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2017 (12) TMI 193 - ITAT HYDERABADTime limit for initiation of proceedings u/s 201(1) - treating the assessee “as assessee in default” - failure to deduct TDS - Held that:- Financial year before us is 2007-08 i.e. commencing on 1.4.2007 relevant to the A.Y 2008- 09. The payment has been made to Shri Ramoji Rao (HUF) by the assessee on 28.02.008 falling within the financial year 2007-08 which ends on 31.3.2008. Therefore, as per the proviso to section 201(3), an order treating the assessee “as an assessee in default” has to be passed before 31st day of March, 2011. In the instant case, the show-cause notice for treating the assessee “as assessee in default” has been issued only on 15.12.2014 i.e. beyond 31.3.2011 and even beyond the period of 6 years even if the provision as amended by the Finance Act 2012 is taken into consideration. The period of 7 years has been brought in by the Finance Act, 2014 w.e.f. 1.10.2014 and therefore, cannot be applied to the case on hand as any amendment to the detriment of an assessee cannot be applied retrospectively. Therefore, in view of the proviso to sub-section 3 of section 201(1), which was in force till 1.10.2014, we are of the opinion that the order of the AO treating the assessee as “an assessee in default” is clearly barred by limitation and ground of appeal No.2 is allowed. Charging of interest u/s 201(1A) - Held that:- The Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages Ltd (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) has clearly held that the interest u/s 201(1A) is compensatory in nature and that even if the payee has paid the tax on the receipt, the payer is liable to pay interest u/s 201(1A) of the Act from the date of deductibility to the date of payment of tax by the payee. It is therefore, held that the assessee is liable to pay the interest u/s 201(1A) of the Act TDS on non-compete fee - Held that:- Except for an oral statement in the grounds of appeal, the assessee has not been able to produce any evidence in support of such a contention. In fact, the AO has clearly brought out on record that the recipient Shri Ramoji Rao (HUF) has taxable income, and that after taking into consideration the noncompete fee received by him, the assessee has been assessed to tax at ₹ 108,47,26,715. The learned Counsel for the assessee has not been able to rebut this finding of the AO except to state that the TDS was required to be effected on non-compete fee which is taxable as business income and in view of the carry forward business loss, nothing remains to be taxed. Therefore, we are not convinced with the argument of the assessee that the assessee under had a reasonable cause to deduct the tax at source. Penalty u/s 271C - non-deduction of tax at source u/s 194J - Held that:- The requirement to make the payment and the genuineness of the payment of non-compete fee by the assessee to Shri Ramoji Rao (HUF) has been adjudicated by the Tribunal in the assessee’s own case for A.Y 2008-09 and the contention of the assessee that the non-compete fee is the business expenditure of the assessee has been upheld. The assessee has always contended that it is its business expenditure and therefore, it was required to deduct the tax at source u/s 194J of the Act. For failure to deduct the tax inspite of being liable to do so, the penalty u/s 271C is clearly leviable.
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