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2016 (6) TMI 887 - ITAT CHANDIGARH

2016 (6) TMI 887 - ITAT CHANDIGARH - TMI - Non deduction of tds u/s 195 - Interest under section 201(1) - sole contention of the assessee had been that since return have been filed by the payee/deductee and taxes/interest under section 234A, B and C have been paid, therefore, department have been compensated. Hence, no interest should be charged - Held that:- The contention of the assessee is not tenable because charging of interest under section 201(1A) and interest charged under section 234A, .....

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pellant : None For the Respondent : Shri S.K.Mittal, DR ORDER Both appeals by different assessees are directed against different orders of ld. CIT(Appeals)-43 New Delhi dated 26.08.2015 for assessment year 2009-10 challenging the order under section 201(1A) of the Income Tax Act. 2. I have heard ld. DR, perused the findings of authorities below and considered the material on record. The assessee did not appear despite service of the notice. The written submission filed by assessee on record has .....

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purchase consideration of ₹ 1.35 Crores from non residents i.e. S/Shri Krishan Lal, Sohan Lal and Mohan Lal, residents of U.K. vide Sale Deed dated 23.05.2008. The Assessing Officer noted provisions of Section 195 and 201 of the Income Tax Act in the impugned order and noted that at the time of making payment of ₹ 1.35 Cr to the above NRIs, no tax has been deducted at source by both the assessees as was required under section 195 of the Income Tax Act. Therefore, proceedings under s .....

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f taxes under section 201 of the Income Tax Act. 4. The Assessing Officer noted that it is admitted fact that at the time of making payment of consideration for the above mentioned property to non- residents of U.K., no tax was deducted at source as required to be deducted under Section 195 of the Income Tax Act. As per provisions of Section 195 of the Act, the assessee was liable to deduct tax at source at the specified rates from the sale consideration before making payment to the sellers i.e. .....

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ability to pay interest under section 201(IA) of the Act from the date when the tax was deductible to the date when the tax was paid by the deductee or from liability from penalty under section 271C of the Act. Accordingly, interest under section 201(1A) of the Act was charged in 50% share of the assessee. 5. The order under section 201(1A) of the Act was challenged before ld. CIT(Appeals) and assessee reiterated the same facts and also submitted that the seller have paid the tax as well as inte .....

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missions of the counsel. I have perused the order available on record. I have heard the counsel. The action of the Assessing Officer is summed up, in his order, towards the end which is as follows :- Hindustan, Coca Cola. vs. CIT (2007) 178 Taxman 355 (SC) In this case, the Hon'ble Supreme Court has held that no demand visualized under section 201(1) of the Income-lax ACL , 1962 should be enforced after the tax deductor has satisfied the officer-in-charqe of TDS, that taxes due have been pai .....

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Shri Ram Chanel on 23.05.2008. It is also seen that in this case, the non- resident sellers later declared the capital gain amounting to ₹ 10,12,608/- each arising on the sale of property bearing No. 2178, Sector- 21 C, Chandigarh in their returns of income for the relevant assessment year i.e. AY 2009-10 filed on 20.11.2012 and paid the tax thereon. Therefore, the tax deductible was paid by the seller. However; in view of the judgment of Hon'ble Supreme Court in the case of Hindustan .....

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the documents furnished by the assessee, Shn. Krishan Lal, Shri Sohan Lal and Shri Mohan Lal all sons of Shri Ram Chand, the non-resident sellers paid tax on capital pains amounting lo ₹ 10.12,608/- each respectively as under : NRI Seller Capital Grain Date on which paid Date on which tax was deductible Amount of interest u/s 201(1A) (Rupees) Shri Krishan Lal 229457 14,11,2012 23.5.2008 126201/- Sohan Lal 229457 14.11.2012 23.05.2008 126201/- Mohan Lal 229457 14.11.2012 23.05.2008 126201/- .....

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statute itself, therefore, the demand is to be paid immediately. Issue demand notice. Penalty proceedings u/s 271C of the Income-tax Act, 1961 for failure to deduct tax at source are being referred to the Add/. Director of Income-tax. International Taxation. Chandigarh." The appellant has raised a plea that the payee/deductee has filed the return and has already borne taxes u/s 234A, 234B and 234C. It is noted that the interest u/s. 201(1 A) is compensatory and has been levied as a compensa .....

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e deductor/payer is u/s 201(1A), which is different from interest u/s 234A, 234B and 234C. In view of the aforesaid, and in view of the order of Hon'ble Supreme Court in the case of M/s. Hindustan Coca- Cola Beverage Pvt. Ltd, as detailed above by the Assessing Officer, there is no merit in the case of the appellant. It has been held by the Hon'ble Supreme Court in this case- "Therefore, the tax deductible was paid by the seller. However, in view of the judgment of Hon'ble Supre .....

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uch tax was actually paid." Further, the Hon'ble Delhi High Court, in the case of DIT Intl Taxation vs. G E Packaged Power Inc. in ITA 352/2014, dated 12/01/2015, at Para 16 (last sentence of this para) has held that the "obligation of the payer to deduction is absolute." 5.3 In view of the aforesaid, the order of the Assessing Officer is upheld. The assessee fails in appeal. 6. The assessee in appeal has challenged the above orders of the authorities below. The sole contentio .....

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e same submissions were made before authorities below. 7. The ld. DR, however, relied upon orders of the authorities below and submitted that charging of interest under section 201(1A) is mandatory and has been rightly charged from the assessee from the day of deductible till the payment is made of the taxes by the seller. Therefore, appeal of the assessee may be dismissed. 8. I have considered rival submissions and material on record. The facts noted in the findings of ld. CIT(Appeals) have not .....

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t till the date of payment of taxes by the deductee assessee or the liability for penalty under section 271 C of the Income Tax Act " 9. Hon'ble Supreme Court in the case of CIT V Elililly & Co. (India) P. Ltd. 312 ITR 225 (S.C) held as under : "The levy of interest under section 201(1A) is mandatory and the absence of liability for tax will not dilute the default. The liability of deducting tax at source is in the nature of a vicarious liability, which presupposes existence of .....

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