In a case of transaction of purchase of immovable property from a non resident it is mandatory to deduct tax on the value consideration paid to such non resident in the absence of any lower deduction certificate. The bench of the Tribunal in (2023] 30 ITR (Trib)-OL 134(ITAT[Bang]) while ruling in favour of the department declined to buy the argument of the company purchaser that they had no knowledge of the NRI status of mahesh Bhupathi, the ace tennis player who was seller of the property in question as well as did not buy the argument that the amount of capital gains are already offered by him in his return and that eventually no tax was payable by Mr. Mahesh Bhupathi on the said transaction in terms of the return filed by him.
Fortunately now after 8 June 2021 we have a law that entitles the payer to escape tds liability for any failure to deduct tax by submitting a certificate in form 26A from an accountant with proof of filing of return of income of the payee irrespective of his residential status. The Proviso to sub-section (1) of section 201 provides a legal escape route. However if no return is filed then the payer has to also bear the tax amount not withheld from payment to non resident.
Now whether or not a payee has filed the return of income in the relevant assessment year in terms of enabling proviso is an information already with the department thus it is an unusual requirement under the law to expect the payer to gather it from the payee as even otherwise it is practically impossible for any payer to secure a copy of return from the non resident.