TMI Blog2009 (11) TMI 999X X X X Extracts X X X X X X X X Extracts X X X X ..... this appeal is whether or not the learned CIT(A) was justified in upholding that the assessee is to be treated as an assessee in default under ss. 201 and 201(1A) r/w s. 195 of the Act in respect of payment made by the assessee towards purchase of land which was owned by certain non-residents based in UK. 3. The material facts of the case are like this. On 15th Jan., 2005, the assessee bought land admeasuring 21 marla and 232 sq. ft. which was co-owned by five individuals based in UK. In respect of this purchase of land, the assessee paid ₹ 13.12 lacs to one Shri Paramjit Singh, a resident of India who was holding power of attorney for the aforesaid five co-owners. It was in this backdrop that the assessee was required to show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stand so taken by the AO, the assessee carried the matter in appeal before the learned CIT(A) but without any success. The learned CIT(A) was of the view that since the sale deeds were executed on behalf of non-residents and the power of attorney holder has entered into sale deed, it was clear that the power of attorney holder was acting on behalf of the original co-owners and, as such, money was received on their behalf. The learned CIT(A) was of the view that in such circumstances, the payment is to be considered as a payment to non resident. As regards assessee's contention that if at all the payment is to be treated has having been made to non-residents, the payment is made to an association of persons (AOP) and, as such, the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of attorneys executed by the co-owners of the land, the rights in the land were admittedly assigned to the power of attorney holder. In these circumstances, the power of attorney holder was not merely acting as an agent of the non-residents to receive money but as a person who had the right to alienate the land by the virtue of rights vested in him by the power of attorneys signed by the co-owners. There is no dispute that Shri Paramjit Singh had the right to sell the, land in question. The question of TDS under s. 195 will only arise when payment is made by the said Shri Paramjit Singh to the actual owners of land sold. There is no ambiguity about the legal position insofar as in the question as to whether the payments to the resident can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal, the assessee has raised as many as six grounds of appeal, however, the sole grievance is against the learned CIT(A) has confirming the action of the AO in levying penalty of ₹ 4,41,618 under s. 271C(1) of the Act. The impugned penalty is levied for assessee's alleged failure of deducting tax at source under s. 195 from payment made to Shri Paramjit Singh towards purchase of land. 8. Since we have quashed the impugned tax withholding demand and held that the assessee cannot be treated as an assessee in default under ss. 201 and 201(1A) r/w s. 195 of the Act, levying of penalty under s. 271C(1) of the Act must also be deleted. The very cause of action of this penalty does not survive any longer. The appeal is thus allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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