TMI Blog2023 (3) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... idential status of Shri Mahesh Bhupathi cannot be accepted as he was with the company since long time and this argument of the assessee do not come to present assessee s rescue or absolve him of the duty to do what the law required the present assessee to do. In our opinion, facts on record show that the assessee well aware of the residential status of Shri Mahesh Bhupathi and the assessee liable as per the provisions of section 195 of the Act to deduct at a specified rate from the purchase price before making payment to seller, who is being NRI. CIT(A) rightly held that assessee is required to determine the income component involved in the payment to non-resident on account of transfer of immovable property on which withholding tax liability is to be computed and the payer would be considered as being in default for non-withholding of taxes only in relation to such income component. In the present case, Ld. CIT(A) rightly held that assessee is liable to deduct TDS on the income component of Rs.1,74,47,180/- as against the income component determined by AO at Rs.1,97,27,780. Accordingly, these grounds of appeal of the assessee are dismissed. Charging of interest u/s.201[1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT[A] failed to appreciate that Mr. Mahesh Bhupathi has since reported the transaction relating to the sale of the apartment in his return of income filed before the Income-tax Department and hence, the appellant cannot be considered as an assessee in default having regard to the fact that no tax was payable by Mr. Mahesh Bhupathi on the said transaction in terms of the return filed by him under t facts and in the circumstances of the appellant's case. 5. The Learned CIT[A] has erred in ignoring the submissions of the Appellant that the transfer took place in the assessment Year 2013-14, the year when the Sale deed was executed and not in the impugned year when only an advance was paid in as much as no income accrued for the year under appeal. 6. Without prejudice the above, the learned CIT[A] failed to appreciate that the liability to deduct tax, if any, would only be restricted to the income accrued in the hands of Mr. Mahesh Bhupathi and not on the entire consideration as held by the Learned CIT[A]. 7. Without prejudice to the above, the extent of tax demanded from the appellant u/s. 201[1] of the Act is highly excessive and the same is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bhupathi at least from the day of booking on 15.06.2004' when the latter booked the apartment as per MOU. Secondly and more importantly, the Website of Assessee Company shows that Mr. Bhupathi is an independent Director of the company and claimed to be associated with the company since 2005. The relevant extract from the website reads as under: Mr. Mahesh Bhupathi is India's first only 10 times Grand Slam title winner and US Open mixed doubles titles holder. He has over 15 years of professional experience in the sports, media and entertainment industries. He is also a part of the Hon. Board of Advisors of IIMUN and the founder of International Premier Tennis League. Mr. Mahesh Bhupathi has been associated with the Company since 2005. In any case, the claim that Mr. Bhupathi has provided his Indian addresses for all the transaction cannot be a valid and an acceptable reason to claim innocence. [emphasis added) 3.1 In any case, paying in Indian currency or not being aware of the residential status does not absolve the assessee of the liability cast upon it. In the provisions of section 201 of the Act dealing with situations where assessee can be held to be in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cases where remittance is made to the non-resident in installments, TDS is to be affected from the first installment. Here, it is important torefer to the observation of Hon'ble Supreme Court in the case of Vodafone International Holdings B.V. (341 ITR 1) The object of Section 195 is to ensure that tax due from nonresident persons is secured at the earliest point of time so that there is no difficulty incollection of tax subsequently at the time orregular assessment. f) In this case, the total consideration was already known/determined at Rs.4 crores as per the clause II of the Agreement for Sale dated 17.7.2010 which is reproduced below: II And whereas the purchaser (assessee) has scrutinized the Title Deeds with regard' to the Schedule A property and after being satisfied with the scheme of Development formulated by the vendor (payee Mahesh Bhupathi) has agreed to purchase the 17.37% undivided share in the schedule A property...along with apartment of built up area of 7000 sq ft...along with two car parking and the common amenities and facilities provided therein for a valid consideration of Rs 4,00,00,000/- only (Rs four crores only)....Maintenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r draft or by any other mode, whichever is earlier-. The legislature in its wisdom has not provided this benefit u/s 195 of the Act for the remittances made to nonresidents. And Literal Rule of Interpretation says we should read the statute as it is, without distorting or twisting. Reference in this context is made to the decision of Hon'ble Supreme Court inthe case of Calcutta Knitwears (362 [TR 673). The relevant extract- is reproduced below:- 23....It is time and again reiterated that the courts, while interpreting the provisions of a fiscal legislation should neither add nor subtract a word from the provisions of instant meaning of the sections. It may be mentioned that the foremost principle of interpretation of fiscal statutes in every system of interpretation is the rule of strict interpretation which provides that where the words of the statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule .......... 34...A taxing statute should be strictly construed; common sense approach, equity, logic, ethics and morality have no role to play. Nothing is to be read in, nothing is to be implied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that in terms of section 202 of the IT Act the power to recover tax by deduction under the forgoing provisions shall be without prejudice to any other mode of recovery . Quantum of sum chargeable u/s 195 3.6 Another submission is that in accordance with the decision of Hon'ble Supreme Court in the case of GE Technology (327 ITR 156) and CBDT instruction no 2/2014, the AO should have determined the appropriate proportion of sum chargeable to tax. It is seen from the AOs Order that he has duly complied with the same inasmuch as the cost of acquisition was excluded from gross payment to arrive at the net capital Gains amount. It is on the net amount that he has computed the TDS liability (para 8 of his order). 