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2024 (10) TMI 103 - HC - Income TaxTDS u/s 194C or 195 - short deduction of TDS - assessee has made direct payment to non-resident company - proceedings u/s 201 (1) r.w.s. 201 (1A) - Application of the decision in the case of Rishikesh Apartments Cooperative Housing Society 2001 (6) TMI 17 - GUJARAT HIGH COURT for TDS deduction. HELD THAT - Deductee has paid the entire amount of tax except Rs.08.00 lakh which was paid as self-assessment tax, the Tribunal was right in holding that the tax paid by the contractor in its own case by way of advance tax and self-assessment tax should be deducted from the gross tax that the assessee should have deducted under the provisions of the Act while computing the interest chargeable under Section 201 (1A) of the Act. In the facts of the case, the Tribunal was therefore justified in directing the Assessing Officer to calculate the interest on the amount which was paid by the contractor as self-assessment tax till the date it was deposited and such interest was to be paid by the assessee for not deducting the tax at source. Therefore, in the facts of the case, it cannot be said that the Tribunal has committed an error in holding that the assessee is not liable to pay any interest in view of the decision of this Court in case of Rishikesh Apartments Cooperative Housing Society 2001 (6) TMI 17 - GUJARAT HIGH COURT Issue of applicability of the provision of Section 195 (2) of the Act being payment to non-resident is concerned, applying the decision of this Court in case of Rishikesh Apartments Cooperative Housing Society (supra), ultimately the assessee was not held to be liable to deduct the tax than what is to be paid by the contractor and therefore, the second question has become academic and we decline to answer the same. Question No. 1 is answered in favour of the assessee and against the Revenue as the Tribunal was justified in applying the ratio of decision of this Court in case of Rishikesh Apartments Cooperative Housing Society (supra).
Issues:
1. Application of the decision in the case of Rishikesh Apartments Cooperative Housing Society for TDS deduction. 2. Justification of not considering Section 195(2) of the Income Tax Act for payment to a non-resident. Detailed Analysis: Issue 1: Application of the decision in the case of Rishikesh Apartments Cooperative Housing Society for TDS deduction The Tax Appeal was filed under Section 260A of the Income Tax Act, 1961, questioning the application of the ratio of the case of Rishikesh Apartments Cooperative Housing Society by the Appellate Tribunal. The appellant contended that the Tribunal erred in applying the decision as the circumstances of the present case were different. The Tribunal directed the Assessing Officer to charge interest on the amount paid by the deductee as self-assessment tax. However, the appellant argued that there was a default on the part of the assessee in deducting the tax at the correct rate of 48% under Section 195(2) of the Act, instead of 2%. The appellant maintained that interest was leviable for non-deduction of tax as per the Act, contrasting the Tribunal's decision based on the Rishikesh Apartments case. Issue 2: Justification of not considering Section 195(2) of the Income Tax Act for payment to a non-resident Regarding the applicability of Section 195(2) of the Act for payment to a non-resident, the Tribunal's decision in light of the Rishikesh Apartments case was pivotal. The Tribunal held that the tax paid by the contractor should be deducted from the gross tax that the assessee should have deducted while calculating interest under Section 201(1A) of the Act. As a result, the Tribunal found the assessee not liable to deduct more tax than what the contractor had paid. Consequently, the second question regarding the applicability of Section 195(2) became academic, and the Court declined to answer it. In conclusion, the High Court answered the first question in favor of the assessee, affirming the Tribunal's decision to apply the Rishikesh Apartments case. The Court also declined to address the second question, as the assessee was not held liable to deduct more tax than what the contractor had paid. The appeal was disposed of accordingly.
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