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2024 (8) TMI 553 - AT - Income TaxTDS u/s 195 - non deduction of tds on remittances made by the assessee to its foreign bank account - assessee in default in terms of sec. 201 - HELD THAT - As noticed that the assessee has not remitted the above said amount to any other person. It has transferred the above said amount from its bank account maintained in India to its own bank account located in United Kingdom i.e., it is a case of transfer of funds by the assessee to itself. The provisions of section 195 shall come into operation only if a person is making payment to any other person of any sum chargeable under the provisions of the Act. It is not the case of the AO that the remittance made by the assessee from its Indian bank account to its foreign bank account is chargeable under the provisions of the Act. Hence the provisions of section 195 of the Act will not be applicable to the impugned remittance made by the assessee to its foreign bank account. Hence, the assessee cannot be treated as assessee in default in terms of sec. 201 in respect of the above said remittance. Decided in favour of assessee.
Issues:
1. Demand raised by AO under section 201 of the Income Tax Act, 1961 for not deducting tax at source under section 195 in relation to remittances to foreign bank account. Analysis: The appeal was filed by the assessee challenging the order passed by the Ld.Addl/JCIT(A)-4, Kolkata, related to the assessment year 2016-17. The main issue in this case was the demand raised by the Assessing Officer (AO) under section 201 of the Income Tax Act, treating the assessee as "assessee in default" for not deducting tax at source under section 195 in respect of remittances made to its foreign bank account. The AO raised a tax demand of Rs. 65.50 crores and interest demand of Rs. 39.95 crores, totaling Rs. 159.65 crores, due to the failure of the assessee to deduct tax at source. The assessee, a company incorporated in the United Kingdom, claimed Long Term Capital Gain as exempt under section 10(38) of the Act. The remittance of surplus funds from its Indian bank account to its UK bank account was the subject of the dispute. The AO contended that tax should have been deducted at source under section 195 of the Act from these remittances. However, the Tribunal noted that the remittance was made by the assessee to its own bank account in the UK, not to any other person, making it a transfer of funds by the assessee to itself. As per section 195, the provisions apply when a person is making a payment to another person chargeable under the Act, which was not the case here. Therefore, the Tribunal held that the assessee could not be treated as an "assessee in default" under section 201 for the remittance to its foreign bank account. Regarding the confusion over the assessment year, the Tribunal clarified that since the transaction was not liable to tax, the assessment year mentioned in the appeal loses significance. Ultimately, the Tribunal concluded that the tax authorities were not justified in raising the demand on the assessee. Consequently, the orders passed by the tax authorities were quashed, and the grounds raised by the assessee were allowed. The appeal filed by the assessee was allowed, and the decision was pronounced in the open court on 8th August 2024.
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