Jitendra Sharma v. JCIT [ITA Nos. 500 to
502/Ind/2018, dt. 14-10-2020] : 2020 TaxPub(DT) 4244 (Ind.-Trib.)
Lower rate deduction of TDS on immovable property in case
of non-resident -- Levy of penalty thereof
Facts:
Assessee along with two others purchased an immovable
property for Rs. 75 lakhs from a seller who furnished his Indian address and
current address as USA. Though the consideration individually was Rs. 25 lakhs
TDS was done at 1% under section 194-IA and deposited as the overall
consideration was over Rs. 50 lakhs. Subsequently revenue found out that the
seller was a non-resident and TDS ought to have been done under section 195 and
initiated proceedings under section 201(1)/201(1A) against the assessees.
Before conclusion of the proceedings the assessees deposited the short fall of
the TDS. Penalty proceedings were initiated under section 271C against the
assessees and was upheld by the Commissioner (Appeals). On higher appeal -
Held in favour of the assessee that they were not liable to
penalty proceedings under section 271C.
Applied: DCIT v.
SMS India Ltd. (supra) (2006) 7 SOT 424 (Mum) :
2006 TaxPub(DT) 1053 (Mum-Trib), dated 30-11-2005.
Editorial Note: It is
virtually impossible for a buyer to make a roving enquiry especially when the
transaction was finalized thru a broker as in the case of the assessee. Their
application of section 194-IA on bona fide basis protected them on the
downside anyways. It would have been better if the CBDT were to come up with a
circular on this topic especially on rent being paid or transfer being effected
with non-residents as to how and what type of TDS applicability
insistence/checks and balances will need to be applied to the guidance of
assessees.