Income Tax penalty levied u/s 271(1)(C) not attract as TDS already deducted under DTAA: ITAT [Read Order]

Income Tax Appellate Tribunal ( ITAT ) of Chandigarh bench ruled that the penalty under section 271(1)(c) does not attract as the Tax Deduction Source (TDS) already deducted under Double Taxation Avoidance Agreements ( DTAA ).

Briefly the facts of the case are that the assessee is a non-resident and during the financial year relevant to the impugned Assessment Year, the assessee has booked certain units in M/s Omaxe Ltd. Novelty Mall, Amritsar.

The assessee has made payment of 95% of the basic sale price at the time of booking the said units and has been provisionally allotted these units and in lieu of 95% payment of the basis sale price, M/s Omaxe Ltd. was to pay monthly assured return to the assessee till the time of possession of these units were handed over to the assessee.

In the return of income filed for the impugned assessment year, the assessee has shown the amount received from M/s Omaxe ltd. as income under the Head “Income from House property” and has claimed statutory deduction under section 24 of the Act.

Further the assessee has claimed credit of TDS deducted by M/s Omaxe Ltd. @ 15% as per Article-12 of India and United Kingdom DTAA read with Section 90 of the Income Tax Act.

The Assessing Officer held  that the  return received by the assessee can only be classified under the heading “income from other source” under section 56(1) of the Income Tax Act. The assessed income was determined and penalty proceedings under section 271(1)(C) of Income Tax were separately initiated.

The bench observed that the M/s Omaxe Limited has deducted tax @ 15% as per Article 12 of India-UK DTAA while remitting the payment to the assessee.

Bench of Sudhanshu Srivatsava (Judicial Member) and Vikram Singh (Accountant Member) directed that the penalty levied and sustained by the Commissioner of Income Tax (Appeals) under section 271(1)(C) be deleted and the matter was decided in favour of the assessee.

To Read the full text of the Order CLICK HERE

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