreign exchange asset and not the capital asset of the nature sold by assessee i.e. immovable property. Thus, ld. DR submitted, provisions of section 115E is not applicable to assessee. As far as assessee s contention that deductee having paid the tax, there is no loss to revenue, hence, interest is not chargeable, ld. DR strongly relying .....

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u/s 201(1A). It is to be noted, this very ground was raised by assessee as additional ground in the first round of litigation before ITAT. As can be seen from the perusal of the order in ITA No. 1977/Hyd/2011, dated 14/09/12, jurisdictional issue raised in the additional ground was not admitted by ITAT and the ITAT while remitting the matter back to the file of ld. CIT(A), directed him to consider assessee s ground raised on applicability of section 115E of the Act. The finding of the Tribunal i .....

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assessee with respect to the liability to tax in the case of non-resident u/s 115E a(1) and decide the issue in accordance with law. At this stage, we refrain from going into the grounds raised by the assessee. 7.1 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 entertai .....

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ere is no requirement in law for the assessee to deduct tax on payment made to the non-resident. 7.3 After perusing the facts on record, 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 assesse .....

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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 .....

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