TMI Blog2019 (4) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation thereon is not allowable. Tribunal had remitted the issue to the file of the AO for deciding afresh and also to decide the allowability of depreciation claimed on such non-compete fee. However, in the order of the Tribunal against the penalty u/s 271C for the A.Y 2008-09, it has been held that the contention of the assessee that the non-compete fee is the business expenditure of the assessee, has been upheld. This finding is thus an erroneous recording of facts and therefore, there is a mistake apparent from record. - M.A. Nos.49 And 37/Hyd/2018 (Arising out of ITA Nos.546 And 547/Hyd/2017 (29.11.2017) - - - Dated:- 18-4-2019 - Smt. P. Madhavi Devi, Judicial Member AND Shri S.Rifaur Rahman, Accountant Member For the Assessee : Shri V. Siva Kumar For the Revenue : Shri A.G.V. Prasad,DR ORDER PER SMT. P. MADHAVI DEVI, J.M. These two miscellaneous applications are filed by the assessee seeking rectification of alleged mistakes which are allegedly apparent from record from the order of the Tribunal dated 29.11.2017 in the above two appeals. The appeal in ITA No.546/Hyd/2017 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpete fee did not have taxable income even after considering noncompete fee as income and therefore Appellant was requested by the recipient of Non-compete fee not to deduct tax from non-compete fee which is a reasonable cause. Hence Commissioner of Income Tax (Appeals)-8 is not justified in holding that the Appellant did not prove that there was reasonable cause for not deducting tax at source in respect of non-compete fee. 4. Commissioner of Income Tax (Appeals)-8 ought to have seen that interest u/s.201 (lA) is leviable for the period from 07-02-2008 (date on which tax was deductible on non-compete fee) to 30-09-2008 (date of furnishing return of income). In fact the return of income of Sri Ramoji Rao (HUF) was e-filed on 3009-2008 itself and it is only a hard copy of return that was filed before the Assessing Officer on 1310-2008. Hence Commissioner of Income Tax (Appeals)8 is not justified in holding that interest is leviable upto 13-10-2008. Further the Commissioner of Income Tax (Appeals)-8 ought to have seen that due date for deducting tax from non-compete fee credited on 30-01- 2008 is 07-02-2008. Hence Appellant submits that Commissioner of Income Tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No.4 rasies the issue of the period for which interest under Sec.201(1A) is to be charged which has been disposed off as not pressed(please see last sentence in paragraph 8). 2.7 It may kindly be seen from the narration in the preceding paragraphs that the issue raised by the applicant in ground No.2 viz., that Commissioner of Income Tax (Appeals)-8 is not justified in holding that interest levied u/s.201(1A) is within the time limit has not been disposed off by the Hon'ble Appellate Tribunal. OMISSION TO CONSIDER THE RATIO OF DECIDED CASES CITED BY THE APPLICANT: 3.1 In support of the contention that the learned CIT(Appeals) erred holding that the order charging interest u/s.201(lA) is within time limit, the applicant pleaded that where there is no time limit stipulated in the statute, proceeding should be initiated within reasonable time and that in the case of the applicant, initiation of proceedings was done after a lapse of about 6 and % years and that in the light of the ratio of decided cases relied on by the applicant, the proceedings ought not to have been upheld by the learned CIT (Appeals). 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court the assessment years were 1989- 90, 1990-91 and 1991-92. It was nearly seven years thereafter that a notice was issued. On the basis of its reasoning, the Hon'ble High Court held that the I.T.A.T was justified in roping in the theory of reasonable period for passing orders u/s.201(lA) of the Act and also that inspite of continuous breach and default, the finding of the Hon'ble I.T.A.T that levy of interest u/s.201(lA) cannot be said to be within reasonable time is legal and valid. This decision of jurisdictional High Court directly applies to the applicant's case and is binding on the Hon'ble Appellate Tribunal. 3.5 The Applicant also relied upon the decision of Hon'ble High Court of Delhi in the case of C.I.T vs C.J International Hotels (p) Ltd., 372 ITR 684 DELHI HC (paper book pages 46 to SO), The years involved in this case were A.Vs: 1999-00 to 200102. In this case, the Department contended, (vide paragraph 3 of the judgment) that had the parliament intended, it would have engrafted a specific period for initiation of proceedings and in the absence of any such limitation, no limitation can be imputed. In rebuttal the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings was beyond reasonable period in the light of the various judicial pronouncements relied on by the applicant before the Hon'ble LT.A.T and in the light of the same, the order u/s.201(lA) needs to be quashed. 