Pravin Prakash Magar Vs CIT (Appeals) (ITAT Mumbai)
TDS on Property Purchase from NRI — ITAT Restores Case to AO as Buyer Obtains Form 26A Proof of Seller’s Tax Payment- Form 26A Can Save Buyer from Default u/s 201 – ITAT Allows Relief in NRI Sale Case
Assessee, an Indian resident, purchased property from two NRIs, each for ₹66 lakh. He applied for a lower deduction certificate u/s 197, requesting TDS @12.61% inclusive of surcharge & cess. However, AO issued a certificate prescribing 12.61% excluding surcharge & cess. Owing to this misunderstanding, Assessee deducted tax at 12.61% including surcharge & cess, resulting in a short deduction.
On processing the TDS statement u/s 200A, CPC raised a demand of ₹2.44 lakh (₹2.39 lakh short deduction & ₹4,792 interest). Assessee contended that the non-resident sellers had already filed their returns & paid due tax on capital gains; hence, there was no loss to the Revenue, relying on Hindustan Coca Cola Beverage (P) Ltd. v. CIT (293 ITR 226 SC).
CIT(A) rejected this plea, holding that under the first proviso to s.201(1) read with Rule 31ACB, relief can be granted only if the Assessee furnishes a CA-certified Form 26A confirming tax payment by the deductees. As no such form was filed, the appeal was dismissed.
