CIT(INTERNATIONAL TAX)1,DELHI vs. BHARTI AIRTEL LIMITED

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ITA/235/2020HC DelhiDLHC01007715202022 March 2023Author: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MS. JUSTICE TARA VITASTA GANJU8 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal as time-barred, holding that the Appellant/Revenue had failed to provide adequate or sufficient reasons to explain the significant delay of over 4 years and 100 days in filing the appeal. The Court noted that the reasons cited in the condonation application, such as a contrary decision by the Bangalore Bench of the ITAT, were insufficient, especially since the Delhi Bench of the ITAT had not followed the Bangalore Bench's decision due to jurisdictional High Court rulings. The Court emphasized that the law of limitation binds all, including government departments, and that decisions relied upon by the Revenue, such as Collector (LA) v. Katiji and State of Haryana v. Chandra Mani, involved substantially shorter delays and were distinguishable from the present case. The Court explicitly stated that the merits of the appeal were not examined, as the dismissal was solely on the ground of limitation. The ratio decidendi is that inordinate and unexplained delays in filing appeals by government departments, even when citing conflicting tribunal decisions, will not be condoned if the explanation is not cogent and acceptable, referencing the principles laid down in Postmaster General And Others. Vs. Living Media India Limited and Another.

What were the facts?

This appeal by the Revenue concerns Assessment Year (AY) 2009-10 and challenges an order dated 17.03.2016 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had held that inter-connection usage charges paid by the assessee, Bharti Airtel Limited, to foreign telecom operators were neither 'Royalty' nor 'Fees' for Technical Services. The appeal was filed with a significant delay of approximately 4 years and 100 days. The Revenue sought condonation of this delay, citing contradictory decisions of other ITAT benches. The assessee opposed the condonation, highlighting the inordinate delay and the lack of a plausible explanation. The High Court noted multiple adjournments sought by the Revenue after the appeal was filed.

What were the issues?

1. Whether the delay of approximately 4 years and 100 days in filing the appeal under Section 260A of the Income Tax Act, 1961, can be condoned? Assessee's arguments: - The delay is inordinate and unexplained. - Government departments are bound by the law of limitation, and delay cannot be mechanically condoned. - Reliance was placed on Supreme Court decisions in State of Madhya Pradesh and Ors. Vs. Bherulal and Union of India Vs. Vodafone Mobile Phone Ltd. to argue that unexplained and inordinate delay by government departments cannot be condoned. Revenue's arguments: - The delay was caused by contradictory decisions of other ITAT benches, necessitating a reconsideration of the administrative decision not to file an appeal. - Reliance was placed on Supreme Court decisions in Collector (LA) v. Katiji and State of Haryana v. Chandra Mani to argue for condonation of delay in government appeals. - An Additional Affidavit was filed to explain the delay, referencing the Bangalore Bench of ITAT's favorable decision.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

2023:DHC:2883-DB ITA 235/2020 $~18 * IN THE HIGH COURT OF DELHI AT NEW DELHI %

Date of decision: 22.03.2023 + ITA 235/2020 & CM APPL. 34818/2020 CIT (INTERNATIONAL TAX) 1, DELHI

..... Appellant

versus BHARTI AIRTEL LIMITED

..... Respondent

Advocates who appeared in this case:

For the Petitioner : Mr G.C. Srivastava (Special Counsel), Mr

Sunil Kumar Agarwal, Sr. Standing Counsel

with Mr Shivansh B. Pandya and

Mr Utkarsh Tiwari, Advs.

For the Respondent : Mr Ajay Vohra, Sr. Adv.with Mr Sachit Jolly,

Ms Soumya Singh & Mr Sohum Dua, Advs.

CORAM: HON'BLE MR JUSTICE RAJIV SHAKDHER HON'BLE MS JUSTICE TARA VITASTA GANJU [Physical Hearing/Hybrid Hearing (as per request)] TARA VITASTA GANJU, J.: (ORAL)

This Appeal concerns Assessment Year (AY) 2009-10. 2. The present Appeal has been filed against the Order dated 17.03.2016 passed by the Income Tax Appellate Tribunal [hereinafter called, “ITAT”]. The ITAT has inter-alia held that the inter-connection usage charges paid to Foreign Telecom Operator(s) are neither 'Royalty' nor 'Fees' for Technical Services. 2023:DHC:2883-DB ITA 235/2020 2.1 The same issue arises in 3 other connected Appeals filed for different AY’s, being ITA 232/2020, ITA 233/2020 and ITA 234/2020 all of which have been heard together.