3.9 The applicant humbly submits that the Hon'ble ITAT omitted to deal with the submissions of the applicant and adjudicate upon the ground raised by the applicant in this regard. The applicant submits that this constitutes mistake apparent from record. The applicant prays that the Hon'ble ITAT may kindly recall the order and rectify the mistake apparent from record . 3. Having regard to the rival contentions and the material on record, we find that it is a fact that in Ground No.2 in ITA No.546/Hyd/2017, the assessee had raised the issue of time limit of 4 years for completion of proceedings u/s 201(1) and 201(1A) of the Act. This Tribunal has dealt with this ground in Paras 6 to 8 of its order. However, the mistakes that have crept in the order are that (i) at the end of Para 6, it is erroneously held that ground of appeal No.2 is allowed; and (ii) Para 8 erroneously starts with Ground No.3 . Therefore, we deem it fit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no mistake apparent from record which was rectifiable u/s 254(2) of the Act. 7. Having regard to the rival contentions and the material on record, respectfully following the above decisions, we agree that there is a mistake apparent from record and needs rectification by dealing with the case law relied upon by the assessee. Since considerable time has passed after hearing of the appeals, we are of the opinion that both the parties should be given sufficient opportunity of hearing. Therefore, we deem it fit and proper to recall the order of the Tribunal in ITA No. 546 /Hyd/2017 dated 29.11.2017 for rehearing of the parties on the decisions relied upon by the learned Counsel for the assessee. The appeals are thus directed to be fixed for hearing in due course after notice to the parties. 8. In the result, M.A. No.49/Hyd/2018 is allowed. M.A. No.37/Hyd/2018 9. For the sake of clarity and ready reference, the contents of the application in M.A. No.37/Hyd/2018 are as under: Application under Sec.254 (2) of Income Tax Act, 1961: 1.1 This application is filed by the applicant company u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interfere with the penalty order confirmed by the CIT (A) 4.1 The applicant submits that mistakes as mentioned hereunder have crept into the order of the Hon'ble Tribunal. MISTAKE AS TO FOUNDATIONAL FACTS: 4.2 Hon'ble Tribunal mentioned (in paragraph 13 of the order) : the requirement to make payment and genuineness of the payment of noncompete fee by the assessee to Shri Ramoji Rao (HUF) has been adjudicated by the Tribunal in the assessee's own case or A. Y 2008-09 and the contention of assessee that the non-compete fee is the business expenditure of the assessee has been upheld. 4.3 The applicant submits that the Hon'ble Tribunal remitted the matter of genuineness and necessity to pay the non-compete fee to the file of the assessing officer, vide paragraph 28 of its order in I.T.A.No.26/HYD/2011 dt.22-10-2014. The under mentioned extract from the said order of the Hon'ble Tribunal is relevant in this connection. therefore considering the totality of the facts and circumstances we are of the view that as the impact of acquisition of 39% of equity shares by M/S. Equator Trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Applicant relied upon the decision of Hon'ble Delhi High Court in the case of C,I.T vs Goyal M,G Gases (I,T,A No: 335/2011 dated 23-02-2011) (Paper book pages 4 to 11) in which the appeal filed by Dept. was dismissed. In this case the CI.T, in his order u/s.263, directed A.O to compute interest on mercantile basis and also directed that consequential order be passed within 3 months. Assessee challenged CIT's order before Hon'ble ITAT. ITAT, noticing that about 4 years had passed after the date of 263 order and that the A.O did not pass consequential order, dismissed the assessee's appeal as infructuous in the sense that in any case the A.O was incompetent pass the consequential order after such inordinate delay. Though the assessee's appeal was dismissed, the revenue apprehended that ITAT's order may prevent the A.O from passing the consequential order and hence filed appeal before the High Court. The Hon'ble Delhi High Court, inter alia, held (in page 5 of its order) that it was of the view that where no period of limitation is prescribed, then, in any event, a reasonable period of limitation ought to be adopted and in the light of the time allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, then there cannot be any scope for levying any penalty u/s.271C The Hon'ble I.T.A.T also recorded that the recipient has paid the tax on the income received. Being so, the provisions of Sec.271C cannot be applied to the assessee's case. Hon'ble I.T.A.T confirmed deletion of the penalty. 