Nidra Hospitality Gujarat Pvt. Ltd. Vs ACIT (ITAT Ahmedabad)
Form 15CB Filed, TDS Deposited & DTAA Followed – ITAT Deletes 201(1)/201(1A) Demand as No Default Exists
Assessee paid commission of Rs.23,52,460/- to non-residents during AY 2017-18. AO, during regular assessment u/s 143(3), disallowed 30% of the amount u/s 40(a)(i) alleging non-deduction of TDS. On that basis, AO separately passed order u/s 201(1)/201(1A) treating Assessee as “assessee-in-default” & raised demand of Rs.3,12,210/- (tax + interest). CIT(A) upheld the order without properly considering Assessee’s evidence.
Before Tribunal, Assessee demonstrated that TDS was duly deducted wherever applicable, Form 15CB was obtained for every non-resident payment, tax was deposited as per law, and Form 27Q (TDS return) was filed on time. Assessee also relied on DTAA provisions, explaining that certain payments to non-residents were not taxable in India and therefore TDS u/s 195 was not required. Further, Tax Audit Report (Form 3CD, Clause 34B) did not report any TDS default.
Tribunal noted that the Department failed to disprove any of the documentary evidence. It further observed that AO mechanically treated Assessee as defaulter simply because commission was paid to non-residents, without examining whether income was taxable in India under the Act or DTAA. Tribunal held that Section 195 requires TDS only when sum is chargeable to tax in India, and when Assessee has complied with DTAA & obtained Form 15CB, there is no failure under TDS provisions.
