Judicial Relief for NRIs: Delhi High Court Mandates TDS Credit Irrespective of Deductor's Form 26QB Error

Non-Resident Indians (NRIs) frequently encounter significant procedural hurdles when disposing of immovable property in India, particularly concerning the withholding of taxes. A recurring compliance bottleneck arises when property buyers inadvertently use incorrect statutory forms to deposit the withheld taxes.

In a significant judicial pronouncement, the Delhi High Court in the matter of Parag Keshav Bopardikar Vs ITO addressed this exact predicament. The judicial authority evaluated a scenario where a non-resident assessee was denied rightful tax credits and subjected to reassessment proceedings simply because the property purchasers utilized Form 26QB (designated for resident sellers) instead of the mandatory Form 27Q (designated for non-resident sellers). This comprehensive summary analyzes the factual background, the erratic actions of the tax department, and the ultimate relief granted by the High Court under the framework of the Income Tax Act 1961.

Factual Matrix of Parag Keshav Bopardikar Vs ITO

The Property Transaction and Tax Withholding

The assessee, an NRI and a tax resident of the United States of America, acquired a residential real estate asset in Pune, Maharashtra, during the year 1998. Subsequently, the assessee decided to liquidate this investment.

Dr. Sharad Moreshwar Hardikar and Mrs. Leela Sharad Hardikar emerged as the prospective buyers. Following negotiations, the parties executed the final conveyance deed on 08.09.2015 for an agreed consideration of ₹2.00 crore. Acknowledging the seller's non-resident status, the purchasers correctly determined that tax must be withheld at a rate of 20 percent.

Consequently, the buyers retained ₹18,68,177 towards statutory tax obligations and remitted the remaining balance of ₹1,81,31,823 directly into the assessee's newly opened Indian bank account. The assessee subsequently calculated his residual tax obligation, remitted an advance tax of ₹1,91,780, and repatriated the remaining funds to the USA. Believing his obligations were fully discharged, the assessee inadvertently omitted filing his annual return of income for the corresponding period.