TMI Blog2018 (4) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The Learned Commissioner of Income-Tax (Appeals) ( CIT(A) ) erred in holding the Appellant to be an assessee in default for failing to deduct tax at source under section 194C Income-Tax Act, 1961 ('the Act') though there is no obligation on the Appellant to deduct tax as the provisions of Section 194C do not apply to the facts of the present case. 2. The Learned CIT(A) erred in not holding the Order passed under Section 201/ 201(1A) of the Act to be bad in law though the same was passed beyond the time limit allowed u/s 201(3). 3. The Learned CIT(A) erred in confirming the demand raised by the DCIT (TDS) without adjudicating upon the Appellant's contention that once the payees (Affiliates) have included the receipt in their return of income and paid taxes thereon, no tax can be recovered from the Appellant. 4. The Learned CIT(A) erred in observing that the DCIT (TDS) should have calculated the amount of alleged TDS default at the rate prescribed under Section 206AA of the Act. 3. In ground no.2, the assessee has challenged the order passed under section 201(1) and 201(1A) to be barred by limitation. Since, the aforesaid issue raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer, however, did not find merit in the submissions of the assessee and ultimately held the assessee as assessee in default for having not deducted tax at source on the payments made to affiliates and accordingly passed an order under section 201(1) and 201(1A) raising demand of ₹ 36,97,34,000 towards tax and ₹ 20,09,04,420 towards interest. Being aggrieved of the order so passed, assessee preferred appeal before the first appellate authority, inter alia, on the ground that the order passed under section 201(1) and 201(1A) is barred by limitation as per sub section (3) of section 201 as was applicable for the relevant period. In the course of hearing of appeal before the first appellate authority, it was submitted by the assessee that as per the provisions contained in sub section (3) of section 201 which existed prior to its amendment by Finance Act, 2014, w.e.f. 1st October 2014, in a case where the assessee has filed a statement in terms of section 200, no order under section 201(1) can be passed after expiry of two years from the end of financial year in which the statement is filed. Thus, it was contended, by the time the show cause notice under section 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained under sub section (3) was substituted by a new provision as per which the limitation period was extended in all cases to before expiry of seven years from the end of financial year wherein payments were made. However, he submitted, the amended sub section (3) of section 201 of the Act was made effective from 1st October 2014. The learned Sr. Counsel submitted, by the time the amendment to sub section (3) of section 201 was effected by Finance Act, 2014, the limitation period as per the pre amended provisions has already expired in case of the assessee. Therefore, the Assessing Officer could not have assumed jurisdiction for issuing a notice under section 201(1) and 201(1A). The learned Sr. Counsel submitted, the impugned order of the Assessing Officer passed under section 201(1) and 201(1A) being barred by limitation has to be declared as null and void. In support of his contentions, the learned Sr. Counsel relied upon the following decisions: i) Tata Teleservice v/s Union of India and Anr., [2016] 385 ITR 497 (Guj.); ii) Troikaa Pharmaceuticals Ltd. v/s Union of India, [2016] SCC Online (Guj.) 4788; iii) CIT v/s Vatika Township Pvt. Ltd., [2014] 367 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a case where the statement referred to in section 200 has been filed; (ii) six years from the end of the financial year in which payment is made or credit is given, in any other case: Provided that such order for a financial year commencing on or before the 1st day of April 2007 may be passed at any time on or before the 31st day of March 2011. 8. As could be seen from a reading of the aforesaid provision, the only change which was effected from the earlier provision was the limitation period of four years in case of a deductor not filing TDS statement was extended to six years from four years. Whereas, in case of a person / deductor filing TDS statement, the limitation period of two years remained unchanged. The aforesaid sub section (3) of section 201 was again amended by Finance Act, 2014, w.e.f. 1st October 2014 by substituting the earlier provision with the following: (3) No order shall be made under sub section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to take effect from 1st October 2014, only and not prior to that. The Hon'ble Supreme Court in Vatika Township Pvt. Ltd. (supra) while examining the principle concerning retrospectivity of an amendment brought to the statutory provisions has observed that unless a contrary intention appears, a legislation is presumed not to be intended to have retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. The Hon ble Court observed, legislations which modified accrued rights or which impose obligations or imposes new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect. It was observed, if a provision is not for the benefit of a community, but, imposes some burden or liability the presumption would be it will apply prospectively. The rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 201(1) of the Act would, therefore, be governed by section 201(3)(i) of the Act as it stood at the relevant time which provided for a period of limitation of two years from the end of the financial year in which statement was filed in a case where the statement referred to in section 200 has been filed. The limitation for initiating action under section 201(1) of the Act, therefore, elapsed on 31st March, 2012 whereas the amendment in section 201 of the Act as amended by Finance Act No. 2 of 2014 came into force with effect from 28th May, 2012. The impugned notice, therefore, is clearly barred by limitation and, therefore, cannot be sustained. For the detailed reasons recorded in the judgment and order dated 5th February, 2016 rendered in the case of Tata Teleservices v. Union of India (supra), this petition also deserves to be allowed. 11. No contrary decision has been brought to our notice by the learned Departmental Representative. Therefore, considering the principle laid down by the Hon'ble Supreme Court in the decisions as well as the ratio laid down by the Hon'ble Gujarat High Court in the decisions referred to above which are directly on the issue, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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