3.7 However, in the present case, the assessee has not brought on record any evidence to show that at that time of payment it was aware that no amount will be chargeable to tax in the hands of the payee. In fact, as also mentioned above, as per the assessment order in the case of the payee, positive income under the head capital gains has been arrived at, as against loss claimed. 3.8 In view of the above facts and the provisions of law, he placed relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst this assessee is in appeal before us by way of above ground. 4. Regarding ground No.2, the Ld. A.R. submitted as follows: a. The appellant denies itself liable to be considered as an assessee in default in terms of Sec. 201[1] of the Act for the alleged failure to deduct tax u/s. 195 of the Act under the facts and in the circumstances of the appellant's case. b. The learned CIT[A] is not justified in holding that the appellant is an assessee in default in as much as the Appellant was unaware of the residential status of Mr. Mahesh Bhupathi which would have necessitated the deduction of tax at source on the payments made to him under the facts and in the circumstances of the appellant's case. c. The learned CIT[A] ought to have appreciated that the appellant being under the bonafide belief that Mr. Mahesh Bhupathi is a Resident in India by virtue of the agreements entered into, the appellant cannot be considered as an assessee in default u/s.201[1] of the Act under the facts and in the circumstances of the appellant's case. 4.1 According to A.R., the assessee was not aware that Mr. Mahesh Bhupathi was a nonresident since, the residential ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed on 30.3.2011 in terms of which the assessee nominated Mr. Shashikiran Shetty to the benefits of agreement under which the consideration was fixed as Rs.6 crores, out of which Mr. Mahesh Bhupathi would receive the consideration of Rs.4 crores and assessee was to entitle to receive the balance sum of Rs.2 crores as his income. It was submitted that the aforesaid transaction was carried through the terms of the agreements referred to above and ultimately, the said apartment came to be sold only on 22.5.2012. In the present case the seller was non-resident and he has been associated with the assessee company since 2005, though he provided Indian address for all the transactions carried by him. The claim of the assessee that he is unaware of the residential status of Shri Mahesh Bhupathi cannot be accepted as he was with the company since long time and this argument of the assessee do not come to present assessee s rescue or absolve him of the duty to do what the law required the present assessee to do. In our opinion, facts on record show that the assessee well aware of the residential status of Shri Mahesh Bhupathi and the assessee liable as per the provisions of section 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment was towards purchase of the immovable property which is being capital asset. There is further no doubt that the same consideration is chargeable to tax as capital gains in the hands of the seller, Mahesh Bhupathi. Thus, liability u/s 195 of the Act to deduct the tax on such income arose when remittance was made or amount payable to him. This ground of appeal of the assessee is dismissed. 6. Ground No.4:- Without prejudice to the above, it is submitted by A.R. that the learned CIT[A] failed to appreciate that Mr. Mahesh Bhupathi has since reported the transaction relating to the sale of the apartment in his return of income filed before the Income-tax Department and hence, the appellant cannot be considered as an assessee in default having regard to the fact that no tax was payable by Mr. Mahesh Bhupathi on the said transaction in terms of the return filed by him under the facts and in the circumstances of the appellant's case. 6.1 Ld. A.R. relied on the following judgements:- [a] Decision of the Hon'ble Supreme Court in the case of HINDUSTAN COCO COLA BEVERAGES PVT. LTD., reported 293 ITR 226; [b] Decision of the Hon'ble Supreme Court in ELI LI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) at one and one-half per cent forevery month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishingthe statement in accordance with the provisions of sub-section (3) of section 200. Provided that in case any person including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee-in-de fault under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident. 4. The proviso to section 201(1A) was inserted by Finance Act, 2012 w.e.f. 01.07.2012. Prior to the insertion to this proviso, the section contemplated only one situation where the tax was actually paid belatedly by the deductor. In 2007, the judgment of Hon'ble Supreme Court, in the case of Hindustan Coco Cola Beverages Pvt. Ltd. (supra) widened the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eon and over which money in the Indian tax authorities will have no control once this sum of money is thrashed away. The claim of the assessee that vendor Mr. Mahesh Bhupathi had already reported the said transaction to the tax authorities in the A.Y. 2013-14 and there was no capital gain reported in his return of income. As we have pointed out the transaction took place in the A.Y. 2011-12 and the TDS liability u/s 195 of the Act also arose in the A.Y. under considerationas payment is chargeable to tax. Hence, we are of the opinion that there is no relevance if the vendor does not have positive income in the A.Y. under consideration when the payment in question is chargeable to tax, then the person making the payment is obliged to deduct tax at source. This ground of appeal of the assessee is dismissed. 7. Ground Nos.5 to 8:- The Ld. A.R. submitted that the authorities have erred in ignoring the submissions of the Appellant that the transfer took place in the assessment Year 2013-14, the year when the Sale deed was executed and not in the impugned year when only an advance was paid in as much as no income accrued for the year under appeal. 7.1 We have heard both the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (49.32% of the payment TDS made TDS required to be made u/s 195 including SC DC in Rs. Short deduct ion u/s 201(1) in Rs. Interest chargeable u/s 201(1A) upto January 215 in Rs. 17/07/2010 1,50,00,000 73,98,000 Nil 22,85,982 22,85,982 12,34,386 15/07/2011 2,25,00,000 1,10,97,220 Nil 34,29,041 34,29,041 14,40,180 08/04/2012 25,00,000 12,33,000 Nil 3,80,997 3,80,997 1,25,697 Total tax and interest payable by the assessee u/s 201(1) and u/s 201(1A) 60,96,020 28,00,263 9.2 The Ld. CIT(A) considered this computation and he has observed as follows:- 15. I have given my careful consideration to the argument of the appellant and the contentions of the AO. The AO mentions in the order that total cost of Rs.2,02,72,220/- (including registration cost) w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
