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TMI Blog2015 (7) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... before AO assessee took a specific plea that on the assurance of recipient-deductee that he will file his return declaring capital gain and pay tax, assessee did not deduct tax in terms with section 195 of the Act. This statement of the assessee clearly demonstrate, from the very beginning both the assessee as well as the recipient were conscious of the fact that payment made towards sale of property was subject to capital gain tax in India. In fact, keeping with the assurance given to assessee recipient deductee has filed a return of income declaring capital gain and also paid the taxes. When the recipient has not made any claim of exemption, assessee who is only payer of the money cannot assume upon itself the burden of deciding the taxability of payment at the hands of the non-resident recipient. At least, the statutory provision does not permit assessee to do so. Even otherwise also, after careful analysis of the relevant statutory provision we find the submissions of ld. AR unacceptable. On perusal of the definition of ‘long term capital gain’ as provided u/s 115C(d), it is seen that it only refers to foreign exchange assets, meaning thereby, any specified asset purchased wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee calling upon him to furnish the details of TDS made u/s 195 on the payment made to non-resident towards sale consideration. Assessee was further called upon that in the event no tax was deducted he should explain why orders u/s 201(1) and 201(1A) should not be passed for not withholding tax u/s 195. In response to show cause notice, assessee vide letter dated 20/11/2011 submitted as under: The sale deed in respect of the property acquired by the firm was executed and registered on 09-04-2008. In the sale deed, the description of the vendor was mentioned as ..at present resident of H. No .. 12-2-71/A, Berban, Hyderabad. In view of the above description, the firm treated the Vendor as an Indian Resident and no tax was deducted from the payment Further the Vendor has given us an oral assurance and under taking that he would pay the tax due on the capital gains under the Provisions of the Income Tax Act. Accordingly, the Vendor calculated and paid the entire tax of ₹ 32804770I- due on the capital gains earned by him before the due date of first installment of Advance tax (i.e. on l0-09-2008) In this, connection, we wish to draw your kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able u/s 201(1A) at ₹ 19,68,283. 3.1 Being aggrieved of the levy of interest u/s 201(1A), assessee preferred appeal before ld. CIT(A). Ld. CIT(A) having confirmed levy of interest, assessee preferred appeal before us. Ld. AR in course of hearing of appeal before ITAT, apart from challenging the levy of interest on merit, also raised additional ground challenging the jurisdiction of AO in passing order u/s 201(1A) of the Act. As far as the issue raised in additional ground challenging the jurisdiction of AO, ITAT did not entertain by refusing to admit the additional ground. However, as far as the merits of levy of interest u/s 201(1A) is concerned, Tribunal remitted the matter back to the file of the CIT(A) to decide assessee s claim that seller being a non-resident not liable to tax u/s 115E(a)(i) of the Act, there is no requirement to deduct tax u/s 195. 4. In pursuance to the directions of the Tribunal, appeal was again heard by ld. CIT(A). After hearing the submissions of assessee on the issue of applicability of provisions of section 115E(1)(a), ld. CIT(A) did not find any merit in the same and accordingly, rejected assessee s claim with regard to non-application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. As far as the issue relating to applicability of provisions of section 115E(1)(a) is concerned, ld. DR referring to the definition of long term capital gain as provided u/s 115C(d) of the Act as well as the definition of specified asset in clause (f) of 115C, submitted, long term capital gain under the said chapter specifically refers to a capital asset being a foreign exchange asset and not the capital asset of the nature sold by assessee i.e. immovable property. Thus, ld. DR submitted, provisions of section 115E is not applicable to assessee. As far as assessee s contention that deductee having paid the tax, there is no loss to revenue, hence, interest is not chargeable, ld. DR strongly relying upon the decision of Hon ble Supreme Court in case of Hindustan Coca Cola Beverages Pvt. Ltd. (supra) submitted, the issue is clearly settled and assessee has to pay interest. 7. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. We have also carefully applied our mind to the decisions relied upon by parties. At the outset, we propose to deal with assessee s ground relating to jurisdiction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn declaring capital gain and pay tax, assessee did not deduct tax in terms with section 195 of the Act. This statement of the assessee clearly demonstrate, from the very beginning both the assessee as well as the recipient were conscious of the fact that payment made towards sale of property was subject to capital gain tax in India. In fact, keeping with the assurance given to assessee recipient deductee has filed a return of income declaring capital gain and also paid the taxes. When the recipient has not made any claim of exemption, assessee who is only payer of the money cannot assume upon itself the burden of deciding the taxability of payment at the hands of the non-resident recipient. At least, the statutory provision does not permit assessee to do so. Even otherwise also, after careful analysis of the relevant statutory provision we find the submissions of ld. AR unacceptable. On perusal of the definition of long term capital gain as provided u/s 115C(d), it is seen that it only refers to foreign exchange assets, meaning thereby, any specified asset purchased with convertible foreign exchange. Therefore, long term capital gain referred to in section 115E(a) will only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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