Jayanthi Bharath Kumar, Visakhapatnam V. The Director of Income Tax, Visakhapatnam

ITA 272/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5189 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 08-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Assessee Lawyers: C V S MURTHY
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C; 234B; 148

Judgement Text

ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.272/VIZAG/2017 ( / ASSESSMENT YEAR: 2007-08) JAYANTHI BHARATH KUMAR VISAKHAPATNAM DDIT(IT&TP) VISAKHAPATNAM ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI C.V.S. MURTHY, AR / RESPONDENT BY : SHRI D.J.P. ANAND, DR / DATE OF HEARING : 09.07.2018 / DATE OF PRONOUNCEMENT : 13.07.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-10, {CIT(A)}, HYDERABAD VIDE ITA NO.0087/CIT(A)-10/2016-17 DATED 1.11.2016 FOR T HE ASSESSMENT YEAR 2007-08. ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-10, HYDERABAD, IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)-10, HYDERAB AD, IS NOT JUSTIFIED IN DISMISSING THE GROUNDS RAISED BY THE APPELLANT W ITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE. INSTEAD OF DISMI SSING THE GROUND RELATING TO COMPUTATION OF LONG TERM CAPITAL GAIN, HE OUGHT TO HAVE APPRECIATED THE SUBMISSIONS MADE BY THE APPELLANT IN THIS REGARD AN D ALSO IN WORKING OUT THE LONG TERM CAPITAL GAIN AND GRANTED RELIEF. HENC E THE APPELLANT PRAYS FOR RELIEF. 3. THE COMMISSIONER OF INCOME TAX (APPEALS)-10, HYDERAB AD, WAS NOT JUSTIFIED IN NOT ENTERTAINING THE FRESH GROUNDS OF APPEAL FILED BY THE APPELLANT WITHOUT GIVING ANY COGENT REASONS, AS THE ADDITIONAL GROUNDS RAISED BY THE APPELLANT ARE LEGAL GROUNDS, WHICH CA N BE RAISED BY THE APPELLANT AT ANY TIME BEFORE THE APPELLATE AUTHORIT Y, THE SAME MAY KINDLY BE ACCEPTED AND A DECISION MAY BE GIVEN ON THE ADDI TIONAL GROUNDS FILED BY THE APPELLANT. 4. THE UNDERSTANDING OF THE COMMISSIONER OF INCOME TAX (APPEALS)-10, HYDERABAD, IN REJECTING THE ADMISSION OF THE ADDITI ONAL GROUNDS WAS NOT IN ACCORDANCE WITH LAW. HENCE, THE RELIEF MAY KINDLY B E GIVEN BY CANCELLING THE DEMANDS RAISED U/S.234B & 234C OF THE I.T. ACT. 3. GROUND NO.1 IS GENERAL IN NATURE, WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 4. GROUND NOS.2 & 3 ARE RELATED TO THE COMPUTATION OF LONG TERM CAPITAL GAINS. THE ASSESSEE IS A NON-RESIDENT AND RESIDENT OF USA. MR.B CHITTI BABU IS THE REPRESENTATIVE ASSESSEE IN THIS CASE. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR (A.Y.) THE ASS ESSEE SOLD IMMOVABLE PROPERTY ADMEASURING 994 SQ.YDS. ALONG WI TH OLD STRUCTURES LOCATED AT D.NO.25-41-1, GODEVARI STREET, VISAKHAPA TNAM TO M/S. ESSEMM LOGISTICS, VISAKHAPATNAM VIDE DOCUMENT NO.37 27, REGISTERED ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 3 BEFORE THE SUB REGISTRAR, VISAKHAPATNAM. THE SALE CONSIDERATION OF THE DOCUMENT WAS STATED