Tribunal rules on "assessee-in-default" status & interest liability under Income Tax Act.

The Tribunal partially allowed the appeal, determining that the assessee was not an "assessee-in-default" under Section 201(1) but was liable for interest under Section 201(1A) of the Income Tax Act, 1961. The Tribunal rejected the additional grounds of appeal and the applicability of Article 26 of the Indo-US Double Taxation Avoidance Agreement. The order was pronounced on January 25, 2018.

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Issues Involved:
1. Sustainability of the CIT(A)'s order in law and facts.
2. Treatment of the appellant as an "assessee-in-default" under Sections 201(1) and 201(1A) of the Income Tax Act, 1961.
3. Application of Section 50C for deemed consideration.
4. Applicability of Article 26 of the Indo-US Double Taxation Avoidance Agreement (DTAA).
5. Tax liability under Section 201(1) and 201(1A) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Sustainability of the CIT(A)'s Order in Law and Facts:
The assessee contended that the CIT(A)'s order confirming the AO's decision under Sections 201(1) and 201(1A) was unsustainable both in law and facts. The Tribunal found that the CIT(A) upheld the AO's order, treating the assessee as an "assessee-in-default" for failing to deduct tax at source while making payments to non-residents.

2. Treatment of the Appellant as an "Assessee-in-Default" Under Sections 201(1) and 201(1A):
The AO initiated proceedings under Section 201(1) because the assessee did not deduct TDS while purchasing property from non-residents. The AO treated the assessee as an "assessee-in-default" for a tax amount of Rs. 6,06,711 and computed interest under Section 201(1A) at Rs. 4,48,966, totaling Rs. 10,55,677. The Tribunal concluded that the assessee's liability under Section 195 is independent and precedes the vendors' liability to file returns and pay taxes.

3. Application of Section 50C for Deemed Consideration:
The AO applied Section 50C, adopting the sale consideration at Rs. 58,11,100 instead of the actual Rs. 48,00,000. The Tribunal held that the assessee's TDS liability should be based on the actual payment made, not the deemed consideration under Section 50C. Thus, the assessee's liability should only be on the actual consideration paid.

4. Applicability of Article 26 of the Indo-US DTAA:
The assessee argued that under Article 26 of the Indo-US DTAA, they should not be treated as an "assessee-in-default." The Tribunal found that Article 26, which prevents discrimination against non-residents, was not applicable to this case. The Tribunal emphasized that the issue was the assessee's liability to deduct TDS, not the non-residents' tax liability.

5. Tax Liability Under Section 201(1) and 201(1A):
The Tribunal noted that the assessee had already paid tax on the Long Term Capital Gain (LTCG) based on the actual payment. The Tribunal held that the assessee could not be treated as an "assessee-in-default" under Section 201(1) but was liable for interest under Section 201(1A) until the date of tax payment.

Conclusion:
The Tribunal partially allowed the appeal, holding that the assessee was not an "assessee-in-default" under Section 201(1) but was liable for interest under Section 201(1A). The Tribunal rejected the additional grounds of appeal and the applicability of Article 26 of the Indo-US DTAA. The order was pronounced on January 25, 2018.

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