TaxTMI 
TaxTMI 
2015 (12) TMI 838
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....on of Capital Loss, as reflected in the Auditor's certificate, is extracted hereunder : "Statement showing computation of capital loss on the sale of 6,000,000 equity shares of Rs. 10/- each held by M/s. SUZUKI MOTOR CORPORATION, Japan, in TVS SUZUKI LIMITED ( now known as TVS Motor Company Limited), Chennai 600 006. 1. Agreed sale price in Indian Rs. 90,000,000 2. Sale price converted in US Dollars (A) 1,883,239 @ Rs. 47.79=1 US $ (as on 5.11.2001) 3. Cost of acquisition in the hands of Suzuki Motor Corporation, Japan, in foreign currency viz. US $ Date of Remittance No. of Shares Amount in Rupees Amount in US dollars At 1 US $ = Rs. 10.41 25.11.1983 2,000,000 20,000,000 1,921,000 At 1 US $ = Rs. 12.903 09.11.1987 4,000,000 40,000,000 3,100,054 Total 6,000,000 60,000,000 5,021,054 (B) CAPITAL LOSS IN US $ ( A B ) ( C ) 3,137,815 Capital Loss in US $ "C" covered into Indian Rupees (INR) @ 47.79 = 1 US Dollars ( as on 05.11.2001) 149,956,179 SUZUKI MOTOR CORP Certified as Correct Asit Mehta & ....
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....terms of Section 201 (1). However, by complying with the directions issued by the Commissioner (Appeals) in his order dated 06.08.2004, the Income Tax Officer, vide his order dated 12.08.2004, determined the interest component at Rs. 60,30,000/- . We extract hereunder the order passed by the said Officer : "ORDER UNDER SECTION 154 READ WITH SECTION 250 OF THE IT ACT, 1961 An order under section 201 (1) and 201 (1A) was passed on 25.04.2003. This was set aside by the order of CIT (A) in ITA No. 40/2003/04 dated 30.01.2004 wherein the CIT (A) had given directions to recompute the demand. Subsequently, an order u/s.201 (1) and 201 (1A) was passed on 22.03.2004. The assessee has filed a petition for rectification of the order dated 22.03.2004. This petition was disposed by an order u/s. 154 dated 16.04.2004. The assessee had filed an appeal with the CIT (A) against the order u/s 201 (1) and 201 (1A) dated 22.03.2004. The order of the CIT (A) in ITA No.8/2004-05/A-XI dated 06.08.2004 has been received. 2. The CIT (A) has stated in page 4 "The stand of the apellant is correct. The AO is hereby directed to give effect to para 24 (ii) of the order of CIT (A) dated 30.01.2004 and com....
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....even though the appellant did not have any liability to deduct tax at source in the transaction under Section 201 (1) 3. Whether on the facts and circumstances of the case, the Tribunal was right in confirming the computation of levy of interest under Section 201 (1A) on the basis of notional rate of tax on the entirety of sale consideration and computed till date of the order passed by the assessing officer totally ignoring the provsions of Section 201 (1A) " 7. The provisions of law which are relevant to the issue on hand viz. Sections 195, 201 (1) and 201 (1A) of the Income Tax Act, read as follows : "Sec. 195. [(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of this Act (not being income chargeable under the head Salaries ) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : Consequences of failure to deduct or pay. 201. [(1) Where any person, including the pri....
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....falls in Chapter XVII which deals with collection and recovery. Chapter XVII-B deals with deduction at source by the payer. On analysis of various provisions of Chapter XVII one finds use of different expressions, however, the expression "sum chargeable under the provisions of the Act" is used only in section 195. For example, section 194C casts an obligation to deduct TAS in respect of "any sum paid to any resident". Similarly, sections 194EE and 194F, inter alia, provide for deduction of tax in respect of "any amount" referred to in the specified provisions. In none of the provisions we find the expression "sum chargeable under the provisions of the Act", which as stated above, is an expression used only in section 195(1). Therefore, this court is required to give meaning and effect to the said expression. It follows, therefore, that the obligation to deduct TAS arises only when there is a sum chargeable under the Act. Section 195(2) is not merely a provision to provide information to the Income-tax Officer (TDS). It is a provision requiring tax to be deducted at source to be paid to the Revenue by the payer who makes payment to a non-resident. Therefore, section 195 has to be re....
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.... the Incometax Act. If the contention of the Department that any person making payment to a non-resident is necessarily required to deduct TAS then the consequence would be that the Department would be entitled to appropriate the moneys deposited by the payer even if the sum paid is not chargeable to tax because there is no provision in the Income-tax Act by which a payer can obtain refund. Section 237 read with section 199 implies that only the recipient of the sum, i.e., the payee could seek a refund. It must therefore follow, if the Department is right, that the law requires tax to be deducted on all payments, the payer, therefore, has to deduct and pay tax, even if the so-called deduction comes out of his own pocket and he has no remedy whatsoever, even where the sum paid by him is not a sum chargeable under the Act. The interpretation of the Department, therefore, not only requires the words "chargeable under the provisions of the Act" to be omitted, it also leads to an absurd consequence. The interpretation placed by the Department would result in a situation where even when the income has no territorial nexus with India or is not chargeable in India, the Government would non....
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....n at source in respect of payments outside India in respect of royalties, fees or other sums chargeable under the Income-tax Act. In a given case where the payer is an assessee he will definitely claim deduction under the Income-tax Act for such remittance and on inquiry if the Assessing Officer finds that the sums remitted outside India come within the definition of royalty or fees for technical service or other sums chargeable under the Income-tax Act then it would be open to the Assessing Officer to disallow such claim for deduction. Similarly, vide the Finance Act, 2008, with effect from April 1, 2008, sub-section (6) has been inserted in section 195 which requires the payer to furnish information relating to payment of any sum in such form and manner as may be prescribed by the Board. This provision is brought into force only from April 1, 2008. It will not apply for the period with which we are concerned in these cases before us. Therefore, in our view, there are adequate safeguards in the Act which would prevent revenue leakage. " ( emphasis supplied ) 9. The Order of the Income Tax Officer dated 12.08.2004, giving effect to the order of the C.I.T. (Appeals) dated 30.01.2....