The ITO,(Intl.Tax.), Ahmedabad V. M/s. Sthapatya Developers, Baroda

ITA 532/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9687 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Additional evidence

Judgement Text

I.T.A. NO. 532 /AHD/ 201 2 ASSESSMENT YEAR: 200 8 - 09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM] I.T.A. NO. 532 /AHD/201 2 A SSESSMENT Y EAR : 20 0 8 - 09 INCOME TAX OFFICER (INTERNATIONAL TAXATION) .APPELLANT BARODA. VS. STHAP ATYA DEVELOPERS, . RESPONDENT SANSKRUTI BANGLOW, OPP. VISHRANTI, 30 MTR. ROAD, OPP. YASH COMPLEX, GOTRI ROAD, BARODA. [P AN: A BBFS 7156 J ] APPEARANCES BY: DINESH SINGH , FOR THE A PPELLANT NONE , FOR THE RESPONDENT D ATE OF CONCLUD ING THE HEARING: NOVEMBER 26 TH , 201 5 DATE OF PRONOUNCING THE ORDER : JANUARY 22 ND , 201 6 O R D E R PER PRAMOD KUMAR , AM : BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 2 9 TH DECEMBER , 201 1 PASSED BY THE LEARNED CIT(A), IN THE MATTER OF DEMAND RAISED UNDER SECTION 201 READ WITH SECTION 19 5 OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTE R), FOR THE ASSESSMENT YEAR 2008 - 09 . 2. GRIEVANCE S RAISED BY T HE ASSESSING OFFICE ARE AS FOLLOWS : - (I) THE LD . CIT(A), HAS ERRED IN LAW AND ON FACTS IN PASSING THE ORDER WITHOUT WAITING FOR THE REMAND REPORT OF THE AO EVEN THOUGH ADDITIONAL EVIDENCES HAD BEEN ACCEPTED BY HIM. ON THIS GROUND ALONE, THE DECISION OF CIT(A) OUGHT TO BE SET ASIDE AND I.T.A. NO. 532 /AHD/ 201 2 ASSESSMENT YEAR: 200 8 - 09 PAGE 2 OF 4 RESTORED BACK TO THE FILE OF CIT ( A ) TO ADJUDICATE AFTER GIVING OPPORTUNITY TO THE A O A S REQUIRED UNDER LAW. (II) THE LD. CIT (A) HA S ERRED IN LAW AND ON FACTS IN HOLDING THAT GROSSING UP OF TAX UNDER SECTION 195A IS NOT JUSTIFIED M ERELY RELYING ON THE LACK OF AGREEMENT BE TWEEN THE TWO PARTIES. (III) THE LD . CIT ( A ) HAS FURTHER ERRED IN LAW AND ON FACTS IN HOLDING THAT GROSSING UP OF T AX UNDER SECTION 195A IS NOT JUSTIFIED WITHOUT CONSIDERING THE FACT THAT ENTIRE SALE CONSIDERATION WAS REMITTED TO THE SELLER BY THE ASSESSEE WITHOUT DEDUCTING TAX U/S 195 OF THE ACT THEREBY THE ONUS OF TAX WAS VOLUNTARILY TAKEN UP BY THE REMITTER ( ASSESSEE ) A ND THEREAFTER THE AMOUNT OF T A X HAS BEEN PAID BY T HE ASSESSEE ITSELF ALONG WITH INTER E ST. (IV) ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS, THEREFORE , PRAYED THAT THE O R DER OF TH E LD. CIT(A) M A Y BE CANCELLED AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 3. BRIEFLY STATED, THE RELEVANT MAT ERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF PROCEEDINGS BEFORE THE ASSESSING OFFICER , IT WAS NOTICED THAT THE ASSESSEE HAS MADE PAYMENT OF RS.83,92,000/ - AS CONSIDERATION FOR PURCHASE OF IMMOVABLE PROPERTY BELONGING TO SIX PERSONS , ALL OF WHOM WERE NO N - RESIDENTS . IT WAS ALSO NOTED THAT THE SUMS SO PAID WERE LIABLE TO BE TAXED IN INDIA IN RESPECT OF LONG T E RM CAPITAL GAIN. THE ASSESSING OFFICE R WAS FURTHER OF THE VIEW THAT SINCE THE ASSESSEE HAS REMITTED THE ENTIRE AMOUNT WITHOUT DEDUCTING TAX A T SOUR CE, THE ASSESSEE WAS ALSO LIABLE FOR GROSSING UP OF THE TAX PAID ON BEHALF OF NON - RESIDENTS UNDER SECTION 195A OF THE ACT. ACCORDINGLY , THE DEMAND UNDER SECTION 201 WAS RAISED NOT ONLY ON TAX OUGHT TO HAVE BEEN REMITTED FROM THE NON - RESIDENT S BUT ALSO IN RESP E CT OF GROSSING UP OF THIS TAX LIABILITY BY PROC EE DING ON ASSUMPTION THAT LIABILITY WAS TO BE BORNE BY THE ASSESSEE. AGGRIEVED , THE ASSESSEE CARRIED THE MATTER BEFORE THE LD . CIT(A) . THE LD . CIT ( A ) DELETED THE IMPUGNED ADDITION TO THE EXTENT OF G ROSS ING UP BY OBSERVING , INTER ALIA , A S FOLLOWS: - 5.2 I HAVE THOROUGHLY CONSIDERED THE FACTS OF THE C A SE. GROSSING UP OF TAX UNDER SECTION 195A IS REQUIRED TO BE DONE, WHEN THERE IS AN AGREEMENT BETWEEN THE TAX DEDUCTOR AND THE DEDUCTEE, TO THE EFFECT THAT THE TAX BURDEN WILL BE BORNE BY THE FORMER. IN A CASE, LIKE THE PRESENT ONE, WHERE THE TA X HAS NOT BEEN DEDUCTED AND THERE IS NO WRI TTEN AGREEMENT THE SUBSEQUENT CONDUCT OF THE TWO PERSONS INVOLVED PROVIDES THE VITAL CLUES TO THE ACTUAL AGREEMENT BE TWEEN THEM. IN THIS CASE, THE TDS MOUNT HAS I.T.A. NO. 532 /AHD/ 201 2 ASSESSMENT YEAR: 200 8 - 09 PAGE 3 OF 4 BEEN RECEIVED BACK FROM THE DEDUCTEE, THE TD S AMOUNT HAS BEEN DEBITED TO THEIR ACCOUNTS AND CONFIRMATION HAS BEEN RECEIVED ; PROVING THAT THERE WAS NO AGREEMENT TO THE EFFECT THAT THE TAX BURDEN WILL BE BORNE BY THE AP PELLANT. IN THE CIRCUMSTANCES, GROSSING UP OF TAX UNDER SECTION 195A IS NOT JUSTIFIED AND IS DIRECTED TO BE ACCORDINGLY REDUCED. THE GROUND OF APPEAL IS ALLOWED. 4. ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF GR A NTED BY THE LD . CI T(A) AND IS IN APPAL BEFORE US. 5. WE HAVE H E ARD TH E LD . D EPARTMENTAL REPRESENTATIVE , P ER USED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. W E FIND THAT THE MANDATE OF SECTION 195 IS UNAMBIGUOUS IN AS MUCH A S IT P ROVIDES T HAT WHERE UNDER AN AGREEMENT OR OTHER ARRANGEMENT THE TAX CHARGEABLE ON ANY INCOME REFERRED TO UNDER SECTION 195 IS TO BE BORNE BY THE PERSON PAYING THE SAID INCOME , GROSSING UP OF INCOME IS REQUIRED TO BE DONE. IN THE PRESENT CA SE , HOWEVER , TH ERE IS NOTHING AT ALL TO SUGGEST THAT THERE WAS A NY AGREEMENT OR ARRANGEMENT WHEREBY THE ASSESSEE BEFORE US WAS TO BEAR THE T A X ON INCOME EMBEDDED IN PAYMENT TO NON - RESIDENTS . ON TH ESE FACT S , THEREFORE , THE RELIEF G R ANTED BY THE LD . CIT(A) WAS INDEED JUST IFIED AND R E ASON A BLE. THERE IS NO SCOP E FOR COMING TO THE CONCLUSION , AS THE ASSESSING OFFICER DID , THAT MERELY BE CAUSE ENTIRE PAYMENT HAS BEEN MADE TO NON - RESIDENTS WITHOUT DEDUCTING TAX AT SOURCE, THE ASSESS E E HAD ASSUMED, UNDER ANY AGREEMENT OR ARRANGEME NT , THE TAX LIABILITY ON BEHALF OF NON - RE SI D E NTS. IN VIEW OF TH ESE DISCUSSION S, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSION ARRIVED AT BY T HE LD . CIT( A) AND DECLINE TO INTERFERE IN THE MATTER. 6. IN THE RESULT, APPEAL IS DISMI SSED. P RONOUNCED IN THE OPEN COURT TODAY ON 22 ND JANUARY, 2016 . SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEM BER) DATED: THE 22 ND DAY OF JANUARY , 201 6 . PBN/ * I.T.A. NO. 532 /AHD/ 201 2 ASSESSMENT YEAR: 200 8 - 09 PAGE 4 OF 4 COPIES TO : (1) THE APPE LLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD