Case Law Details
Brief of the Case
Madras High Court held In the case of M/s. Anusha Investments Ltd. vs. ITO that in the present transaction, admittedly there is no tax liability on the purchase of shares. As a result, the question of deducting tax at source and the assessee violating the provisions of Section 195 does not arise and therefore, the assessee cannot be treated as an assessee in default and interest on default cannot be imposed. The Supreme Court in the case of GE India Technology Centre P. Ltd. vs. Commissioner of Income Tax and another, 2010 (327) I.T.R. 456 (S.C.) has clearly held that the provisions relating to TDS would apply only to those sums which are chargeable to tax under the Income Tax Act. Hence, the liability to interest does not arise at all, in case there is NIL tax liability.
Facts of the Case
The assessee purchased the shares from M/s. Suzuki Motor Corporation, Japan, who sold the same in dollar terms in a sum of US $ 18,83,239 equivalent to Rs. 9 crores. M/s. Suzuki Motor Corporation, Japan, invested in the shares of M/s. TVS Suzuki Ltd., an Indian Company, in the years 1983 and 1987, for a value of US $ 50,21,054 equivalent to Rs. 6 crores. Due to the sale by M/s. Suzuki Motor Corporation, Japan, in favor of the assessee appellant, the Japanese Company incurred a Capital Loss in US $ 31,37,815 equivalent to Rs. 14.99 crores. This transaction, according to the Department, would attract the provisions of Section 195, and, therefore, the assessment order was passed by the Assessing Authority.
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