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2019 (8) TMI 697

..... on-resident respectively - default u/s. 201(1) - DTAA provisions - HELD THAT:- Assessee has raised common grounds of appeal feeling aggrieved by the order of AO, and on the issue of DTAA, the assessee had raised general ground and therefore, in our considered opinion, there is no prohibition for the AO to pass a common order for all the assessment years. In all the cases before the AO, the payee (recipient) was non-resident. It is not disputed that payment was made for purchase of software. It is also not disputed before the AO that tax was not deducted as mandated by law before making payment. Therefore, all the necessary conditions as required under law for invoking provisions of s. 201 were in place and therefore in our view, the action on the part of lower authorities is in accordance with law. We hold accordingly. Regarding the arguments of the learned AR of the assessee that the orders passed by the AO are time barred, we respectfully follow the tribunal order in the case of Google as reproduced above and hold that these orders are not time barred as these are passed within six years. In the result, all the six appeals filled by the assessee in the proceedings u/s 201 & 2 .....

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..... company. This finding of CIT (A) could not be controverted by the learned DR of the revenue and we find no infirmity in the ultimate finding of CIT (A) that there was no apparent mistake in the order passed by the AO which can be rectified u/s 154 On this aspect, we uphold the order of CIT (A). These grounds are rejected. Levy of surcharge and cess - This is the case of the department that in respect of royalty payment to those countries also for which DTAA prescribes withholding tax rate of 10%, surcharge and cess should be levies because no proof is brought on record by the assessee about proof of residency of those parties in those countries - HELD THAT:- It is stated by CIT (A) that the assessee has submitted the details regarding software payments, name of vendor, country of vendor and amount paid and he has also stated in the same Para that he has gone through the details carefully. He has noted in the same Para that it was claimed by the assessee before him that withholding tax rate for payment of royalty to all countries in dispute except Greece is 10% but he has held that this claim is not correct and he has noted the withholding tax rate on payment of Royalty in respect o .....

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..... nder section 9(1)(vi) of the Act, provisions of Double Taxation Avoidance Agreements and judicial decisions without actually specifying the charge having regard to the facts and circumstances in the appellant's case. 9. That the Learned CIT(A) erred in confirming the liability against the appellant contrary to the provisions of the I T Act and also DTAA. 10. That the CIT(A) erred in sustaining the order passed by the AO by upholding that payments made for purchase of software licenses, are royalty payments both under section 9(1)(vi) the Income-tax Act, 1961 and as per relevant DTAA, exigible for deduction of tax at source. 11. That the learned CIT(A) / AO erred in fastening a liability on the appellant u/s 201(1) and 201(1A) based on Explanation 4 to section 9(1)(vi) of the Act which has been inserted by the Finance Act, 2012 w.r.e.f. 1-6-1976. 12. That the learned CIT(A) / AO failed to appreciate that there cannot be retrospective default in the matter of tax deduction at source on the basis of retrospective amendment, hence on this ground alone the order requires to be cancelled. 13. For the above and other grounds and reasons which may be submitted during the course of hear .....

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..... e following two mistakes in the order passed by the DDIT:- 1. Since Assessing Officer has considered the rate of tax as per provisions of Income-tax Act, surcharge and educational cess should have been levied on the tax liability calculated by the Assessing Officer. However, Assessing Officer has failed to levy surcharge and educational cess in the order u/s. 201(1) & 201(1A). 2. As per the agreements entered by assessee with foreign vendors available on record, the payment had to be made to the Vendors net of taxes. Thus as per Sec.195A of the Income-tax Act, 1961 while passing order u/s. 201(1) and 201(1A) Assessing Officer should have considered grossing up of the payment. But Assessing Officer did not consider the grossing up of amount credited as required u/s. 195A, for determining the tax-deductible u/s. 195 in respect of payments made to Non-resident companies. 6. The AO then issued notice to the assessee u/s 154 for rectifying these mistakes and to grant opportunity of hearing to the assessee before passing the order u/s 154 because this will increase the tax liability of the assessee and after hearing the assessee, he passed the rectification order for all the assessme .....