TO BE ` 15.00 LAKHS AND FOR STAMP DUTY PURPOSE, THE REGISTERING AUTHORITY (HEREINAFTER CALLED THE S RO) ASSESSED THE MARKET VALUE AT ` 54,03,500/-. THE ASSESSEE DID NOT FILE RETURN OF INCOME DECLARING THE RESULTANT CAPITAL GAINS, HENCE THE A.O. ISSUED NOTICE U/S 148 OF THE ACT AND TAKEN UP THE CASE FOR SCRUTINY. IN THE RETURN OF INCOME, THE ASSESSEE ADMITTED THE SALE CO NSIDERATION OF ` 15.00 LAKHS AGAINST THE MARKET VALUE DETERMINED BY SRO AT ` 54,03,500/-. THE ASSESSEE OBJECTED FOR ADOPTING TH E SRO VALUE AND THE A.O. REFERRED THE ISSUE TO THE DEPARTMENTAL VALUATI ON OFFICER (DVO) WHO HAS VALUED THE PROPERTY AT ` 89,03,000/-. THE A.O. COMPLETED THE ASSESSMENT ADOPTING THE SALE CONSIDERATION AT ` 45,72,000/- FOR 994 SQ.YDS OF THE LAND, ` 2,88,000/- FOR 70 YEARS OLD SHEDS AND ` 5,42,720/- FOR 10 YEARS OLD SHEDS AS ASSESSED BY THE SRO. ACC ORDINGLY, THE A.O. COMPUTED THE CAPITAL GAINS AT ` 40,56,514/- FOR THE LAND, ` 23,244/- FOR 10 YEARS OLD SHEDS AND LOSS OF ` 29,628/- FOR 70 YEARS OLD SHEDS AND THE TOTAL LONG TERM CAPITAL GAIN WAS WORKED OUT TO ` 40,50,130/- WHICH WAS BROUGHT TO TAX. 5. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 4 THE A.O. AGAINST THE ORDER OF THE CIT(A), THE ASSE SSEE FILED APPEAL BEFORE THE TRIBUNAL. 6. DURING THE APPEAL HEARING, THE LD. A.R. ARGUED THAT THE VALUE ADOPTED BY THE SUB REGISTRAR OFFICE WAS ORIGINALLY FIXED IN 1976 AND THERE WAS NO REVISION IN VISAKHAPATNAM AREA TILL 1982. TH E LD. AR FURTHER SUBMITTED THAT GUIDELINE VALUE AS ON 1981 WAS VERY LOW COMPARED TO THE MARKET VALUE OF THE PROPERTY IN 1981, HENCE REQUEST ED FOR WORKING OUT THE FAIR MARKET VALUE (FMV) AS IN 1981, BY MAKING T HE REVERSE WORKING TAKING THE BASIS FROM THE REVISED RATES OF 1982. T HE LD. A.R ARGUED THAT THE MARKET VALUE WAS REVISED IN 1982 TO RS.250/- PE R SQ.YARD, AND CONTENDED THAT THE COST OF LAND FIXED AT ` 100/- PER SQ.YD AS ON 1.4.1981 WAS RELATED BACK TO 1976 AND THEREFORE, RE QUESTED TO ARRIVE AT THE FMV OF 1981 @ ` 200/- BY REVERSE WORKING ON THE BASIS OF GUIDELINE VALUE OF 1982. THE LD. A.R. FURTHER SUBMITTED THAT THERE WERE CERTAIN DRAWBACKS IN THE PROPERTY SUCH AS OCCUPATION BY TEN ANT AND LACK OF PROPER APPROACH ROADS ETC. AND BECAUSE OF THE SAID DRAWBACKS, THE PROPERTY COULD NOT GET REASONABLE RATE AS EXPECTED, AND HENCE, THE A.O. IS NOT JUSTIFIED IN ARRIVING AT THE LONG TERM CAPIT AL GAIN AT ` 40,50,130/-. THE LD. A.R. ARGUED THAT CONSIDERING THE DRAWBACKS IN THE PROPERTY, VALUE ADOPTED BY THE SRO SHOULD BE SCALED DOWN AND THE VALUE OF THE LAND AS ON 1.4.1981 SHOULD BE ENHANCED TO ` 200/- INSTEAD OF ` 100/- ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 5 CONSIDERING THE REVISED RATES IN 1982 BY THE GOVERN MENT OF ANDHRA PRADESH. 5. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THIS CASE, THE ASSESSEE HAS SOLD THE PROPERTY FOR A CONS IDERATION OF ` 15.00 LAKHS AGAINST THE VALUE ASSESSED BY THE SRO AT ` 54,03,500/-. ON THE OBJECTIONS RAISED BY THE ASSESSEE, THE A.O. REFERRE D THE VALUATION OF THE PROPERTY TO THE DVO AND THE DVO VALUED THE PROPERTY AT ` 89,03,000/-. THE BREAKUP OF THE VALUE FIXED BY THE DVO AND SRO, ITEMWISE ARE AS UNDER: SL.NO. DESCRIPTION DVO (RS.) SRO (RS.) 1. MARKET VALUE OF LAND @ ` 84,00 PER SQ.YD. 83,49,600 45,72,400 2. MARKET VALUE OF BUILDING WHICH IS 70 YEARS OLD 84,754 2,88,000 3. MARKET VALUE OF WHICH IS 12 YEARS OLD 3,29,361 5,42,720 4. MARKET VALUE OF WHICH IS 20 YEARS OLD 1,38,821 TOTAL VALUE OF THE PROPERTY 89,03,000 54,03,120 7. AS PER SECTION 50C(3) OF THE ACT, IN CASE THE VA LUE DETERMINED BY DVO EXCEEDS THE VALUE ADOPTED BY SRO, THE VALUE ASS ESSED BY SRO SHOULD BE TAKEN AS FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 6 A RESULT OF TRANSFER. FOR READY REFERENCE, WE REPR ODUCE RELEVANT PROVISION OF IT ACT, SUB SECTION 3 OF SECTION 50C O F THE ACT, WHICH READS AS UNDER: (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESS ED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSE D BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALU E OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESU LT OF THE TRANSFER.] 8. IN THE INSTANT CASE, THE A.O. HAS OBSERVED THAT THE DVO HAS VALUED THE PROPERTY FOR MORE VALUE THAN THE VALUE A SSESSED BY THE SRO, HENCE, THE A.O. ADOPTED THE VALUE OF SRO AS PER SE CTION 50C(3) OF IT ACT AND COMPUTED THE CAPITAL GAINS. THE DVO HAS VA LUED THE PROPERTY AFTER CONSIDERING ALL THE OBJECTIONS RAISED BY THE ASSESSEE BEFORE THE DVO AND THE A.O. AND VALUED THE PROPERTY AT HIGHER RATE. SINCE THE OBJECTIONS WERE CONSIDERED BY THE TECHNICAL EXPERT AND MADE THE VALUATION OF THE PROPERTY AT HIGHER RATE NO SEPARAT E DEDUCTION IS REQUIRED TO BE ALLOWED ON ACCOUNT OF THE DEFICIENCI ES CANVASSED BY THE LD. A.R. THEREFORE, WE HOLD THAT THE A.O. HAS RIGH TLY ADOPTED THE VALUE ASSESSED BY THE SRO U/S 50C OF THE ACT AND ACCORDIN GLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE ASSESSEES A PPEAL ON THIS GROUND. 9.0 IN THE APPEAL, THE ASSESSEE HAS REQUESTED FOR R EVISION OF COST OF LAND I.E. FAIR MARKET VALUE(FMV) AS ON 01/04/1981 A T ` 200/- PER SQ.YD. ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 7 AGAINST FMV AS ON 1.4.1981 @ ` 100/- PER SQ.YD. AS PER THE GUIDELINE VALUE. THE ASSESSEE DID NOT BRING ANY EVIDENCE TO ESTABLISH THAT THE FMV OF LAND AS ON 1.4.1981 WAS ` 200/- PER SQ YARD, WITH MARKET INFORMATION FROM APPROVED CHANNELS, WEALTH TAX RETU RNS OF THE ASSESSEE ETC. THOUGH THE ASSESSEE SUBMITTED THAT THE GUIDE L INE VALUE WAS REVISED IN 1982 AND REQUESTED FOR BACKWARD WORKING OF THE FMV, IT IS INCORRECT METHOD TO ARRIVE AT THE FMV. FOR ARRIVI NG THE FMV AS ON 1981 THE CORRECT METHOD IS GUIDELINE VALUE, OR THE SALE VALUE OF THE LANDS IN THE AREA, OR THE AUTHENTIC MARKET INFORMATION