TMI Blog1997 (5) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard. 2. We have heard the learned Departmental Representative as well as the learned assessees counsel. The learned Departmental Representative has submitted that the concessional rate of Income Tax provided for non-residents has been prescribed after considering all the deductions allowable to such persons, i.e., in case of non-residents, expenses on account of interest, etc., are not allowable. He has further submitted that the having not deducted tax at source from the payment of interest made to non-residents, as required under s. 195, the AO was right in disallowing the deduction of the same from capital gain. He further submitted that the assessees case before the AO was deduction from capital gains whereas before the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of Bombay High Court in the case of CIT vs. Public Utilities Investment Trust Ltd. [1983]143ITR236(Bom) and after holding that the assessee was not doing any business or profession and, therefore, the provisions of s. 40A(2) were not applicable. The other facts relating to this issue are that the assessees who was a NRI had raised certain income from NRIs in USA for the purpose of investment in shares of the Indian companies in India. The source of assessees income in India were capital gains on sale of securities and shares, dividend and interest from bank. During the period relevant to the asst. yr. 1988-89 the assessee had paid interest of ₹ 7,06,824 on the loans raised in USA from NRIs and claimed deduction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be justified in taking of consequential actions such as recovery of TDS or disallowance of expenditure by invoking the provisions of s. 40A(2) or s. 58(1)(a)(ii) as the case may be. 6. Similarly, if the person concerned is aggrieved by the decision of IT authorities holding him defaulter for not deducting tax at source, as required under s. 195, then, the person has only one remedial recourse which is in the form of appeal under s. 248 of the IT Act and nothing else, i.e., the person concerned cannot challenge the subsequent consequential actions for recovery of TDS or disallowance of expenditure without preferring an appeal under s. 248 challenging the order holding the person as defaulter for contravention of the provisions of s. 195. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material before us, we are of the opinion that the CIT(A) was justified in allowing the assessees claim because, as has been held by the Karnataka High Court in the case of Kirloskar Asea Ltd. (supra), foreign currency was a capital asset and, therefore, any profit or loss due to fluctuations in the conversion rate has to be considered as capital gain or loss. This ground of appeal is rejected. 10. Ground No. 3 : On the facts and in the circumstances of the case and in law the learned CIT(A) erred in entertaining the objections of the assessee on both the above mentioned points without taking into account the facts that neither of them was a ground of objection in Form No. 6A filed on 13th April, 1989 which alone had the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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