A division bench of the Vishakha Patanam ITAT, on last day, ruled that tax must be deducted from source in case of payments made to a non-resident through his agent under section 195 of the Income Tax Act, 1961.
The assesse, in the instant case, purchased the property belonging to Shri Satish Kumar who is an NRI. Smt. Allam Baby is a GPA holder for the purpose of facilitating the transaction in India. Similarly, assesse took housing loan by the seller from Dewan Housing Limited. Assesse made payment to the GPA holder who is an agent of non- resident.
It was contended on behalf of the assessee that since the payment was made to the GPA holder and the Dewan Housing Finance Ltd. and it was not paid to NRI directly, it is not liable to deduct tax from source as per the provisions of section 195 of the Income Tax Act, 1961.
Overruling the above contentions, the bench said that the payments made to Dewan Housing Limited as well as with Smt. Allam Baby constitutes the payments made to the non-resident and the TDS is deductible as per the provisions of section 195 of the Act and this ground of appeal of the assessee is dismissed.
Read the full text of the Order below.
