9911796707
TMI Blog2015 (7) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... posited i.e. 28-9-2007. Thus, interest @ 1% for 27 months was computed at Rs. 93,58,510/-. Ld. CIT(A) while partly allowing the assessee's appeal, inter alia, held that assessee was not liable to deduct tax u/s 195. 3. Brief facts of the case are that Shri Jasbir Singh Sarkaria, a citizen of USA, was one of the three co-owners of land admeasuring 27.7 acres, situated in Panchkula, Haryana. The assessee, M/s Santur Developers P. Ltd entered into a collaboration agreement with the 3 coowners on 8.6.2005 and a supplementary agreement on 15.09.2005. Earnest money of Rs. 1 crore was paid with signing of first agreement. AO has observed that the assessee made payments in respect of such agreements to the Non-resident without deduction of tax the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge interest u/s 201(1A) till the date of payment of tax by the deductee or the liability for penalty u/s 271C still remains. He, accordingly, levied interest at Rs. 93,58,510/-. 4. Before ld. CIT(A), the assessee had primarily advanced following submissions: (i) The AO himself had held that since the owners of the land had already deposited the tax due on the income from capital gains, arising to them, therefore, the assessee could not be treated as an assessee in default and, therefore, no order u/s 201(1) had been passed against the assessee. Therefore, there was no justification in charging interest u/s 201(1A). (ii) The provisions of section 195 were not applicable in the instant case for the following reasons: (a) The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le under the provisions of this Act as sale proceeds is not income chargeable under the provisions of this Act. The submission is that section 195 is applicable only when income in the nature of 'interest' or 'any other sum chargeable under the provisions of this Act, is required to be paid by a resident Indian to a non-resident. However, in the present case no income was paid by assessee but only the entire sale consideration was paid. (iii) The provisions of section 192 to 196D in Chapter XVII relating to deduction of tax do not provide any deduction of tax at source in respect of sale proceeds of an immovable property paid by a resident tax payer. Further, such deduction of tax at source is also snot provided for in any DTAA with any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced by ld. CIT(A) in para 12 of his order. 5. Ld. CIT(A) upheld the assessee's contention that it was not liable to deduct tax u/s 195 and further upheld the contention of assessee that in view of non-discriminating clause in Article 26 of the DTAA between India and USA, the assessee was not obliged to deduct tax at source u/s 195 of the Act in the instant case, as there is no provision in the Income-tax act, requiring a resident to deduct tax at source from sale proceeds of land payable to any other resident. Ld. CIT(A) also observed that in any view of the matter, there was no loss to revenue because the non-resident Shri Jasbir Singh Sarkaria filed his return of income for AY 2006-07 and 2007-08 on 28-9-2007 after approaching the Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Jasbir Singh Sarkaria as per operations of law and even that interest has not been quantified by ld. CIT(A). He submitted that ld. CIT(A) did not call for a remand report also from the AO on the fact whether any interest had been deposited by Shri Jasbir Singh Sarkaria or not. As regards ld. CIT(A)'s finding that in view of non-discriminating clause under Article 26 of the DTAA no TDS was required to be made, ld. DR submitted that as per provisions of section 195, the assessee was required to deduct TDS. 8. Ld. counsel for the assessee submitted that from a bare perusal of the grounds of appeal, it is evident that the department has not assailed the findings of ld. CIT(A) in holding that the provisions of section 195 are not applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasoning ntoed in para 8 above. Alternatively he has held that- (a) there was no revenue loss to department as Jasbir Singh Sarkaria had paid taxes; and (b) The assessee was entitled to the benefit of Article 26 of DTAA between USA and India. 9.1. The department has not assailed the findings of ld. CIT(A) in holding that the provisions of section 195 are not applicable. Under such circumstances, we rfrain from making any observations with regrd to applicability of section 195 to the facts of the instant case and proceed to take up ground no. 2. 9.2. Apropos ground no. 2, we find that the reasoning given by ld. CIT(A) with reference to Article 26 of the DTAA between India and USA is fully justified because since there is no provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