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..... of such countries with which the DTAA with India allows withholding of more than 11.33% and deleted the surcharge and cess ion respect of other payments. 9. Feeling aggrieved by the order passed by the CIT(Appeals) in respect of grossing up of taxes, the revenue is in appeal before us as per ITA Nos. 2335 to 2339/Bang/2016 on the following identical grounds:- 1. Ld. CIT(A) has erred in partly allowing the appeal of the assessee which is opposed to law, facts and circumstances of the case. 2. Ld.CIT(A) failed to appreciate the fact that as per the terms of the Agreement entered by assessee with non-resident vendors the onus of deduction of taxes on the payments made solely vests on assessee. Accordingly, the Assessing Officer (AO) has rightly passed the order u/s 154 rws 201 on a grossing-up basis. 3. As per the Agreements with vendors which is part of the record, it is very clear that it was the sole responsibility of the assessee to pay the taxes as applicable in India on payments made to the vendors. Accordingly, the AO has grossed up the amounts u/s 195A and passed an order u/s 154 of the Income Tax Act. However, the Ld.CIT(A) erred in holding that the order was beyond the scope .....

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..... e in law. 7. That the learned CIT (A) has erred in fastening a liability on the appellant u/s 201(1A) of the Act. 8. That the above grounds are without prejudice to each other. The appellant craves leave to add, alter, amend or vary from the above grounds of appeal before or at the time of hearing. 11. We will first deal with the appeals filed by the assessee in the proceedings u/s 01 and 201 (1A). The first effective ground raised by the assessee before us and also before the CIT(Appeals) is that the DDIT was bound to grant relief in favour of the assessee in terms of the binding decision of the Hon ble Karnataka High Court in assessee s own case [ground No.2 before the CIT(A) and ground No.7 before us]. 12. The assessee has drawn our attention to the decision of the Hon ble High Court of Karnataka rendered in ITA No.507/2002 dated 25.08.2010 wherein in para 37 & 38 it was held as under:- 37. The last substantial question of law framed. is as under:- Whether the Tribunal is correct in allowing expenditure on imported software when the expenditure per se is capital in nature and is non-allowable? 38. The assessee company claims import of software for the purpose of retail tradi .....

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..... 8.6 The Special Bench in the case of Amway India Enterprise v DCIT 111 ITC, 112 had an occasion to consider as to whether the expenditure incurred on.software is revenue or capital. If the life of the computer software is shorter, say less than two years, then it is to be treated as revenue expenditure. The Special Bench further observed that if there are associated capital expenditure like purchase of new computer equipment for running the software developed under the project, then it can be considered as capital expenditure. If the software is used as part of the profit-making apparatus of the assessee, then expenditure on software is capital. If it is used to facilitate the running of the business, then it is revenue in nature. Since in the instant case, the Assessing Officer has simply relied on the order of his predecessor by holding the expenditure as capital, therefore, we have to record a finding on the basis of the finding recorded in earlier year. Since in earlier years, the issue stands deckled in favour of the assessee, therefore, we are not inclined to interfere with the finding of the learned CIT(A). Moreover, the Tribunal is holding that the payment made for purchase .....

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..... rther appeal under section 260A of the Act and that the matter had not attained finality. The learned Departmental Representative placed reliance on the findings of the Assessing Officer and the DRP on this issue and reiterated the arguments in the orders of the authorities below. 25. We have heard both parties and carefully perused and considered the material on record. We find from a perusal of the order of the coordinate bench of the Tribunal in the assessee s own case for Assessment Year 2004-05 in ITA No.1072/Bang/2007 (supra) at para 8.2 thereof that this issue has been held in favour of the assessee following the earlier decision of the Tribunal in the assessee s own case in ITA Nos.426, 427, 468 and 469/Bang/2006 for Assessment Years 2001¬02 and 2002-03. It is seen from this order that this issue has been decided in favour of the assessee company by the Tribunal from Assessment Year 1998-99 onwards. We, therefore, respectfully following the decision of the coordinate bench of the Tribunal for Assessment Year 2004-05 (supra), decide this issue in favour of the assessee. Grounds No.20 to 23 are allowed to the above extent. 15. The ld. AR has further drawn our attention to .....

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..... i) of the Act for failing to deduct tax at source u/s 195 of the Act as such payments did not constitute royalty u/s 9(1)(vi) of the Act? [Question of law No.26 in ITA Nos.907 & 909/2008, Question of law No.22 in ITA Nos.904 & 905/2008 and Question of law No.9 in ITA No.363/2009 - (Department's appeal)] Whether the Appellate Authorities were correct in holding depreciation claimed on software imported for in house utilization and treated as part of block of assets should be allowed, despite the same being in the nature of royalty as per Explanation to section 9(1)(vi) of the Act and no TDS u/s 194 of the Act having been deducted, section 40(a)(i) of the Act? [Question of law No.2 in ITA Nos.210 & 211/2009 - (Department's appeal)] 171. The said substantial questions of law arose for consideration in the assessee's case itself in ITA 507/02 which was decided on 25.8.2010 where the substantial question of law was answered in favour of assessee and against the revenue. Accordingly, the said question of law is answered in favour of the assessee and against the revenue. Substantial Question No.19: Whether the Appellate Authorities were correct in holding that exci .....

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..... ion of Delhi Municipal Corporation v. Gurnam Kaur AIR 1989 SC 38 wherein the Hon ble Supreme Court at page 8&9 had held as under:- Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. With all respect to the learned Judge who passed the order in Jamna Das' case and to the learned Judge who agreed with him, we cannot concede that this Court is bound to follow it. It was delivered without argument, without reference to the relevant provisions of the Act conferring express power on the Municipal Corporation to direct removal of encroachments from any public place like pavement or public streets, and without any citation of authority. Accordingly, we do not propose to uphold the decision of the High Court because, it seems to us that it is wrong in principle and cannot be justified by the terms of the relevant provisions. A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute. So far as the order shows, no argument was addressed to the Court on the question or not whether any direction could properly be made compelling .....

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..... ple upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well settled theory of precedents, every decision contain three basic postulates - [i] findings of material facts, is the inference which the Judge draws from the direct, or perceptible facts; [ii] statements of the principles of law applicable to the legal problems disclosed by the facts; and [iii] judgment based on the combined effect of the above. A decision is only an authority for what it actually decides. What is of the essence in decision is its ratio and not every observation found therein not what logically follows from the various observations made in the judgment. Every judgment must be read as applicable to the particular facts proved, since the generality of the expressions which may be found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not .....

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..... of interest of an owner. It is true that the decisions relied on by Shri Vaidyanathan on the principle of payment of interest as part of compensation in respect of land acquired were brought to the attention of this Court for discussion. What would be considered a little later. Suffice it to say for the present that the finding that solatium and interest are not payable for the lands acquired under the Central Act as part of compensation is a binding precedent. Obviously, therefore, this Court followed the ratio therein in District Judge, Udhampur case [supra]. The contention, therefore, that Hari Kishan Khosla's case cannot be treated as a binding precedent since therein there is no ratio but a conclusion without discussion, is not tenable and devoid of force. In that view, it is not necessary to discuss in extenso the effect of the decisions cited by Shri Vaidyanathan. Equally, the contention of Shri Vaidyanathan that the ratio in Hari Kishan Khosla's case is in conflict with the ratio in Satinder Singh's case which was neither distinguished nor overruled and that the decision of a coordinate Bench cannot have the effect of overruling decision of another co-ordinate B .....

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..... the judgment of the jurisdictional High Court in the matter of CIT (Intl.Taxn) v. Samsung Electronics Co. Ltd [(2011) 203 Taxman 477] and distinguishing the later judgment of the jurisdictional High Court in WIPRO Ltd. vs. DCIT as reported in 382 ITR 179, has held as under : 4. We have considered the rival submissions. First, we examine the applicability of the first judgment of Hon'ble Karnataka High Court rendered in the case of WIPRO Ltd. vs. DCIT (Supra) rendered on 25.08.2010. In this case, the substantial question of law raised as per Para 37 was as under:- Whether the Tribunal is correct in allowing expenditure on imported software when the expenditure per se is capital in nature and is not allowable? 5. From this substantial question of law, it comes out that in that case, this was not a dispute before Hon'ble Karnataka High Court as to whether the import of software is Royalty or not? The dispute in that case was this that the import of software is capital expense in that case and therefore, how the same can be allowed as deduction. In that case also, the A.O. held that the payment for software is Royalty and since TDS was not deducted, it is to be disallowed u/s .....

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..... upra) and that of the order of the coordinate bench (supra), on identical facts and circumstances, we uphold the orders of the lower authorities. 23. On the basis of above decisions and the binding precedent of the jurisdictional High Court in the matter of Samsung Electronics Co. Ltd. & Ors., (supra) and Synopsis International Old Ltd. (supra), it was submitted that the action on the part of ld. DCIT in invoking the provisions of section 201 was in accordance with the law. 24. It was further submitted that if this Tribunal does not follow the law laid down by the Hon ble jurisdictional High Court in the matter of Samsung Electronics Co. Ltd. & Ors., (supra), then it / tribunal would be under contempt of court for not following the law laid down by the jurisdictional High Court and therefore, it will amount too non-compliance of the order of the Hon ble High Court. 25. In rebuttal, the ld. AR filed the written submission as directed by the Bench and has submitted as under:- Pursuant to the hearing on 24.04.2019 and in addition to the written submissions filed during hearings on 20.03.2015, 19.11.2015 & 22.11.2017, the assessee submits that the issue in question is held .....

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..... t Consultants (P) Ltd (226 Taxman 319 ¬department paper book pages 126 to 138) and others cannot overturn the decision rendered in assessee's own case in a lis between the parties. A decision given in some other case cannot overturn the decision rendered in assessee's own case and the decision is also applicable even from the rule of consistency and predictability. The reliance placed by the Ld.DR on the following decisions submitted during hearing on 24.04.2019 being CIT vs Sun Engineering Works (P) Ltd - 198 ITR 297 (SC), Delhi Municipal Corporation vs Gurnam Kaur AIR - 1989 SC 38, Union of India vs Dhanwanthi Devi - 1996 (6) SCC 44, Bhargawan Pillai vs State of Kerala AIAR 2004 SC 2317, Ramacharan Atma Ram Sonkar vs Radhe Shyam Dhakuram pandey 1998 (2) MPLJ 173, Hanuman Datt vs State of MP 2002 (4) MPLJ 354, Jagabandhu Sahu vs State of Orissa AIR 1969 Ori 299 and Tata International Ltd vs Trisuns Chemicals Industry Ltd 2002 (2) Bom CR 88 are not applicable as the clearest of language read in proper context is that the Hon'ble Karnataka High Court in assessee's own case vide order dated 25.08.2010 in ITA.No. 507/2002 in Para 39 Page 34 of the order has held as .....

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..... llip;. Hence the above decision is not applicable to the impugned case. The decisions relied on by the Ld.DR of Hon'ble ITAT Bangalore in M/s.Kalki Communication Technologies ltd vs ITO - ITA 1401 to 1403/B/2013 dt.15.04.2015 and GE India Industrial I' Ltd vs Addl CIT in ITA 595/B/16 dt.17.11.2017 are not applicable as the Hon'ble ITAT Bangalore and Hon'ble Karnataka High Court in assessee's own case have held that the impugned payments are not covered u/s 9(1)(vi) of the Act. The argument of the ld.DR that the decision of the Hon'ble Karnataka High Court in assessee's own case in ITA 507/2002 dt.25.08.2010 & in ITA 879/2008 dt.25.03.2015 should not be relied on in view of the decision of Hon'ble Karnataka High Court decision in PCIT vs GMR Energy Limited ITA 358 to 360/2018 dt.08.01.2019 wherein the Court has held in page 10 para 7 of the order as extracted under (copy enclosed as Annexure 1): 7 A judgment of the court becomes binding only when a question arises for consideration, is contested by both sides and thereafter findings are recorded by the Court. None of these conditions have been fulfilled. There is no notice issued to the other side .....

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..... was also passed ignoring the binding decision of the jurisdictional High Court in the matter of Synopsis International Old Ltd. (supra) and also in the matter of Samsung Electronics Co. Ltd. & Ors., (supra). Interestingly, the decision of Samsung Electronics Co. Ltd. & Ors., (supra) was passed by the jurisdictional High Court on 15.10.2011 [ 345 ITR 494]. The decision of Synopsis International Old Ltd. (supra) dated 03.08.2010 as well as of Samsung Electronics Co. Ltd. & Ors. dated15.10.2011 were available to both the coordinate Benches for the AY 2007-08 and also for AY 2008-09. However the coordinate Bench had followed the decision in the case of assessee for the earlier assessment years. The ld. AR in the written submissions had also submitted that the decision of Synopsis International Old Ltd. (supra) and Samsung Electronics Co. Ltd. & Ors. (supra) were considered by the Tribunal while deciding the issue in favour of assessee and therefore, the order of coordinate Benches are binding and are required to be enforced by the authorities below as well as by the Tribunal. In our view, respectfully following the coordinate benches decision which are in conflict of Hi .....

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..... empt. The Tribunal is the creation of statute/ Constitution and has been assigned the duty to examine the facts and apply the correct law without being influenced by the threat of contempt posed by both sides. in contempt. In our humble understanding, the law declared by the Hon ble High Court in the case of Samsung Electronics Co. Ltd. & Ors. (supra) is the correct exposition of law and therefore, the same is binding on this Tribunal situated under the jurisdiction of Hon ble Karnataka High Court. We again reiterate that the question decided by the Hon ble Karnataka High Court in the case of Wipro (Supra) were not decided in the context of question now posed before us, i. e. whether payment made by the assessee for purchase of software was in the form of royalty or not? 28. In the light of the above, we do not find any error on the part of authorities below to apply the decision rendered by the jurisdictional High Court in the matter of Synopsis International Old Ltd. (supra) and Samsung Electronics Co. Ltd. & Ors. (supra) and accordingly the action on the part of lower authorities is in accordance with law. In the result this ground is decided against the assessee. 29. Th .....

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..... t. He pointed out that the tribunal also held that limitation provided for the non-resident for declaring assessee as assessee in default is required to be 6 years and he had drawn our attention to the following paras of this tribunal order:- 91. For the purpose of above, it was submitted that the reasoning which was given by courts/Tribunal referred by the assessee are not available as all the judgments referred by the learned counsel for the assessee were for the period prior to introduction of amendment in section 201(1) of the Act. It was submitted that on the analogy and reasoning given by the Special Bench in the case of Mahindra & Mahindra (supra) in paras.14.2, 17.10 and 17.11 are no more available to the assessee as the said reasoning were given by the Special Bench in the case of Mahendra & Mahendra (supra) in the absence of limitation for initiation of proceedings or passing of order u/s 201 of the Act as applicable on said date and therefore, the Special Bench has applied the limitation as provided u/s 143(2), 149, 153, 154 and 263 to the proceedings under section 201 of the Act. The special bench after detailed examination in para.14.2, in the case Mahindra &am .....

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..... n by the assessee, period of six years has to be read/considered in view of the legislative interference by introduction of section 201(3) of the Act. In the absence of such an analogy and any other Limitation other than period of six years would amount to discrimination in the limitation between the payment to resident and non-resident. 4) The assessee has relied on the judgement of the Delhi High Court in the case of Bharathi Hotels Ltd (2016) 76 taxman.com 256 (Delhi) to contend that even after introduction of section 201(3) of the Act and in the absence of any limitation provided by the Act in respect of payments to the nonresident's, the reasonable limitation has to be read into. With great respect, the Delhi High Court has not provid ed any li mitat ion wit h respect t o payments to non-residents. Without prejudice to the above contention even if the contention of the assessee that in the absence of any limitation, reasonable time limit has to be read into the section is to be accepted, applying the same analogy as held by the various courts relied upon by the assessee and considered by the Delhi High Court, the period of six years provided by the statute to the payments .....

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..... ot competent to lay down any time limit. If this contention is brought to the logical conclusion it will mean that the unlimited time will be available to the Departmental authorities at their sweet-will for taking action under this section. In our considered opinion this contention raised on behalf of the revenue is bereft of any force for the simple reason that certainty is the hallmark of any proceedings. It is beyond our comprehension that how, in the absence of any time limitation provided in the section, the action can be taken in indefinite period. It is wholly impermissible to argue that unlimited time limit be granted to the revenue for taking action under this section. The sword of taxing authorities cannot be allowed to hang, forever, over the head of the tax payers. If this proposition of the learned D.R. is accepted that will give license to the authorities to take action even after 30, 40 or 50 years. The canons of limitation are ordinarily provided expressly in the Act and in their absence, they are to be impliedly inferred by taking into consideration the scheme of the relevant provisions. The ld. DR has relied on some cases for suggesting that no time limit be laid .....

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..... 17] 83 taxmann.com 306 (Allahabad) had occasion to deal with all judgments referred before us and thereafter it was held as under 71. In the entirety of the discussion, we find it difficult to hold that period consumed by Revenue in prosecuting matter against main payee would have resulted in accrual of a right upon Assessee so as to deprive Revenue from proceeding under Section 201(1) and 201(1A), though, admittedly, Assessee-petitioner has committed default by not complying Section 195 by non-deduction of TDS on the amount paid to Smt. Nidhi Raman. Defence of petitioner that it was misrepresented by seller by not disclosing by any of them that she was an N.R.I. would equally be available to Revenue also for explaining delay and also their bonafide is fortified that they make all possible efforts to recover entire amount of tax from person liable to pay tax and as a last resort they have sought to exercise power under Section 201(1) and 201(1A) against Assessee. 72. The view taken by Delhi High Court that period of limitation of four years, as applicable for making Assessment under Section 147, should be made applicable for exercising power under Section 201(1) and 201(1A), we fin .....

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..... competent authority within a reasonable period and whether delay is unjust, arbitrary, whimsical or it is for valid reasons. If Court finds that delay in exercise of power is for valid and bonafide reasons, alleged delayed exercise of power cannot be held invalid. 98. The contrary judgment of Hon ble Delhi High Court in the matter of Bharti Airtel Ltd v. Union of India [(2016) 76 taxmann.com 256] was relied upon by the Ld. AR. The DR relied upon Bhura Exports Ltd [2011] 13 taxmann.com 162 (Calcutta) and Mass Awash (P.) Ltd. [2017] 83 taxmann.com 306 (Allahabad) In our view the decision of the Special Bench and other judgments apply with equal force in favour of both i.e. resident as well as non-resident providing period of limitation of four years from the end of the financial year for initiation of proceedings on the analogy and principle mentioned in section 147, 148, 153 etc. prior to amendment in law. However there are contrary judgments in favour of the revenue post amendment which does not provide any limitation for initiation of proceedings u/s.201 of the Act. 99. In view thereof, there is conflict of judgments of various courts. One set of judgment are in favour of the ass .....

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..... arly under DTAA non-resident cannot be discriminated viz-a-viz resident. If we accept the argument of the Ld. AR that the limitation of 4 years, as held provided by the Special Bench would continue to apply to non-resident even after post amendment to section 201, in that eventuality, hostile discrimination towards the resident-payee will creep in i.e., the limitation for initiation under section 201 against the resident payee would be six years and against the non-resident payee it would be four years. This is neither the intention of the legislature nor the mandate of the Special Bench or the judgment referred herein above. On the contrary, if we accept the argument of the Ld. DR that there is no limitation for initiation of proceedings under 201, in view of Hon ble Calcutta and Allahabad High Court judgments (supra), if the payee is non-resident then, it will amount to discrimination against the nonresident as the proceedings may be initiated against the resident within four years and there is no limitation for initiation of proceedings against the non-resident. Therefore, the arguments of both the assessee as well as the Revenue cannot be accepted. If we accept the argument of .....

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..... firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed ………………. Section 201(1) of the Act reads as under: (1) Where any person, including the principal officer of a company, - (a) who is required to deduct ally sum in accordance with the provisions of this Act; or (b) referred to in sub-section (IA) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in .....

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..... time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :. As per the above section the obligation of deduction of TDS if any can be discharged in the light of law as it stands at that point of time. An assessee cannot be treated as an assessee in default relying on subsequent amendments made to the Act having retrospective effect. The assessee vide written submission dt.22.11.2017 in para 4 has relied on several decisions wherein it is held that retrospective effect cannot be imposed when it comes to deduction of TDS. The assessee also places reliance on the decision of the Hon'ble Allahabad High Court in the case of Jagran Prakashan Limited vs DCIT 345 ITR 288 (Index of Decisions-H pages 110 to 150) which has been affirmed by the Hon'ble Supreme Court in SLP Civil 9861/2013 dt.05.05.2014 (Index of Decisions - II page 151). While dealing on the issue on assessee-indefault, the High Court has held as under: 74. From the above, it is clear that deductor cannot be treated an assessee in default till it is .....

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..... dismissed. 37. Now we take up six appeals filed by the assessee in the proceedings u/s 154 i.e. ITA Nos. 18 to 23/Bang/2017. Identical Grounds raised by the assessee in these six appeals are already reproduced above in Para 10. 38. Both sides were heard. Regarding Ground No. 4 to 6 in which this is the contention raised that these orders u/s 154 are bad in law, we find that in addition of grossing up of tax u/s 195A for which, there may be an argument that it is not an apparent mistake rectifiable u/s 154, the AO has also increased the demand in respect of Surcharge and Education Cess and it is a fact that the demand of TDS is as per provision of Income Tax Act in some years where the rate of withholding tax as per DTAA is higher and hence, not raising demand in respect of Surcharge and cess is an apparent mistake rectifiable u/s 154 and therefore, we hold that these orders u/s 154 are not bad in law although some demands raised in these orders may be bad in law and the same can be deleted on merit. These Grounds Nos. 4 to 6 are rejected. 39. As per Ground No. 1 to 3 raised by the assessee in these appeals, it is contended that the learned CIT (A) has erred in holding that rate of .....

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..... es and pay it to the authority. As per the Master Agreement with. Microsoft, there is no indication of any definite amount to be paid to the vendor irrespective of taxes. There is no basis to infer that the appellant had to bear the cost of taxes payable on remittances. Moreover, the appellant is right in contending that the terms of one agreement could not be applied to payments pertaining to other vendors. Raising of additional demand based on facts relating to one payment and applied to other payments requires inference and extrapolation. It could not be called a mistake apparent from record. Therefore, section 195A was not applicable on the facts and circumstances of the case. The additional liability due to grossing up of the tax with remittances as made by the assessing officer in order under section 154 is deleted. Ground no.s 6 and 7 are allowed. 44. We find that in this Para, a categorical finding is given by CIT (A) that as per the agreements between the assessee company and various parties to whom payments were made, the assessee company had to deduct TDS if required by law or by the income tax authorities and hence, there is no basis to infer that the assessee company h .....

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