AND T HE VALUE DECLARED BY THE ASSESSEE IN HER WEALTH TAX RETURN. THE ASSESSE E HAS NOT FURNISHED ANY INFORMATION TO SUBSTANTIATE THAT THE GUIDELINE VALUE WAS INCORRECT. THE A.O. HAS ADOPTED THE SRO VALUE IN THE CASE OF T HE SALE CONSIDERATION AS WELL AS FOR COST OF LAND (FMV) AND THE DECISION TAKEN BY THE A.O. IS CONSISTENT. IN THE ABSENCE OF ANY EVID ENCE TO ESTABLISH THAT THE LAND RATE OF THE AREA WAS AT ` 200/- AS ON 01/04/1981 AND THE MARKET RATE WAS MORE THAN RS.100/-, WE HOLD THAT TH E FMV ARRIVED BY THE AO IS REASONABLE AND DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND THE SAME IS UPHELD. 10. THE NEXT GROUND RAISED BY THE ASSESSEE WAS COMP UTATION OF SHORT TERM CAPITAL LOSS IN RESPECT OF SUPER STRUCTURES. DURING THE APPEAL HEARING, THE LD. A.R. DID NOT MAKE ANY ARGUMENT ON THIS GROUND. ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 8 HOWEVER, ON GOING THROUGH THE ASSESSMENT ORDER, THE A.O. HAS ADOPTED THE VALUE OF SALE CONSIDERATION AS ADOPTED BY THE S RO. NO OTHER EVIDENCE PRODUCED BY THE ASSESSEE DURING THE APPEAL HEARING TO CONTROVERT THE FINDING GIVEN BY THE A.O., THEREFORE , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SA ME IS DISMISSED. 11. GROUND NO.4 IS RELATED TO THE CHARGING OF INTER EST U/S 234B & C OF THE ACT. DURING THE APPEAL HEARING, LD. A.R. ARGUE D THAT THE ASSESSEE IS A NON-RESIDENT AND REQUIRED TO DEDUCT TAX AT SOURCE AT THE TIME OF PURCHASE OF PROPERTY FROM THE NON-RESIDENT AS REQUI RED U/S 195 OF THE ACT. THEREFORE, THE ASSESSEE IS NOT OBLIGED TO PAY ADVANCE TAX AND RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. 1. JACABS CIVIL INCORPORATED, 2. MITSUBISHI CORPORATION (2011) 330 ITR 578 (DELHI). 12. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSEE IS NON-RESIDENT AND RE SIDENT OF US AND SOLD THE PROPERTY TO THE RESIDENT. THE VENDEE REQUIRED TO DEDUCT THE TAX AT SOURCE AS PER SECTION 195 OF THE ACT. THE ASSESSEE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF JACABS C IVIL INCORPORATED AND ANOTHER CITED (SUPRA) WHEREIN THE HONBLE HIGH COUR T HELD AS UNDER: ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 9 THIS CLAUSE CATEGORICALLY USES THE EXPRESSION DED UCTIBLE OR COLLECTIBLE AT SOURCE AND IT IS THIS CLAUSE WHICH IS INCORPORATED BY THE UTTARANCHAL HIGH COURT IN THE SAID JUDGEMENT (SUPRA ) IN THE MANNER ALREADY POINTED ABOVE. THE SCHEME OF THE ACT IN RE SPECT OF NON-RESIDENTS IS CLEAR. SECTION 195 OF THE ACT PUTS AN OBLIGATIO N ON THE PAYER, I.E., ANY PERSON RESPONSIBLE FOR PAYING TO A NON-RESIDENT, TO DEDUCT INCOME-TAX AT SOURCE AT THE RATES IN FORCE FROM SUCH PAYMENTS EXC LUDING THOSE INCOMES WHICH ARE CHARGEABLE UNDER THE HEAD SALARIES. TH EREFORE, THE ENTIRE TAX IS TO BE DEDUCTED AT SOURCE WHICH IS PAYABLE ON SUC H PAYMENTS MADE BY THE PAYEE TO THE NON-RESIDENT. SECTION 201 OF THE ACT LAYS DOWN THE CONSEQUENCES OF