5.6 Applicant also relied upon the decision of the Hon'ble I.T.A.T A bench Mumbai, in the case of A.C.LT Vs American School of Bombay Education Trust (IT.A Nos.6349 to 6351/Mum/2009 and C.O NOS.141 to 143/Mum/2010 dated 31-01-2011). (Paper book pages 39 to 43) In this case, the Hon'ble LT.A.T, A Bench, Mumbai was adjudicating upon orders passed by C.LT (A) deleting penalty imposed U/s.271C of the Act. In the said case, orders U/S.201(1) 201(lA) were passed by D.C.LT (TDS). Thereafter penalty U/s.271C was levied. When the penalty appeal came up before the C.LT (Appeals), assessee contended that the LT.A.T held that the initiation of proceedings U/S.201(1) 201(lA) in the instant years was beyond the period of six years and hence barred by limitation. Considering the fact that the LT.A.T has quashed the orders U/S.201(1) 201(lA), the C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 230 Delhi High Court (Paper book pages 51 to 54) In the said case, the High Court held that where no limitation is prescribed, as in Sec.201, action must be initiated by the competent authority under the Act within a period of four years. The Court also held that date of knowledge is not relevant for purposes of exercising jurisdiction in so far the provisions of the Act are concerned and also that acceptance of liability by assessee would not, by itself, extend period of limitation nor would it extend reasonable time. 5.9. The applicant also cited the decision of Hon'ble Supreme Court in the case of State of Punjab others vs Bhatinda Distt. Coop. Milk Producers Union Ltd.11 SCC 363 SC (Paper book pages 55 to 59) wherein Hon'ble Supreme court held 'it is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors . In the said case, issue of notice after a period of five years was considered not valid. 5.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (TDS). Thereafter penalty U/S.271C was levied. When the penalty appeal came up before the C.LT (Appeals), assessee contended that the I/T.A.T held that the initiation of proceedings U/S.201(1) 201(lA) in the instant years was beyond the period of six years and hence barred by limitation. Considering the fact that the I.T.A.T has quashed the orders U/S.201(1) 201(lA), the C.LT (Appeals) ordered deletion of penalty U/S.271C of the Act. Against such order of C.I.T (Appeals), revenue came up in appeal before the LT.A.T. Hon'ble I.T.A.T held that where the order U/S.201(1) and 201(lA) is set aside on account of limitation, the effect is that the assessee is not deemed to be in default in respect of any failure to deduct or pay tax at source and in such circumstances, the question of penalty U/s.271C cannot arise. Since the C.LT(Appeals) has ordered for cancellation of penalty on the basis of order of the LT.A.T, the Hon'ble I.T.A.T refrained from considering the submissions by both sides on merits and the order of the C.LT(A) was upheld and the appeals of revenue were dismissed. 6.3 It is also submitted that the Hon'ble ITAT in the combined order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, there is a mistake apparent from record. Therefore, we deem it necessary to modify Para 13 as under: 13 .. (HUF) has been directed to be verified by the Tribunal in the assessee s own case for A.Y 2008-09 in the quantum appeal and the contention of the assessee to allow depreciation on non-compete fee or alternatively to allow it as deferred revenue expenditure has not been accepted. The liability of the assessee to deduct tax at source would arise irrespective of the nature of the payment as it clearly attracts the provision of section 194J of the Act. However, unless the genuineness of the payment is decided, it cannot be said that it is taxable in the hands of the recipient and only if it is taxable, do the TDS provisions get attracted . 12. As far as the second alleged mistake pointed out by the assessee is concerned, we find that the AO initiated the penalty proceedings after a lapse of more than 6 years and therefore, it is the case of the assessee that it is barred by limitation of a reasonable period. The appellant has relied upon various case law in support of this contention. In all these cases, the Courts have held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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