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TMI Blog2022 (7) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... . DR in ITO vs. Shri Rang Infrastructure (P) Ltd ( 2019 (9) TMI 307 - ITAT AHMEDABAD] is distinguishable on the fact that the extension of the period of time limit U/s. 201(3) applies only to residents and not to NRIs and hence reliance cannot be placed for the instant case. Thus we are of the considered view that treating the assessee as an assessee in default U/s. 201 of the Act is not valid in law. We therefore are inclined to quash the order of the Ld. CIT(A). Appeal of assessee allowed. - I.T.A. No.135/Viz/2021 - - - Dated:- 14-7-2022 - Shri Duvvuru Rl Reddy, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Appellant : Sri C. Subrahmanyam, CA For the Respondent : Sri SPG Mudaliar, Sr. AR ORDER PER DUVVURU RL REDDY, Judicial Member : This appeal is filed by the assessee against the order of the Ld. CIT(A)-10, Hyderabad in DIN Order No. ITBA/APL/S/250/2020-21/1027771258(1), dated 21/06/2020 passed U/s. 201(1) 201(1A) of the Act for the AY 2011-12. 2. In this appeal, there is a delay of 296 days in filing the instant appeal before the Tribunal. The assessee has filed condonation petition. However, as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, in this case the seller of the property, the payee, being a national of USA is not subject to TDS. 4. Without prejudice to the above grounds, Ld. CIT(A) ought to have taken cognizance of the fact that when the said capital gains was assessed and tax demand was raised in the hands of the said NRI payee, under such circumstances, upholding the finding of the AO that the appellant is assessee in default, u/s. 201 of the Act is against the law which otherwise amounts to double taxation not permitted under law. 5. Without prejudice to the ground no.1 to 3, the Ld. CIT(A), while issuing a direction to the AO by stating that the penalty U/s. 201(1) and interest U/s. 201(1A) has to be reduced to the extent amount of tax was determined in the hands of the payee, has erred in not appreciating the fact that by virtue of section 201(2) of the Act since no tax was deduted by the assessee, no demand in respect of the amount can be raised in the hands of the assessee U/s. 201(1) of the Act. 6. Without prejudice to the ground no.1 to 3, the Ld. CIT(A) while issuing a direction to the AO by stating that the penalty U/s. 201 and interest U/s. 201(1A) has to be reduced to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the decision of the Ahmedabad Bench of the Tribunal in the case of ITO vs. Shri Rang Infrastructure (P.) Ltd reported in [2019] 112 taxmann.com 344 (Ahmedabad-Trib.). Ld. DR argued that section 201(3) was amended in the year 2014 w.e.f 1/10/2014 onwards. The Ld. DR pleaded that the order of the Ld. Revenue Authorities be upheld. 7. We have heard both the sides and perused the material available on record. In this case the admitted facts are that the assessee has purchased a property during the FY 2010-11 relevant to the AY 2011-12 on 7/3/2011. The assessee has paid a sum of Rs. 54,22,000/- out of which Rs. 50,39,500/- was paid to the NRI. As per the provisions of section 195 of the Act, the assessee is required to deduct tax at source on payments made to non-residents. In the instant case, the assessee required to deduct the tax at source on the sums chargeable to capital gains. The assessee has failed to deduct the tax at source, therefore the assessee is liable for payment tax and interest U/s. 201(1)/201(1A) of the Act. The Ld. AO passed order U/s. 201(1)/201(1A) on 27/03/2018 which is after a lapse of five years from the end of the relevant assessment year. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court has relied on the decision of CIT Vs. NHK Japan Broadcasting Limited [305 ITR 137] and the CIT Vs. Hutchison Essar Telecom. Limited [323 ITR 330], Further, Hon ble Delhi High Court has considered amendment made to Section 201 of the Act vide Finance Bill, 2009 and viewed that the Parliament did not make any amendment to the time limits for the non residents which indicates that the Parliament has accepted the judicial pronouncements for the limitation period already set out by the courts. The Hon ble Delhi High Court also considered the decision of Hon ble Supreme Court in the case of GE India Technology Centre Vs. CIT (2010) (10) SCC 29, wherein, the Hon ble Supreme Court held that the proceedings should be initiated u/s 201/201(1A) within reasonable period and it cannot extend without limitation. After considering the decision of the Hon ble Supreme court in GE India Technology and the Vodafone Essar Mobiles Ltd. the Hon ble Delhi High Court followed its own decision in the case of CIT Vs. NHK Japan Broadcasting Limited (supra) and held that 4 years is the reasonable period for initiating the proceedings u/s 201/201(1A) of IT Act. The Ld. DR relied on the decision of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be required to pay the amount, even if due five or six years preceding the demand, would be a serious problem. Several developments take place over the period, and the nature of relations undergoes change. 9. In the instant case, Smt. Davuluri Sai Swapna has filed her return of income in response to the notice U/s. 148 of the Act for the AY 2012-13 admitting a total taxable income of Rs. 16,16,878/- and offered capital gains of Rs. 15,22,953/-. The AO of the non-resident ITO, Ward-12(2), Hyderabad passed the assessment order U/s. 143(3) r.w.s 147 of the Act on 12/6/2019 accepting the return filed by the NRI Smt. Davuluri Sai Swapna. Since the non-resident has discharged her obligation with respect to payment of capital gains tax, the assessee cannot be taxed once again for non-deduction of TDS U/s. 195 of the Act. It is also observed that the seller Smt. Davuluri Sai Swapna is a non-resident from the assessment order passed by AO, Ward-12(2), Hyderabad. Similarly it is also noticed that the AO erred in not adopting the SRO value as prescribed U/s. 50C of the Act while concluding the assessment of the Non-Resident. The reliance placed by the Ld. DR in ITO vs. Shri Rang Infra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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