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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”: HYDERABAD
Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU
O R D E R PER L.P. SAHU, A.M.: This appeal filed by the assessee is directed against CIT(A) – 10, Hyderabad’s order dated 29/09/2017 for AY 2009-10 involving proceedings u/s 163(1)(c) of the Income Tax Act, 1961 ; in short “the Act”.
Coming to the sole issue of capital gains assessment to the extent of Rs. 29,86,600/- (twin instances), briefly, the facts of the case are that the AO observed in the assessment
:- 2 -: Sai Pragathi Estates & Constructions Pvt. Ltd., Hyd. order that non-resident, Smt. C. Anitha sold immovable properties vide document Nos. 673 and 669/2009 for a consideration of Rs.26,11,600/- each. As the non-resident is liable to pay capital gains, on their share of fair market value of the property as per the provisions of Section 5OC and as no such return of income for the Asst. Year 2009-10 was filed by the vendor, Smt. C. Anitha, the AO issued notice to the GPA (General Power of Attorney) holder, Sai Pragathi Estates and Constructions Pvt. Ltd. u/s. 163(1) of the LT. Act. The Assessing Officer noticed from the documents that the assessee was appointed as GPA holder and invoked the provisions of Section 163 of the IT. Act. The AO issued a show cause notice dt. 15.03.2016 proposing to treat the assessee as an agent of Smt. C. Anitha requesting to file their objections, if any. As there was no response from the assessee, the Assessing Officer treated the assessee as an agent of the non-resident.
Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A), who confirmed the order of AO.
Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT.
At the time of hearing before us, none appeared on behalf of the assessee and, therefore, we proceed to decide
:- 3 -: Sai Pragathi Estates & Constructions Pvt. Ltd., Hyd. the appeal after hearing the ld. DR and considering the facts available on record.
The ld. CIT-DR relied on the orders of revenue authorities.
After hearing the ld. DR and perusing the material on record as well as going through the orders of revenue authorities, we observe that the assessee submitted before the CIT(A) that the AO alleged that a show cause notice dt. 15.03.2016 was issued proposing to treat the appellant as the Agent of Smt. C Anita Chalasani a non resident u/s 163 of the Act and required the assessee to file objections and the case was posted for hearing on 18.03.2016. On perusal of record, we find that the lower authorities have not given proper opportunity to the assessee to represent its case that it is not agent of Smt. C. Anita Chalasani, a non-resident nor a GPA holder to her.
7.1 We notice at the outset that neither of the lower authorities have taken recourse to section 163(2) while assessing the appellant herein as the agent of the non- resident. Section 163(2) reads as under: “163. (1) For the purposes of this Act, "agent", in relation to a non-resident, includes any person in India— (a) who is employed by or on behalf of the non- resident; or :- 4 -: Sai Pragathi Estates & Constructions Pvt. Ltd., Hyd.
(b) who has any business connection with the non- resident; or (c) from or through whom the non-resident is in receipt of any income, whether directly or indirectly; or (d) who is the trustee of the non-resident; and includes also any other person who, whether a resident or non-resident, has acquired by means of a transfer, a capital asset in India : Provided that a broker in India who, in respect of any transactions, does not deal directly with or on behalf of a non-resident principal but deals with or through a non- resident broker shall not be deemed to be an agent under this section in respect of such transactions, if the following conditions are fulfilled, namely:— (i) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and (ii) the non-resident broker is carrying on such transactions in the ordinary course of his business and not as a principal. Explanation.—For the purposes of this sub-section, the expression "business connection" shall have the meaning assigned to it in Explanation 2 to clause (i) of sub-section (1) of section 9 of this Act. (2) No person shall be treated as the agent of a non- resident unless he has had an opportunity of being heard by the Assessing Officer as to his liability to be treated as such.
7.2 On perusal of the aforesaid sub-section (2) of the said section clearly states that no person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the Assessing Officer as to his liability to be treated as such. In the case on hand, the AO has not :- 5 -: Sai Pragathi Estates & Constructions Pvt. Ltd., Hyd. provided proper opportunity to the assessee. Faced with this situation, we restore the matter back to the file of the AO with a direction to provide an opportunity to the assessee to prove that the assessee is an agent for tax liability as provided in Chapter XV of the Act within three effective opportunities and proceed afresh thereafter as per law.
In the result, appeal of the assessee is treated as allowed for statistical purposes. Pronounced in the open court on 4th June, 2021.
Sd/- Sd/- (S.S. GODARA) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 4th June, 2021. kv Copy to : 1 M/s Sai Pragathi Estates & Constructions Pvt. Ltd., C/o M/s Kalyandas & co., CAs. 15, Venkateshwara Colony, Narayanaguda, Hyderabad – 500 029. 2 ITO (International Taxation – I), Hyderabad. 3 CIT(A) – 10, Hyderabad. CIT (IT & TP), Hyderabad 4 ITAT, DR, Hyderabad. 5 6 Guard File.
:- 6 -: Sai Pragathi Estates & Constructions Pvt. Ltd., Hyd.
S.No. Details Date 1 Draft dictated on 2 Draft placed before author Draft proposed & placed before 3 the Second Member Draft discussed/approved by 4 Second Member Approved Draft comes to the Sr. 5 PS/PS 6 Kept for pronouncement 7 File sent to Bench Clerk Date on which the file goes to 8 Head Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order