Shalini Kataria, New Delhi V. ACIT, TDS, CPC, Ghaziabad

ITA 8562/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9564 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2019-2020
• Appeal Filed On: 31-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 2; 201(1); 200A; 201; 22

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No. 8562/Del/2019 Assessment Year 2019-20 O R D E R PER C.M. GARG, JM This appeal has been directed against the order of Ld. Commissioner of Income Tax (Appeals) 28 dated 27.09.2019 for Assessment year 2019-20. 2. Ground No. 6 of assessee is general in nature which requires no adjudication. Ld. assessee’s Representative (AR) submitted that the assessee does not want to press ground No. 5 hence the same is dismissed as not pressed. Remaining ground of appeal read as under: Shalini Kataria, Flat No. 1202, 2 nd Floor, Park Royal Residency Apartment, Vasundhara CGHS Ltd., Plot No. IB, Sector-22, Dwarka, New Delhi – 110 077 PAN AMIPK7810J Vs. ACIT, TDS, CPC, Ghaziabad. (Appellant) (Respondent) Assessee by: Shri Baldev Raj, CA Department by : Shri Jeetender Chand, Sr. DR Date of Hearing 27.09.2022 Date of pronouncement 30.09.2022 ITA No. 8562/Del/2019 2 “1. That on the facts and circumstances of the case, the order dated 18/10/2018 as passed by the ACIT, Centralized Processing Cells-TDS, [hereinafter referred to as "the A.O."] under section 200A/206CB of the Income-tax Act [hereinafter referred to as "the Act"] and as upheld by the Commissioner of Income-tax (Appeals)-28, New Delhi [hereinafter referred to as "the CIT(A)"] is bad at law and void ab initio. 2. That on the facts and in law, the CIT (A) erred in upholding that Appellant is in default in short deduction of TDS of Rs. 74,143. 3. Without prejudice to the Ground no 2: That on facts and on law, the CIT (A) erred in upholding Appellant is in default for short deduction of TDS of Rs 74,143, when due tax has been paid by the "payee" and Appellant is covered in first proviso to section 201 of the Act. 4. That on facts and on law, the CIT (A) erred in not considering the written submission filed and on record.” 3. Apropos ground of appeal the Ld. AR placing reliance on the order of Ld. ITAT Panaji Bench in the case of Shree Balaji Concepts reported as (2022) 140 taxmann.com 142 (Panaji-Trib) submitted that wherein the assessee purchased immovable property from a non-resident seller and paid consideration for same without deducting tax at source, as non resident seller had disclosed the consideration received from assessee in their respective returns, the assessee could not be held as an assessee in default as per amended provisions of section 201(1) of the Act. He also submitted that where the assessee sold property and paid consideration without deducting the TDS on the same and payee filed return of income disclosing the amount of tax the interest levied upon the assessee under section 201(1A) of the Act should be calculated for the period from the date of transaction of purchase of property till the date of filing of return by the payees seller. ITA No. 8562/Del/2019 3 4. Elaborating the facts of the present case the Ld. AR submitted that the assessee filed detailed written submissions before the Ld. CIT(A) spread over 11 pages along with supported documentary evidence placed at pages 12 to 27 of assessee’s paper book which clearly substantiate that the assesee can not be treated that assssee in default under section 201(1) of the Act. Ld. AR also submitted that the claim of joint co-owner Shri Amit Kumar of the same property has been allowed by the Ld. CIT(A), Delhi -41 vide order dated 28.08.2020 pertaining to the same transaction and the revenue cannot take a different or deviated stand in the present case having similar and identical facts of the circumstances. Ld. AR submitted that in a case of non resident individual if income is less than Rs. 1 crore than the rate of surcharge applicable is 10% and since the total income of deduction which includes income from long term capital gain is less than Rs.1 crore the rate of surcharge applicable is 10% only. Ld. AR vehemently pointed out that the surcharge provisions refer to income and not the transaction amount and it would be appropriate to go into the intent of legislation regarding taxability of the income. 5. Replying to the above, the Ld. Sr. DR supported the action of the CPC as well as first appellate order and submitted that in the cases where income or aggregate or such income exceeds Rs. 50 laks but does not exceeds one crore rupees the rate of surcharge would be 15% of such tax. The Ld. AR submitted that the amount of transaction undertaken by the assessee it is clear that the assessee had paid Rs. 1,02,50,000/- on account of property to a non resident which exceeds one crore rupees limit therefore she is liable to pay surcharge @ 15% against 10% as applied by her. 6. On careful consideration of rival submissions, first of all , from the order of Ld. CIT(A), Delhi – 41 dated 28.08.2020 in the case of joint co-owner Shri Amit Kumar we note that the Ld. CIT(A) has decided the issue of applicability of percentage of surcharge in favour of the assessee with following observations and findings : ITA No. 8562/Del/2019 4 “6.1 I have examined the facts of the case, read the 200A order issued by the ACIT- TDS and gone through the submissions of the appellant and the case laws mentioned above. 6.2 As per the facts of the case the appellant deducted TDS @ of 14% on the amount paid for purchase of property from a Non-Resident and applied surcharge @ 10% and Education cess @ 4%. Thus out of the payment of Rs 1,01,84,478/- tax, surcharge and cess amounted to Rs 16,31,146/-. However, ACIT CPC-TDS raised a demand for short deduction of tax and interest thereof amounting to Rs 74,143/-. 6.3 The appellant in his submission has stated that the demand raised by CPC is erroneous since they have applied rate of surcharge of 15% on the TDS when it should be 10% as the capital gain arising from the sale of house is less than 1 crore. In support of his contention the appellant has submitted copy of the income tax return verification form of the seller for AY 2019-20 submitted on 23.8.2019 on income tax e~filing platform. As per the form the gross total income of Shree Deep Ranjan (the seller) is Rs 71,68,248/- out of which long term capital gains amounts to Rs 67,18,881/-. CPC-TDS through the AO vide letter dated 11.8.2020 was asked to clarify the basis of demand raised. CPC vide reply dated 28.8.2020 submitted as under:- “In reference of the trail mail Kindly find below the calculation of the demand: TAN: DELA48739F, F.Y: 2018-19, Quarter-2 and Form Type: 27Q. PAN of Deductee: DGIPR4235P Demand Type: Short Deduction Certificate rate = 14 % (excluding surcharge and cess), Surcharge @ 15% (Payment to non-company more than 1 crore), Cess @ 4%, ITA No. 8562/Del/2019 5 Total TDS rate (Certificate rate+surcharge+cess): 16.744%. Payment Amount: 10184478/- TDS to be deducted by Deductor as per certificate rate (@16.744 of payment amount): 1705289/- TDS deducted by Deductor: 1631146/- Short Deduction demand (TDS to be deducted by Deductor -TDS deducted by Deductor): 74143/-.” 6.4 CPC has clarified that the basis of short deduction of demand raised is the rate of applicable surcharge. The rates of surcharge have been verified from the Finance Act 2019 and are reproduced below:- Surcharge on income-tax The amount of income-tax deducted in accordance with the provisions of— (i) item 1 of this Part, shall be increased by a surcharge, for the purposes of the Union,— (a) in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, being a non- resident, calculated,— I. at the rate of ten per cent of such tax, where the income or the aggregate of such incomes 1[(including the income under the provisions of section 111A and section 112A of the Income-tax Act)] paid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees; ITA No. 8562/Del/2019 6 II. at the rate of fifteen per cent of such tax, where the income or the aggregate of such incomes 1 [(including the income under the provisions of section 111A and section 112A of the Income-tax Act)] paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed two crore rupees; 6.5 As per the above surcharge rates, in the case of a non-resident individual if income is less than one crore rupees than the rate applicable is 10%. In this case while the appellant has applied the rates on the basis of income estimated from long term capital gains in the hands of the seller, CPC TDS has applied the rates as per the transaction amount ie Rs 1,01,84,478/-. Since the total income of the deductee which includes income from long term capital gains is less than one crore the rate of surcharge applicable is 10%. The surcharge provisions refer to income and not the transaction amount and it would be appropriate to go into the intent of the legislation regarding taxability of the income. Accordingly, it is held that the surcharge applicable in this case is @ 10%.” 7. Therefore, in view of the above findings arrived by the Ld. First Appellate Authority in the case of co-owner it is clear that the surcharge provisions referred to income and not the transaction amount. Therefore taking into consideration the legislative intention it has to be held that the surcharge applicable in the present case is @ 10%. 8. The next issue for our consideration is that as to whether the assessee can be treated as assessee in default as per amended provisions of section 201(1) of the Act. In the present case from the paper book filed by the assessee spread over 40 pages we clearly note that the written submissions filed by the assessee before the Ld. CIT(A) is supported by the documentary evidence we note that from pages 70-80 it clear that the net tax liability deducted on income from capital gain out of transaction of sale of property to assessee is Rs. 15,44,841/- whereas the appellant has deducted total amount of Rs. 16,31,146/- which is higher than the tax liability of deductee. ITA No. 8562/Del/2019 7 From page 19 the copy of Form No. 27A also show that the assessee has duly deposited TDS and also filed TDS statement for the relevant prescribed period in the prescribed form. From pages 22 to 23 that is undertaken under section 200 A / 206 CB of the Act it is also discernable that the CPC and TDS received a demand of Rs. 77,110/- being the TDS short deduction including of Rs. 74,143/- and interest of Rs. 2964/- under section 201 (1A) of the Act. From copy of the return of income available at pages 24 to 27 for assessment year 2019-20 of the seller Shri Yuki Mallick clearly show that the deductee / payee deductee has shown income under the head capital gain from the transaction of sale of property to the assessee and the amount of capital gain is less than Rs. 1 crore but more than Rs. 50 lakhs and the appellant has deducted surcharge @ 10%. These facts have not been negated by the AO/CPC or by the Ld. CIT(A) in the first appellate order or by the Sr. DR in the submissions before this bench. 9. In view of foregoing facts and circumstances we find that the order of ITAT Panaji Bench in the case of Shree Balaji Concepts (supra) also supports the claim of assessee that where the assessee has purchased immovable property from a non resident and paid consideration of the sale without deducting tax at source as non resident seller had disclosed consideration receipt from assessee in their respective return the assessee could not held as assessee in default as per amended provision of section 201(1) of the Act. As we have noted above the seller/payee/deductee had filed return of income for assessment year 2019-20 declaring the income of long term capital gain from the sale of a residential flat to the assessee of Rs. 67,18,881/- and had also paid tax thereon then the assessee could not be held as assessee in default under section 201(1) off the Act. 10. As we have concluded above, that the assessee cannot be treated as assessee in default under section 201(1) of the Act, in the event, where the seller/payee/deductee a none resident has filed return of income and has offered the long term capital gain accrued to him from transfer of sale of property to the assessee for taxation then the assessee can not be held or treated as assessee in default. Therefore, the orders of the authorities below, ITA No. 8562/Del/2019 8 in holding the assessee in default for short deduction of TDS of Rs 74,143/-, is not sustainable as when seller Non-Resident has filed return of income and due tax has been paid by the payee then the appellant gets immunity under first proviso to section 201 (1) of the Act thus she cannot be treated as assessee in default. The Ld. DR on behalf of assessee did not press ground No. 5 wherein the Ld. CIT(A) has upheld the charge of interest under section 201(1A) of the Act of Rs. 2964/-. Thus the same is confirmed. This is also in accordance with the order of the ITAT Panaji in the case of Shree Balaji Concepts (supra). Therefore, the ground Nos. 1, 2 and 3 of the assessee are allowed. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 30.09.2022. sd/- sd/- (PRADIP KUMAR KEDIA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30.09.2022 Veena Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. ITA No. 8562/Del/2019 9 PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order