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TMI Blog2018 (10) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... treating the assessee as an assessee in default for non deduction of tax at source under section 195 when the non-resident vendor has filed his return of income in India for the relevant assessment year declaring long term capital gains from the transfer of immovable property to the assessee. This is contrary to the decision of the Honourable Supreme Court. 3. The liability to tax if any has to be determined in the hands of the nonresident sellers and collected from them once they have filed their returns of income. 4. The Ld AO is not at all correct in treating the assessee as an assessee in default for non deduction of tax at source under section 195 for the principal amount of tax of Rs. 3,20,330/- in view of the clear mandate of sub-section (2) of section 201 that such a charge can be created only when tax was deducted and not paid to the Government and not when tax was not deducted. 5. The Ld. AO is not at all correct in the computation of long term capital gains by adopting an estimated value of the property- without reference to any comparable cases. 6. The Ld. AO is not correct in charging interest under section 201(IA) upto the date of passing of the order under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation of the assessees, the AO treated the assessees as assessees in default and computed the capital gains at Rs. 82,87,762/- as under. In respect of Land : Doc No. Property description Date of sale/Date of purchase Cost of acquisition (Rs.) Indexed cost of acquisition (Rs.) Sale price as per Sec.50C (Rs.) Long Term Capital Gains (Rs.) 109/2008 Land of 130.16 sq.yards purchased in FY 1996- 97 and recd. As gift in F.Y.2001-02 09.01.2008/ 26.06.1996 2,33,000 (approx.) 4,15,510 (2,33,000 * 551/305) 40,34,960 36,19,450 110/2008 Land of 130.16 sq.yards received as gift in 200102 09.01.2008/ 26.06.1996 2,33,000 (approx) 4,15,510 (2,33,000* 551/305) 40,34,960 36,19,450 In respect of building : Doc No. Property description Date of sale/Date of construction Cost of construction (Rs.) Indexed cost of construction (Rs.) Sale price as per Sec.50C (Rs.) Long Term Capital Gains (Rs.) 109/2008 Building admeasuring 2,820 sft 09.01.2008 F.Y.2001-02 8,46,000 (Approx @ Rs. 300/sft 10,94,239 (8,46,000*551/426) 15,23,040 4,28,801 in FY 200102 110/2008 Building admeasuring 3,510 sft 09.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment u/s 144 r.w.s. 147 by orders dated 31.03.2016 with 'Nil' demand. Subsequently, the Ld.CIT(A) has taken up the case for revision u/s 263 and cancelled the assessments made in the hands of the representative assessees. The assessees further submitted that the notice u/s 147 was issued to Sri Jamisetty Subrahmanyam, the non resident and the buyers on 30.03.2015 simultaneously. The Ld.AR submitted that the AO has taken simultaneous action u/s 147 as well as u/s 201(1)/201(1A) in Mar 2015, therefore, the observation of the Ld.CIT(A) that the AO of the vendor was conducting the enquiries and there was no inaction on the part of the AO is far from the truth. The Ld.AR argued that in the instant case till such time, the notice was issued u/s 201/201(1A), neither the AO of the vendor nor the AO of the assessee have initiated any action, thus, the decision of Hon'ble Allahabad High Court is distinguishable and has no application in the assessees' case. The Ld.AR submitted that the notice was issued by the AO on 02.03.2015 and the assessment year involved was 2008-09 relevant to the financial year 2007-08. The notice was issued beyond the 4 years of time limit, hence argued that the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermining the tax liability at Rs.Nil in all the cases. The AO issued the notice initiating the proceedings u/s 201(1)/201(1A) of the Act on 02.03.2015 i.e. after lapse of 5 years from the end of the relevant assessment year. There is no time limit provided in the Act for treating the assessees in default for payments made to non-residents. As per sub section 3 of the Section 201, the time limit is provided for taking action in respect of residents in India, but there is no time limit for non-residents. The identical issue has come up before this Tribunal in the case of Bheemarasetty Sunitha cited supra and this Tribunal after considering the decisions of Hon'ble Delhi High Court in the case of Bharti Airtel Limited &Anr Vs. Union of India &Anr and the decision of NHK Japan Broadcasting Corporation [305 ITR 0137], the decision of Hon'ble Supreme Court in the case of GE India Technology Centre and the decision of Hon'ble Bombay High Court in the case of Mahindra & Mahindra Ltd. [365 ITR 0560 (Bom)] held that the reasonable time limit for issue of notice u/s 201(1)/201(1A) is 4 years. In case, the notice is issued beyond 4 years, the Coordinate Bench of ITAT held that the same is barr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Delhi High Court followed its own decision in the case of CIT Vs. NHK Japan Broadcasting Limited (supra) and held that 4 years is the reasonable period for initiating the proceedings u/s 201/201(1A) of IT Act. The Ld. DR relied on the decision of Hon'ble Bombay High Court in the case of Mahindra & Mahindra Ltd. Considering the Hon'ble Supreme court decision in CIT Vs.Vegetable Products Ltd., 88 ITR 192 (SC) and CIT Vs. Karamchand Premchand Ltd (1960) 40 ITR 106, we are also of the view that the decision favourable to the assessee is required to be taken. Accordingly following the decision of Hon'ble Delhi High Court we hold that reasonable period is 4 years for initiating of proceedings u/s 201/201(1A). In the instant case the property was registered on 18.7.2007 and the assessee is liable to deduct the TDS during the F.Y.2007-08 and the 4 years time limit for initiating action u/s 201/201A expires before March 2012. In the instant case, notice u/s 195 treating the assessee as assessee in default was issued on 11.08.2013 beyond the 4 years of the financial year in which the assessee required to deduct tax at source. As held by Hon'ble Delhi High Court, the time limit for in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid return also, it is not the case of petitioner that there was any indication disclosing to Revenue Authority that one of the sellers was N.R.I. Case of Revenue is that they came to know during the course of processing of return of petitioner for A. V. 2006-07 that one of co-sellers, Smt. Nidhi Raman, is an NRI. and liable to pay capital gain tax as land sold was an urban land, which was also supported by return of income for A.Y. 2006-07." In the instant case the fact that the vendor is NRI was recorded in the sale deed itself, as evident from the Ld.CIT(A)'s order and he is the resident of 7690A, Green Meadow, USA. Having recorded the residential status in sale deed no extra time is required to prosecute the matter against the payee and the payer. In the case of the decision of Hon'ble Allahabad High Court relied upon by the Ld.CIT(A), it was indicated that all the vendors are shown as residents of India. The assessing officer was under the impression that the vendor was resident of India, thus taken the time for initiating the proceedings u/s 201(1)(1A) of the act. Where as in the instant case residential status was recorded in the sale deed and the AO determined the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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