FAILURE TO DEDUCT OR PAY. THESE CO NSEQUENCES INCLUDE NOT ONLY THE LIABILITY TO PAY THE AMOUNT WHICH SUCH A PERSON WAS REQUIRED TO DEDUCT AT SOURCE FROM THE PAYMENTS MADE TO A NON -RESIDENT BUT ALSO PENALTIES ETC. ONCE IT IS FOUND THAT THE LIABILITY WAS THAT OF THE PAYER AND THE SAID PAYER HAS DEFAULTED IN DEDUCTING THE TAX A T SOURCE, THE DEPARTMENT IS NOT REMEDY LESS AND THEREFORE CAN TAK E ACTION AGAINST THE PAYER UNDER THE PROVISIONS OF SECTION 201 OF THE IN COME-TAX ACT AND COMPUTE THE AMOUNT ACCORDINGLY. NO DOUBT, IF THE P ERSON (PAYER) WHO HAD TO MAKE PAYMENTS TO THE NON-RESIDENT HAD DEFAUL TED IN DEDUCTING THE TAX AT SOURCE FROM SUCH PAYMENTS, THE NON-RESIDENT IS NOT ABSOLVED FROM PAYMENT OF TAXES THEREUPON. HOWEVER, IN SUCH A CAS E, THE NON-RESIDENT IS LIABLE TO PAY TAX AND THE QUESTION OF PAYMENT OF ADVANCE TAX WOULD NOT ARISE. THIS WOULD BE CLEAR FROM THE READING OF SEC TION 191 OF THE ACT ALONG WITH SECTION 209(1)(D) OF THE ACT. FOR THIS REASON, IT WOULD NOT BE PERMISSIBLE FOR THE REVENUE TO CHARGE ANY INTEREST UNDER SECTION 234B OF THE ACT. 12.1 THE COORDINATE BENCH OF KOLKATA ITAT-C BEN CH IN THE CASE OF ADDITIONAL DIRECTOR OF INCOME-TAX, (INTERNATIONAL T AXATION)- 3(1), KOLKATA V. WHITE INDUSTRIES AUSTRALIA LTD. , [2017] 81 TAXMANN.COM 33 (KOLKATA - TRIB.)HAS CONSIDERED THE SAME ISSUE AND HELD AS UNDER: 22. AS FAR AS THIS APPEAL BY THE REVENUE IS CONCERNED THE PERSON MAKING PAYMENT TO THE ASSESSEE WAS DUTY BOUND TO DEDUCT TAX AT SOURCE U/S.195 OF THE ACT ON PAYMENT MADE TO THE ASSESSEE, AS THE ASSESSEE WAS A NON-RESIDENT. I N ESTIMATING THE ADVANCE TAX PAYABLE, THE ASSESSEE WAS BOUND TO TAKE NOTE (GIVE CREDIT TO) TA X DEDUCTIBLE AT SOURCE (WHETHER ACTUALLY DEDUCTED OR NOT). IF SUCH CREDIT IS GIVEN THEN THER E WOULD BE NO LIABILITY TO PAY ADVANCE TAX OF THE ASSESSEE WOULD BE LESS THAN RS.5000 AND THEREFO RE NO INTEREST U/S.234B OF THE ACT COULD BE LEVIED. IN THIS REGARD REFERENCE MAY BE MADE TO THE DECISION OF THE ITAT DELHI IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING INC. V. DY. CIT [2000] 72 ITD 415 (DELHI) . IN THIS REGARD RELIANCE MAY ALSO PLACED ON THE DECISION IN THE CASE OF MOTORALA INC. V. DY. CIT [2005] 95 ITD 269 (DELHI) (SB) , WHEREIN THE HON'BLE TRIBUNAL HAS HELD THAT NO INT EREST IS PAYABLE BY A TAXPAYER IF HIS ENTIRE TAX WAS DEDUCTI BLE AT SOURCE, AND THIS IS TRUE EVEN IF THE TAX WAS NOT ACTUALLY DEDUCTED. THE RELEVANT EXTRACTS OF THE SAID DECISION IS PRODUCED BELOW: 'ALL THE PAYMENTS MADE TO THE ASSESSEE ARE TAX DEDU CTIBLE AT SOURCE (EVEN ASSUMING THAT THEY ARE TAXABLE) AS RIGHTLY HELD BY THE CIT(A) AND ALSO CONTENDED BEFORE US. IN THAT ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 10 CASE, HAVING REGARD TO THE PROVISIONS OF SECTION 20 1(1) & 201(1A) TO WHICH OUR ATTENTION WAS DRAWN ON BEHALF OF THE ASSESSEES. THE ASSESSEES CANNOT BE HELD TO HAVE