TaxTMI 
TaxTMI 
2015 (3) TMI 682
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....t the assessee is an 'assessee in default' for not deducting tax at source u/s.201(1) of Act, while making payment for purchase of a property. 3. The material facts giving rise to the present appeals are as follows. The appellant is an individual. He purchased residential property bearing No.696, WOC Road, 3rd Stage, 3rd Block Extension, Bangalore, under a registered sale deed dated 27.04.2008. The property in question originally belonged to one Cmdr. J.R. Vijai. Mr. Vijay died intestate on 21.09.2003 leaving behind him, his wife, Mrs. Shyamala Vijai and only daughter Mrs. Poornima Shivaram as Class-I legal heirs, entitled to succeed to his properties. The appellant purchased the aforesaid property for a total consideration of Rs. 1.20 c....
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....tax thereon at the rates in force. 5. Admittedly, the appellant did not deduct tax at source while making the payment. The ITO, International Taxation, Ward 2(1) issued a show cause notice u/s. 201(1) of the Act calling upon the assessee to show cause as to why he should not be treated as an 'assessee in default' in respect of tax not deducted at source as mandated by the provisions of section 195 of the Act. The assessee did not give any reply to the show cause notice. The Assessing Officer therefore proceeded to pass an order u/s. 201(1) of the Act as follows:- "As stated above, during the financial year 2008-09, the assessee purchased the property at West of Chord Road, Bangalore, from Smt. Purnima Shivaram for a consideration of R....
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.... liability u/s. 201(1) of the Income Tax Act. 24,00,000 Add: Surcharge@ 10% 2,40,000 Add: Education Cess@2% 48,000 Total tax liability u/s. 201(1) of the Income Tax Act 26,88,000 As per the provisions of Sec.201(1A) the assessee is liable to pay interest @ 1% for every month or part of a month on the tax which it had failed to deduct. Tax liability u/s. 201(1A) for the asst. year 2009-10 is calculated as under: Tax liability u/s.201(l) for the asst. year 2007-08 (sic) as computed above 26,88,000 Interest @ 1% per month for 33 months - from April 2008 to December 2010 on 26,88,000 13,87,040 Tax liability u/s. 201(1A) 40,75,040 The total tax liability of the assessee, Sri.R.Prak....
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....rly indicates that Smt Shamala Vijay (Resident) and Smt Purnima Shivaram (Non Resident) were the joint owners of the property. It is also clear from the Sale Deed that Smt Purnima Shivaram authorised Smt Shamala Vijay through a general Power of Attorney. (ii) The Sale Deed has been signed by Smt Shamala Vijay in two capacities i.e. one for herself and another as the GPA Holder of Smt Purnima Shivaram. (iii) Even after the repeated opportunities and show cause notices issued by the Assessing Officer, the appellant failed to produce any evidence in respect of the share of Smt Purnima Shivaram in the said property. The above facts make it clear that the payment of 1,20,00,000/- includes the consideration for the shareholding in the pr....
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....y. The share of each of the vendors would therefore be Rs. 60 lakhs. Mrs. Shyamala Vijai is, admittedly, a non-resident and to the extent of Rs. 60 lakhs paid to her, the provisions of section 195 are attracted and the assessee ought to have deducted tax at source while making payments to the non-resident through Mrs. Shyamala Vijai. 11. The ld. DR has, however, relied on the decision of the ITAT Bangalore Bench in the case of Syed Aslam Hashmi v. ITO in ITA No.1313/Bang/2010 & 107 6/Bang/2012, dated 28.09.2012. The ld. DR pointed out before us that the Tribunal in the aforesaid decision has held that u/s. 195 of the Act, tax is to be deducted on the entire sale consideration. We have perused the aforesaid decision and are of the view th....