Artha Real Estate Corporation Ltd. Vs DCIT (ITAT Bangalore)
In Artha Real Estate Corporation Ltd. Vs DCIT, the ITAT Bangalore examined whether the assessee could be treated as an assessee in default under Section 201 of the Income Tax Act for non-deduction of tax at source (TDS) on purchase of immovable property and certain other expenses reported in Form 3CD.
The assessee, engaged in the business of real estate, had filed its tax audit report in Form 3CA. Based on disclosures in the tax audit report, the Assessing Officer (AO) initiated proceedings under Section 201 after noticing non-deduction of TDS on certain expenses and on purchase of immovable property. The AO observed that the assessee had purchased land worth ₹4.81 crore but deducted TDS under Section 194IA only on ₹1.43 crore at 1%. The AO issued a show cause notice seeking explanation for non-deduction of TDS on the remaining ₹3.38 crore. According to the AO, no satisfactory explanation was furnished and the assessee was therefore treated as an assessee in default under Section 201 of the Act.
The CIT(A) upheld the action of the AO. Aggrieved by the order, the assessee filed an appeal before the Tribunal.
Before the Tribunal, the assessee argued that TDS was not deducted on the balance amount relating to purchase of land because the amount had been charged to the statement of profit and loss account. With regard to other expenses, the assessee submitted that the liabilities had not crystallized during the relevant year and therefore the obligation to deduct TDS had not arisen. It was further contended that some of the provisions were subsequently reversed and in later years, after crystallization of liabilities, TDS had been deducted and remitted to the Government. The assessee also argued that the CIT(A) failed to consider additional evidence and documents filed during appellate proceedings, including Form 16A and statements showing subsequent deduction and payment of TDS.