COMMITTED DEFAULT IN PAYING THE ADVANCE- TAX. THEY ARE ENTITL ED TO TAKE INTO ACCOUNT THE TAX WHICH IS DEDUCTIBLE BY THE PAYER. THOUGH NOT ACTUALLY DEDUCT ED. CONSEQUENTLY, THERE IS NO LIABILITY TO PAY INTEREST. THE DECISION OF THE CIT(A) TO CANC EL THE INTEREST U/S 234B IS UPHELD ON MERITS. ' 23. THE ISSUE WAS CONFIRMED BY THE DELHI HC IN THE CAS E OF DIT V. ERICSSON AB [2011] 16 TAXMANN.COM 371/204 TAXMAN 192/343 ITR 470 . RELIANCE WAS ALSO PLACED ON THE DECISION IN THE CASE OF DIT V. JACOBS CIVIL INCORPORATED/MITSUBISHI CORPN [2010] 194 TAXMAN 495/330 ITR 578 (DELHI) (PAGE 726 TO 742), WHEREIN THE HON'BLE DELHI HIGH COURT HAS HELD AS UNDER: 'NO DOUBT, IF THE PERSON (PAYER) WHO HAD TO MAKE PA YMENTS TO THE NON-RESIDENT HAD DEFAULTED IN DEDUCTING THE TAX AT SOURCE FROM SUCH PAYMENTS. THE NON - RESIDENT IS NOT ABSOLVED FROM PAYMENT OF TAXES THEREUPON. HOWEVER, IN SUCH A CASE, THE NON-RESIDENT IS LIABLE TO PAY TAX AND THE QUESTION OF PAYMENT OF AD VANCE TAX WOULD NOT ARISE. THIS WOULD BE CLEAR FROM THE READING OF SECTION 191 OF THE ACT ALONG WITH SECTION 209 (1) (D) OF THE ACT. FOR THIS REASON. IT WOULD NOT BE PERMISSIBLE F OR THE REVENUE TO CHARGE ANY INTEREST UNDER SECTION 234B OF THE ACT.' 24. RELIANCE MAY ALSO BE PLACED ON FOLLOWING DECISIONS LAYING DOWN IDENTICAL PROPOSITION AS SET OUT ABOVE. DIT (INTERNATIONAL TAXATION) V. MAERSK CO. LTD. [2011] 198 TAXMAN 518/10 TAXMANN.COM 269/334 ITR 79 (UTTARAKHAND) (FB) . SEDCO FOREX INTERNATIONAL DRILLING ( SUPRA ); RHEINBRAUN ENGG. & WASSER GMIBH V. DY. CIT [IT APPEAL NO. 1915 BOM./1996, DATED 3 OCTOBER 1997 (BOM.)]; M.M. RATHAN V. ITO [1997] 62 ITD 21 (MUM.) (TM) ; ASIA SATELLITE TELE COMMUNICATIONS CO. LTD. V. DY. CIT [2003] 85 ITD 478 (DELHI) ; DIT V. NGC NETWORK ASIA LLC [2009] 313 ITR 187 (BOM.) ; CIT V. TIDE WATER MARINE INTERNATIONAL INC. [2009] 309 ITR 85/177 TAXMAN 150 (UTTARAKHAND) AND CIT V. RANCHI CLUB LTD. [2001] 247 ITR 209/114 TAXMAN 414 (SC) . THEREFORE, THE PROVISIONS OF SECTION 234B & 234C AR E NOT APPLICABLE TO THE ASSESSEE. 25. UNDER SECTION 209(1)(A)TO (D) LAYS DOWN FOUR SITUA TIONS UNDER WHICH ADVANCE TAX PAYABLE BY THE ASSESSEE IS TO BE COMPUTED. IN THE PRESENT C ASE WE ARE NOT CONCERNED WITH CLAUSES (A) TO (C). CLAUSE (D) OF SUB-SECTION (1) OF SEC.209 IS RELEVANT FOR THE PRESENT CASE AND IT READS THUS:- '( D ) THE INCOME-TAX CALCULATED UNDER CLAUSE (A) OR CLA USE (B) OR CLAUSE(C) SHALL, IN EACH CASE, BE REDUCED BY THE AMOUNT OF INCOME-TAX WHICH WOULD BE DEDUCTIBLE OR COLLECTIBLE AT SOURCE DURING THE SAID FINANCIAL YEAR UNDER ANY PROVISION OF THIS ACT FROM ANY INCOME (AS COMPUTED BEFORE ALLOWING ANY DEDUCTIONS ADMISSI BLE UNDER THIS ACT) WHICH HAS BEEN TAKEN INTO ACCOUNT IN COMPUTING THE CURRENT INCOME OR, AS THE CASE MAY BE, THE TOTAL INCOME AFORESAID; AND THE AMOUNT OF INCOME-TAX AS S O REDUCED SHALL BE THE ADVANCE TAX PAYABLE.' 26. A READING OF THE ABOVE CLAUSE SHOWS THAT THE CLAUS E CATEGORICALLY USES THE EXPRESSION 'DEDUCTABLE OR COLLECTABLE AT SOURCE'. UNDER SEC.19 5 OF THE ACT, THERE IS AN OBLIGATION ON THE PAYER, I.E. ANY PERSON RESPONSIBLE FOR PAYING TO A NON-RESIDENT, TO DEDUCT INCOME TAX AT SOURCE AT THE RATES IN FORCE FROM SUCH PAYMENTS EXCLUDING THOSE INCOMES WHICH ARE CHARGEABLE UNDER THE HEAD 'SALARIES'. THEREFORE, THE ENTIRE TAX IS T O BE DEDUCTED AT SOURCE WHICH IS PAYABLE ON SUCH PAYMENTS MADE BY THE PAYEE TO THE NON- RESIDEN T. SEC.201 OF THE ACT LAYS DOWN THE CONSEQUENCES OF FAILURE TO DEDUCT OR PAY. THESE CON SEQUENCES INCLUDE NOT ONLY THE LIABILITY TO PAY THE AMOUNT WHICH SUCH A PERSON WAS REQUIRED TO DEDUCT AT SOURCE FROM THE PAYMENTS MADE TO A NON-RESIDENT BUT ALSO PENALTIES ETC. ONCE IT IS FOUND THAT THE LIABILITY WAS THAT OF THE PAYER AND THE SAID PAYER HAS DEFAULTED IN DEDUCTING THE TAX AT SOURCE, THE DEPARTMENT IS NOT ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 11 REMEDY-LESS AND THEREFORE CAN TAKE ACTION AGAINST T HE PAYER UNDER THE PROVISIONS OF SEC.201 OF THE INCOME TAX ACT AND COMPUTE THE AMOUNT ACCORD INGLY. NO DOUBT, IF THE PERSON (PAYER) WHO HAD TO MAKE PAYMENTS TO THE NON-RESIDENT HAD DE FAULTED IN DEDUCTING THE TAX AT SOURCE FROM SUCH PAYMENTS, THE NON- RESIDENT IS NOT ABSOLV ED FROM PAYMENT OF TAXES THEREUPON. HOWEVER, IN SUCH A CASE, THE NON-RESIDENT IS LIABLE TO PAY TAX AND THE QUESTION OF PAYMENT OF ADVANCE TAX WOULD NOT ARISE. THE PROVISIONS OF SEC. 209(1)(D) HAVE BEEN AMENDED BY THE FINANCE ACT, 2012 BUT THOSE AMENDMENTS ARE NOT RELE VANT FOR THE PRESENT CASE WHICH RELATES TO AY 1992-92. WE THEREFORE HOLD THAT THE ASSESSEE WAS NOT LIABLE TO PAY ANY INTEREST UNDER SEC.234-B OF THE ACT FOLLOWING THE JUDGMENTS REFERR ED TO EARLIER. IN THE INSTANT CASE, THE FACTS OF THIS CASE ARE S IMILAR, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE CITED (SUPRA) AND THE DECISION OF THE COORDINA TE BENCH OF KOLKATA, WE HOLD THAT THE ASSESSEE IS NOT LIABLE FOR INTERES T U/S 234 OF THE ACT TO THE EXTENT OF TDS TO BE MADE FROM THE ASSESSEE. AC CORDINGLY, WE DIRECT THE A.O. NOT TO LEVY THE INTEREST U/S 234B OF THE A CT TO THE EXTENT OF TAX REQUIRED TO BE DEDUCTED FROM THE ASSESSEE BY THE PU RCHASER. ACCORDINGLY, THE APPEAL OF THE ASSESSEE ON THIS GRO UND IS PARTLY ALLOWED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 13 TH JUL18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 13.07.2018 VG/SPS ITA NO.272 /VIZAG/2017 JAYANTHI BHARATH KUMAR, VSKP 12 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI JAYANTHI BHARAT KUMAR, C/O SRI CHITTI BABU, D.NO.7-22-1, KIRLAMPUDI LAYOUT, VISAKHAPATNAM 2. / THE RESPONDENT THE DY. DIRECTOR OF INCOME TAX ( IT&TP), VISAKHAPATNAM 3. + / THE CIT(IT&TP), HYDERABAD 4. + ( ) / THE CIT (A)-10, HYDERABAD 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM