VENUGOOPAL SUBRAMANYAM RAJA,KUMBAKONAM V. DCIT CIRLE 2(1), TRICHY

ITA 2855/CHNY/2024

AI Insights

The case involves Venugoopal Subramaniyam Raja, who did not file income tax returns for the assessment years 2007-08, 2009-10, and 2010-11 but made interest payments to RBS Coutts Bank Ltd., Singapore, without deducting TDS. The Assessing Officer issued notices under sections 148 and 142(1) of the Income Tax Act, 1961, and added the entire interest amount to the assessee's income under section 40(a)(i) for non-deduction of tax under section 195. The CIT(A) upheld this decision, referencing a previous ITAT order in the assessee's own case for AY 2008-09, which found the assessee liable to deduct TDS on similar payments. The ITAT dismissed the appeals, agreeing with the lower authorities and citing the absence of any new facts or legal arguments that would warrant a different conclusion.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107333 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Other Referred Cases: ITA No. 1249/Mds/2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDHYA RANI KURE
• Keywords: TDS; Double taxation relief; Non-deduction of tax
• Section: 148; 142(1); 195

Judgement Text

"आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी एस.आर. रगुनाथॎ, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri S.R. Raghunatha, Accountant Member आयकर अपील सं./I.T.A. No.2855, 2856 & 2857/Chny/2024 िनधाŊरण वषŊ/Assessment Years: 2007-08, 2009-10 & 2010-11 Venugoopal Subramaniyam Raja, 40/41, Town High School Road, Kumbakonam 612 001, Tamil Nadu. [PAN:AAFPR5570F] Vs. The Deputy Commissioner of Income Tax, Circle 2(1), Trichy. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : None ŮȑथŎ की ओर से/Respondent by : Ms. Sandhya Rani Kure, JCIT सुनवाई की तारीख/ Date of hearing : 10.03.2025 घोषणा की तारीख /Date of Pronouncement : 12.03.2025 आदेश /O R D E R PER BENCH: These three appeals filed by the assessee are directed against separate orders all dated 09.09.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment years 2007-08, 2009-10 & 2010-11. 2. We find no representation on behalf of the assessee or any application filed seeking adjournment. The assessee called absent and set exparte. We proceed to decide the appeals on merits after hearing the ld. DR basing on the material available on record. I.T.A. No.2855-2857/Chny/24 2 3. Since issues raised in these appeals are similar based on the same identical facts, with the consent of the ld. DR, we proceed to hear the appeals together and pass consolidated order for the sake of convenience. 4. First, we shall take up appeal in ITA No. 2855/Chny/2024 for AY 2007-08 for adjudication. 5. The assessee raised 3 grounds of appeal, amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the assessment order in the facts and circumstances of the case. 6. At the outset, we note that the assessee is an individual and no return of income filed. According to the Assessing Officer, the assessee is a partner in M/s. Raja Holdings, Kumbakonam in his individual capacity and paid interest to RBS Coutts Bank Ltd., Singapore without deducting TDS. The Assessing Officer issued notice under section 148 of the Income Tax Act, 1961 [“Act” in short] and duly served on the same date. Notice under section 142(1) of the Act was also issued on the assessee calling for the return of income. In response to the said notice, the assessee filed return of income I.T.A. No.2855-2857/Chny/24 3 declaring total income at ₹.NIL. Further, according to the Assessing Officer that the assessee neither deducted TDES from interest payment made to foreign bank nor filed undertaking with the remitting bank. The assessee explained that the said RBS Coutts Bank Ltd. is not a persona and contended vehemently before the Assessing Officer that the provisions under section 195 of the Act are not applicable. The Assessing Officer held that section 9 of the Act stipulates strictly about the taxability of income that arise or accrue in India and the interest payment made by the assessee is an income deemed to accrue or arise in India under section 9(1)(v)(c) of the Act . Accordingly, the entire interest amount was added by attracting section 40(a)(i) of the Act for violation of non-deduction of tax under section 195 of the Act. Having aggrieved by the order of the Assessing Officer, the assessee challenged the same before the ld. CIT(A). We note that the assessee advanced same arguments as canvassed before the Assessing Officer which are reflecting at page 7 to 10 of the impugned order. The ld. CIT(A), considering the said submissions and by placing reliance on the order of this Tribunal in assessee’s own case for AY 2008-09, dismissed the appeal of the assessee, for ready reference, the relevant part at para 6 is reproduced herein below: I.T.A. No.2855-2857/Chny/24 4 6. Decision 6.1 I have considered the contention of the appellant. The appellant has contested that the Hon'ble ITAT had misconceived that the appellant had sought exemption from TDS on the Ground that the payment falls under article 11(3) of DTAA with Switzerland. The appellant contested that he had never put such a plea neither before the Assessing Officer nor before the appellate fora. The appellant contested that the payment of interest falls under Article 11(1) of the DTAA with Switzerland. 6.2 It is seen from the order of the Hon’ble ITAT that the Hon’ble ITAT has taken due cognizance of article 11(1) and 11(2) of the DTAA between India and Switzerland The following finding of the Hon’ble ITAT is reproduced “In the above circumstances, in our considered view the interest in question was taxable in India though the rate of tax could not exceed 10% Therefore, in our view, the assessee was liable to deduct tax at source on the aforesaid payment of interest u/s 195 of the Act.\" 6.3 Hence, the Hon'ble ITAT has taken due cognizance of article 11(1) and 11(2) of the DTAA between India and Switzerland and taking cognizance of Article 11(2) the Hon'ble ITAT has given the finding that the rate of tax could not exceed 10%. The Hon'ble ITAT also examined whether case of the appellant is covered by article 11(3) of the DTAA. Hence, the argument of the appellant that the Hon'ble ITAT had considered only article 11(3) and not other articles of the DTAA between India and Switzerland is misplaced and the same is rejected 6.4 The decision of Hon'ble ITAT, Chennai in appellant's own case for the AY 2008-09 on the same facts is binding on the first appellate authority The appellant has not brought any new facts on record The facts for the year under consideration remain the same as that for the A.Y 2008-09, in which the Hon'ble ITAT Chennai in ITA No. 1249/Mds/2012 has given a finding that the appellant was liable to deduct tax at source on the payment of interest u/s 195 of the Act and by not doing the same the appellant is hit by the provisions of section 40(a)(i) of the Act. Hence, following the decision of the Hon'ble ITAT, Chennai in appellant's own case for the A.Y 2008-09, it is held that the appellant was liable to deduct tax at source on payment of interest of Rs.12,50,693/- and it is admitted fact on part of the appellant that he did not deduct tax at source u/s 40(a)(i) of the Act in respect of payment of interest of Rs 12.50.693/-, Hence, the payment of interest of Rs.12,50,693/- is hit by the provisions of section 40(a)(i) of the Act. Hence, the AO correctly disallowed the same u/s 40(a)(i) of the Act. Hence, the order of the AO is confirmed and the ground of appeal taken by the appellant is dismissed. I.T.A. No.2855-2857/Chny/24 5 7. On perusal of the above, we note that the assessee vehemently argued that no provision under section 195 of the Act is applicable to the facts and circumstances of the case for the reason that RBS Coutts Bank Ltd. is not a person. The ld. CIT(A), primarily considered the order of the ITAT in assessee’s own case for AY 2008-09 and held that the assessee is liable to deduct tax on such payment of interest to RBS Coutts Bank Ltd.. 8. The ld. DR Ms. Sandhya Rani Kure, JCIT submits that the Assessing Officer also considered the order of the ITAT in assessee’s own case as far as the ld. CIT(A) also placing on the same and dismissed the appeal of the assessee. She argued that there is no reference before the ld. CIT(A) about any contrary view regards the decision of the ITAT in assessee’s own case. She supported the order of the ld. CIT(A) and prayed to confirm the same. 9. On perusal of the assessment order, we note that the Assessing Officer referred to the order of this Tribunal in assessee’s own case at page 4 of the assessment order as rightly pointed out by the ld. DR. On perusal of the impugned order, we note that there was no reference to stay of operation of the order of the Tribunal by Hon’ble High Court in I.T.A. No.2855-2857/Chny/24 6 this regard. Before us, no order as such contrary to the view taken by the ITAT, Chennai Benches in assessee’s own case for the AY 2008- 09 was brought on record. In the absence of any contrary view, having no option except to follow the ITAT order in assessee’s own case, we are of the opinion that the ld. CIT(A) is justified in holding that the assessee is liable to deduct tax on interest payment made to RBS Coutts Bank Ltd., Singapore. Thus, the grounds raised by the assessee are dismissed. I.T.A. No. 2856/Chny/2024 – AY: 2009-10 10. We find the issues in AY 2009-10 are similar to the facts and circumstances relevant to AY 2007-08 in ITA No. 2855/Chny/2024, wherein, we have sustained the order of the ld. CIT(A) and dismissed the grounds raised by the assessee, therefore, we hold our findings would be equally applicable to the assessment year under consideration. Thus, the grounds raised by the assessee for AY 2009-10 are dismissed. I.T.A. No. 2857/Chny/2024 – AY: 2010-11 11. We find the issues in AY 2010-11 are similar to the facts and circumstances relevant to AY 2007-08 in ITA No. 2855/Chny/2024, wherein, we have sustained the order of the ld. CIT(A) and dismissed the I.T.A. No.2855-2857/Chny/24 7 grounds raised by the assessee, therefore, we hold our findings would be equally applicable to the assessment year under consideration. Thus, the grounds raised by the assessee for AY 2010-11 are dismissed. 12. In the result, all the appeals filed by the assessee are dismissed. Order pronounced on 12th March, 2025 at Chennai. Sd/- Sd/- (S.R. RAGHUNATHA) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 12.03.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "