TMI Blog2019 (8) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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 201 201 (1A) are dismissed. Mistake rectifiable u/s 154 - addition of grossing up of tax u/s 195A - HELD THAT:- 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. Rate of tax is 15% in USA, UK, Austria and Canada and 20% in Spain because as per the assessee it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or, 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 of USA, UK, Austria, and Canada is 15% and the same for Spain is 20%. This shows that learned CIT (A) has not accepted the claim of the assessee without examination and verification. Hence, if this is the contention of the revenue that the vendors of Ireland, Netherland, Singapore, Israel, France, Germany, Australia and Belgium etc. are not residents of respective countries, the revenue should have brought on record some evidence in this regard. In the absence of any evidence even in one case that the vendor of a country of 10% withholding tax rate is in fact resident of some other country having higher withholding tax rate, we do not find any reason to interfere in the order of CIT (A). This Ground is also rejected. - ITA Nos.1215 to 1220/Bang/2014, 18 to 23/Bang/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 hearing of this appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered. A common order was passed by the CIT(Appeals) in ITA Nos.173 to 178/Intl. Taxn./CIT(A)-IV/2012-13. Feeling aggrieved by the common order passed by the CIT(A) u/s. 201(1) 201(1A) dated 30.11.2014 for the assessment years 2007- 08 to 2012-13, these six appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not convinced with the submissions made before him by the assessee and accordingly, he passed an order against the assessee. 5. As per the AO, he later noted the 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 rectifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 47 to 52/CIT (A)/2015 16. As per this order, he held that grossing up of tax by invoking the provisions of section 195A is not as per law but he held that the orders p [assed by the AO u/s 154 are not bad in law. He also held that the AO is directed to levy surcharge and cess in respect of royalty payments made to vendors who are resident 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Spain whereas the rate of tax as per the relevant clause of the respective DTAA is 10%. 4. That the learned CIT(A) has erred in not considering that the order under section 154 of the Income Tax Act, 1961 (Act) is bad in law and is thereby disputed. 5. That the learned CIT(A) has erred in not considering that the rectification u/s 154 was made on an issue that is clearly outside the scope of section 154 of the Act. 6. That the learned CIT(A) has erred in not considering that the findings, reasons given by the AO for carrying out rectification are contrary to facts emerging from records and is unsustainable and untenable 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 ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as that is not what was urged before the lower authorities. Once it is held to be not representing the royalty and it is a revenue expenditure, the deduction allowed by the Appellate Authority is legal and valid and do not call for any interference. 13. The ld. DR had also drawn our attention to the order of Tribunal passed in ITA No.426, 427, 468 469/Bang/2006 dated 30.05.2008 wherein the Tribunal in paragraphs 18.5 18.6 held as under:- 18.5 We have heard both the parties. It is true that the issue under reference stands covered by the decision of the Tribunal in the case of the assessee for the asst. year 2000-01. The Tribunal while disposing off the appeal for the asst.year 2000-01, followed he earlier order for the asst.years 1998-99 and 1999-2000, which is reported in 96 TTJ 211., Thus, the issue is covered in favour of the assessee. 18.6 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation put forth by the assessee and disallowed the entire depreciation claimed on the ground that there was an obligation on the part of the payers to effect deduction from out of payments made by them in favour of non-resident recipients for acquiring any software even assuming that it partakes the character of goods. It was submitted that the Assessing Officer was of the view that software is basically purchased by way of licence to use and he relied on the judgment of the Hon'ble High Court of Karnataka in the case of Synopsis Inc. and the decision of the Delhi Tribunal in the case of Microsoft Corporation Vs. ADIT. It was contended that the DRP agreed with the reasoning of the Assessing Officer in continuing the disallowance, even though it was submitted therein that the learned CIT(A) and the Tribunal had decided this issue in the assessee s favour in the earlier assessment years, on the ground that the Department has taken the matter in further 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. Thus it is clear that the Tribunal has followed the earlier order for the Assessment Year 2004-05 which has been confirmed by the Hon'ble jurisdictional High Court. Following the earlier order of this Tribunal as well as Hon'ble jurisdictional High Court, we decide this issue in favour of the assessee. 16. The ld. AR has further drawn our attention to para 170 to 172 of the order of the jurisdictional High Court in the matter of Wipro Ltd. v. DCIT for the AY 20101-02 to 2004-05 to the following effect:- 170. The said questions arose for consideration before this Court in the assessee's case in ITA No.3198/2005 which was decided on 28.2.2012 where the substantial questions of law were answered in favour of the assessee and against the revenue. Following the said Judgment, said questions of law are answered in favour of assessee and against the revenue. Substantial Question No.18: Whether the Appellate Authorities were correct in holding that the payments made by the assessee for import of software cannot be disallowed u/s 40(a)(i) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, once the authority ( court / tribunal )created by law has declared that the payment made by the assessee to a non-resident entity was not in the nature of royalty, there was no liability on the part of assessee to withhold tax at the time of making payment to such non-resident entity. Having so decided in favour of assessee by the competent courts and Tribunal, it was inappropriate and the authorities were in contempt for initiating action u/s. 201(1) (1A) of the Act. 18. Per contra, the ld. Sr. Standing Counsel for the revenue had submitted that the decisions rendered by the Tribunal were issued without considering the law laid down by the Hon ble High Court in the matter of CIT v. Synopsis International Old Ltd. 212 Taxman 454 (Kar) and in the matter of CIT v. Samsung Electronics Co. Ltd. Ors., 345 ITR 494 (Kar) whereby the High Court has consistently held that the payments made by the assessee for purchase of software was in the nature of royalty and hence, subject to deduction of tax and non-deduction of tax automatically invokes the rigors of section 201 for declaring the assessee as assessee in default. It was further submitted by the ld. DR that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is not an authority on point B. Point B is said to pass sub silentio. In Gerard v. Worth of Paris Ltd. (k)., [1936] 2 All E.R. 905 (C.A.), the only point argued was on the question of priority of the claimant's debt, and, on this argument being heard, the Court granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith, Ltd., [1941] 1 KB 675. the Court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. 19. Similarly, the ld. DR also relied upon the decision in the case of UOI v. Dhanwanthi Devi, 1996 (6) SCC 44 at 51 para 13 to 14 held as under:- Before adverting to and considering whither solatium and interest would be payable under the Act, at the outset, we will dispose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case which constitutes its ratio decidendi. Therefore, in order to understand and appreciate the binding force of a decision is always necessary to see what were the facts in the case in which the decision was given and what was the point which had to be decided. No judgment can be read as if it is a statute. A word or a clause or a sentence in the judgment cannot be regarded as a full exposition of law. Law cannot afford to be static and therefore, Judges are to employ an intelligent in the use of precedents. It would, therefore, be necessary to see whether Hari Kishan Khosla's case would form a binding precedent. Therein, admittedly the question that had arisen and was decided by the Bench of three Judges was whether solatium and interest are payable to an owner whose land was acquired under the provisions of the Central Act? On consideration of the facts, the relevant provisions in the Central Act and the previous precedents bearing on the topic the Court had held that solatium and interest are not a part of compensation. It is a facet of the principle in the statute. The Central Act omitted to provide for payment of solatium and interest since preced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t application of the Probation Act to a case covered under Section 5(2) of the Act. Therefore, there is no substance in the accused- appellant's plea relating to grant of benefit under the Probation Act. The decision in Bore Gowda's case (supra) does not even indicate that Section 18 of the Probation Act was taken note of. In view of the specific statutory bar the view, if any, expressed without analysing the statutory provision cannot in our view be treated as a binding precedent and at the most is to be considered as having been rendered per incuriam. Looked at from any angle, the appeal is sans merit and deserves dismissal which we direct. 21. On the basis of the above, it was submitted that the principle of law expounded by the High Court in the case of Wipro (supra) [case of the assessee] was not the exposition of law as considered by the Hon ble Supreme Court and was only with respect to facts before the jurisdictional High Court and therefore, will not come in the way of AO/CIT(A) for declaring the assessee as assessee in default u/s. 201(1) of the Act. 22. The ld. DR had also relied on the decision of the Tribunal rendered in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at as per this judgment of Hon'ble Karnataka High Court, the decision is not on this aspect that it is Royalty or not and therefore, this judgment is not relevant in the present case. 6. Now, we examine the applicability of the second judgment of Hon'ble Karnataka High Court rendered in the case of WIPRO Ltd. vs. DCIT (Supra) rendered on 25.03.2015. As per this judgment, in Para 171, it was held that in earlier judgment dated 25.08.2010, similar question was decided in favour of the assessee and against the revenue and therefore, in those appeals also, the issue was decided in favour of the assessee. We have already seen that the decision dated 25.08.2010 is not on this aspect that it is Royalty or not and therefore, this judgment is not relevant in the present case. Accordingly, this later judgment dated 25.03.2015 is also not relevant. 7. There is no dispute that the present issue is covered against the assessee by the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. Samsung Electronics Co. Ltd. (Supra) and learned AR of the assessee has merely cited these two judgments rendered in the case of WIPRO Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble ITAT rendered in assessee's own case for AY's 2001-02, 2002-03 2004-05. Further the Hon'ble ITAT in assessee's own case for AY 2008-09 in IT(TP)A 1665/B/12 dt.04.01.2017 has decided the issue in favour of the assessee in Para 15 16, pages 17 18 of the order (copy of the order placed on record during hearing) wherein the Hon'ble ITAT has relied on the decision of the Tribunal in assessee's own case for AY 2007-08 mentioned supra and the decision of the jurisdictional high court in assessee's own case for AY 2004-05 in ITA 879/2008 dt.25.03.2015 (copy placed on record - relevant para 170 page 56 of the order). From the above it is seen that on identical set of facts having regard to the law even after the insertion of Explanation 4 to section 9(1)(vi) with retrospective amendment from 01.06.1976 carried out in Finance Act 2012, the decision of the Hon'ble TIM' and Hon'ble Karnataka High Court in assessee's own case have been rendered in favour of the assessee on the basis of its own facts and the applicable law. The argument of the department that the issue before the Hon'ble ITAT and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 52 to 91), CIT vs CGI Information Systems Management Consultants (P) Ltd (226 Taxman 319 - department paper book pages 126 to 138) and Citrix Systems Asia Pacific Pvt Ltd in Re 343 ITR 1 AAR are all cases of third parties and not applicable under the impugned case for the reasons mentioned supra. The decision of the Hon'ble Supreme Court in GVK Industries Ltd Anr vs ITO Anr Civil Appeal No.7796/1997 (department paper book pages 92 to 125) is not applicable as it is a decision on the constitutional validity of section 9(1)(vii)(b) of the Act whereas the impugned case is on the issue of applicability of section 9(1)(vi) of the Act. This decision is not applicable as the subject matter is different and the law involved is different. It has been held by the Hon'ble Supreme Court in CIT vs Sun Engineering Works (P) Ltd - 198 ITR 297 that a decision cannot be read out of context. Hence reliance placed on the decision in GVK Industries is not correct. The reliance placed by the Ld.DR on the decision of the Karnataka High Court in the case of CIT vs Wipro Ltd 203 Taxman 621 (department paper book pages 139 to 143) is also incorrect as evident from page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. It cannot be considered as a precedent. The above ruling is not applicable to the impugned case as the ruling of the Court is binding between the parties. Moreover in the High Court decisions in assessee's own case the substantial question of law was framed and decided after notice to the parties. The same is evident in from the decision in ITA 507/2002 dt.25.08.2010 in Para 37 to 39 pages 32 to 34 of the decision:- 37. The last substantial question of law framed is as under .. and in ITA 879/2008 (11.25.03.2015 in Para 171 page 56 Substantial question no.18 171. 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 the assessee and against the revenue. Accordingly, the said question of law is answered in favour of the assessee and against the revenue. Since in the impugned case the substantial questions of law were framed and answered in favour of the assessee, the ruling in PCIT vs GMR Energy Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.10.2011 had categorically held that payment made for purchase of software were in the form of royalty u/s. 9(1)(vi) of the Act and therefore, in our view, the decision rendered by the coordinate Bench treating the expenditure incurred for the purchase of software cannot be held that it is not royalty. In fact, as pointed out by the ld. DR, the issue which was decided by the coordinate Benches were confined to narrow compass whether the assessee was entitled to depreciation on the expenditure incurred for purchase of software or not? There was no discussion before any of the forums including before the High Court with respect to applicability of provisions of section 9(1)(vi) of the Act or the Explanation introduced into the Act w.e.f. 1.4.2012. In our view, application of law is required to be decided by the coordinate Bench by discussing the provision of law and also of the judgment and thereafter discussing how the said provision of law and judgment are applicable or not applicable to the facts . In the absence of any discussion on the above two aspects as to the scope of provisions of the Act as well as judgment, it will be unfair to conclude that, the coordinate benches had c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding precedent of jurisdictional High Court and of the Supreme Court and demonstrate on the basis of facts and on law, what was the principle laid down by the Hon ble Supreme Court. The Hon ble Supreme Court in the case of Sun Engineering Works (P) Ltd. (supra) had held that there are many judgments including the judgment cited by the DR that judgment is not a statute and it is required to be applied on the given facts and further We are of the opinion , that Single change in facts will not only affect the colour and texture of decision, but would also affect outcome of the case . 30. The second objection raised by the ld. AR for the assessee is with respect to the order passed by the Officer was barred by limitation (ground No.5 6). In this regard, the ld. AR had submitted that the assessment year under consideration was 2007-08 and 2012-13 and law amendments were made in s. 201 and earlier limitation was not provided under the Act and subsequently by virtue of amendment, limitation was provided and therefore it was submitted that in the absence of limitation provided, the maximum period for passing the order was four years in the light of decision rendered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one year form the end of the relevant financial year. 92. On the basis of above it was submitted by the learned Standing Counsel that the reasoning as given by the Special Bench, Hon ble jurisdictional High Court as well as by other High Courts is no more available for initiation of proceedings against non-resident for period of 4 years, in view of the fact that same logic and reasoning is required to be followed by the Tribunal by laying down the reasonable period of limitation for initiation of proceedings against non-resident entity. In the written submissions it was submitted by the DR as under: 1. Section 201(3) of the Act has been amended by providing Limitation only in respect of payments made to the resident in India. In the Circular Explaining the Finance Act, it has been specifically referred that the payments made to the nonresidents, no limitation is applicable. In view of the specific provision providing Limitation only to the payments made to the resident in India and not providing any limitation to the payments made to the non - resident , no limitation can be prescribed or read into the section. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six years is read into the section in respect of payments to non-resident, it would amount to discrimination among the payments to residents and the nonresident. 93. In rebuttal, learned counsel for the assessee submitted that prior to amendment, there was no statutory period for initiation of proceedings against the non-resident. Once the amendment came into force for resident only, it should not implicitly apply to non-resident as it was only restricted to resident. It was submitted that principle of literal interpretation is required to be invoked for the purpose of interpreting this kind of provisions and this tribunal cannot supply the word which is not intended to be supplied by the legislature. Lastly, our attention was drawn to the judgment passed by the Hon ble Delhi High Court in the case of Bharti Airtel vs. Union of India (76 taxman.com.256) and special attention was drawn to paras.11,12, 13, 14 17. 94. We heard rival submissions and perused material on record available. In our view, before we deal with issue of limitation, it would be relevant to reproduce the reasoning given by the Special Bench in the case of Mahindra Mahin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying the ratio of any judgment, it is imperative to look into text and the context in which it is rendered. It is equally important to bear in mind the relevant provision in the background of which such judgment was rendered. It is not permissible to pick up a case from one enactment and insist for the application of the ratiodecidendi of that case to an altogether different legislation, which has no resemblance with the former. The Hon'ble Rajasthan High Court in Arihant Tiles Marbles (P.) Ltd. v. ITO [2007] 295 ITR 148/166 Taxman 274 has held that the interpretation of any expression used in the context of one statute is not be automatically imported while interpreting similar expression in another statute. Similar view has been earlier expressed by the Hon'ble Supreme Court in CIT v. Venkateswara Hatcheries (P.) Ltd. [1999] 237 ITR 174/103 Taxman 503. 95. In para.14.2 (supra in Mahindra and Mahindra) it has been held by the Special Bench that in sub-section (1) and (1A) of section 201, no limit for initiation of proceeding or passing of the order is prescribed. Thereafter, the Special Bench noticed the period of limitation provided for issuance of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t difficult to subscribe inasmuch as we do not impose a fixed time and prescribe a period of limitation, which has not been prescribed by Legislature in its wisdom. Such legislative action, by way of judicial precedent, in our view, would not be appropriate exercise of judicial review under Article 226 of Constitution. As we have already discussed above, even Supreme Court says that if time period is not prescribed for exercise of power, a reasonable time would depend upon the facts of each case and cannot be quantified or prescribed like a period of limitation. 73. In Uttam Namdeo Mahale (supra), the judgm ent delivered by Three Judge Bench, Court has said as under: Mr. Bhasme, learned counsel for the appellant, contends that in the absence of fixation of the rule of limitation, the power can be exercised within a reasonable time and in the absence of such prescription of limitation, the power to enforce the order is vitiated by error of law. He places reliance on the decisions in State of Gujarat v. Patil Raghav Natha; Ram Chand v. Union of India and Mohd. Kavi Mohamad Amin v. Fatmabai Ibrahim. We find no force in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee and the other set of judgments are in favour of the Revenue. There is no direct judgment after the amendment of Section 201, by the jurisdictional High Court which deals with the issue of initiation of proceedings under the amended provision of 201. In the absence of any binding judgment by the Hon ble jurisdictional High Court, we are bound to adopt the same logic as upheld by the jurisdictional High Court, by treating the resident and the non-resident at par after relying upon the decision of Special Bench in the matter of Mahindra and Mahindra (supra), in case relating to pre amendment assessment year. In our opinion, after the amendment of law same logic and limitation is required to be applied for non-resident well as resident thus treating non-resident at par with resident. In other words, period of imitation for initiation of proceedings for resident as well as non-resident u/s 201 should be 6 years from the end of the financial year. Further the payer is required to maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 one it would tantamount to discriminating either the resident or the nonresident, which is not permissible in the eyes of law. 102. The assessee / payer in the eyes of law whether making payment to resident or non-resident under the provisions of section 201, constitutes one class only. Accordingly, the same period of limitation is required to be applied equally for payee i.e. Resident or non-resident, Law abhor vacuum and uncertainty. 103. There is no classification given under section 201. Section 201(1) only talks about person who is required to deduct any sum for the payment made. Therefore, borrowing the same reasoning of the special bench, whereby it held that the same period of limitation should be applied to resident as well as non-resident, we are of the considered view that limitation for initiation of proceedings for non-resident payee should be 6 years instead of no-limitation.as is the limitation for resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( 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 accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident ( i) has furnished his return of income under section 139; ( ii) has taken into account such sum for computing income in such return of income; and ( iii)has paid the tax due on the income declared by him in such return of income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w 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 found that assessee has also failed to pay such tax directly. In the present case, the Income tax authorities had not adverted to the Explanation to Section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 tax is 15% in USA, UK, Austria and Canada and 20% in Spain because as per the assessee it is 10% for these countries also. In this regard, we find that as per Para 13 of the combined impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication 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 had to bear the cost of taxes payable on remittances was to be borne by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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