On 24.12.2020, a Coordinate Bench of this Court issued a limited notice in the Application for condonation of delay; CM APPL No. 34818 of 2020. Given the substantial delay in filing the Appeal, the Appellant/Revenue filed an Affidavit dated 10.10.2022 [hereinafter called “Additional Affidavit”] seeking also to explain the delay in filing of the Appeal. Although the Additional Affidavit references all connected Appeals, it is only on the record of ITA 232 of 2020. A Reply Affidavit to the Additional Affidavit was also filed by the Respondent/Assessee on 17.10.2022 in ITA 232 of 2020. 4. There is a typographical error in paragraph 6 of the order dated 10.03.2023, as it indicates that the request of the adjournment is from the "Respondent/Revenue" instead of "Appellant/Revenue". The order dated 10.03.2023 should be read to reflect this change. The rest of the order remains unchanged.

Learned Senior Standing Counsel for the Appellant/Revenue, Mr Sunil Kumar Agarwal, had, on 10.03.2023, requested for an adjournment/accommodation on behalf of the Additional Solicitor General (ASG).

Today, Mr Agarwal submits, that the ASG will not be able to appear in this matter as he is conflicted, having appeared in a batch of connected matters in which the Respondent/Assessee was also a party. He further submits that the Appellant/Revenue has appointed a Special Counsel i.e., Mr G.C. Srivastava, to assist the Court in this 2023:DHC:2883-DB ITA 235/2020 matter, who is present in Court today.

1 Mr G.C. Srivastava, Special Counsel, requests for an adjournment, being only recently engaged by the Appellant/Revenue.

Learned Senior Counsel for the Respondent/Assessee, Mr Ajay Vohra, strongly opposes this request. Mr Vohra submits that several adjournments have already been sought by the Appellant/Revenue after the filing of the Appeal in this Court. Reference was drawn to the earlier orders passed by the Coordinate Benches of this Court including orders dated 15.03.2021, 13.08.2021, 30.11.2021 28.03.2022, 18.07.2022, 29.08.2022 20.10.2022 and 01.12.2022 and on the last date of hearing on 10.03.2023. 7.1 Mr Vohra emphasises that prior to any decision on merits, the Appellant/Revenue has to explain the huge delay of 4 years and 100 days in filing of the Appeal. Reliance has been placed by the Respondent/Assessee on the decisions of the Supreme Court in State present Appeal. In this regard, it is inter-alia submitted that due to ______________________ 1 (2020) 10 SCC 654 2 2022 SCC OnLine SC 1580 2023:DHC:2883-DB ITA 235/2020 certain developments, a need arose for reconsideration of an earlier administrative decision of the Appellant/Revenue of not filing an Appeal.

The record shows that the present Appeal has been filed after delay of 4 years and 100 days as per the Appellant/Revenue [i.e.,1560 days] and 1589 days as per the Registry of this Court. The Application which was filed accompanying the Appeal; C.M. APPL. No. 34818 of 2020 for condonation of delay in filing the Appeal is cryptic. The only reason cited in this Application for the delay is that there was a contrary decision of the Bangalore Bench of ITAT which was in favour of the Appellant/Revenue. The relevant extract reads as follows:

“2. That in filing the present appeal, there is a delay of roughly 4 years and 100 days.

That the reason which has warranted the filing of the present appeal at such a belated stage is that on similar facts, Bangalore bench of the Ld. ITAT has decided in favor of Revenue, and Assessee is in 260A appeal before the Hon'ble Bangalore High Court wherein strong reliance is being placed on non filing of the present appeal.

That since both the matters involve substantial and far reaching questions of law, the Appellant seeks to file the present appeal to enable consistency of the views and to avoid any legal objection to the same”.

1 This aspect has already been dealt with by this Court in its order dated 10.03.2023. The ITAT chose to rely not on the decision of the Bangalore Bench but on the decisions of the juri ictional High Court in the matter of DIT v. New Skies Satellite BV3 and Asia Satellite Telecommunications Co. Ltd. v. Director of Income Tax4. Thus, on ______________________ 3 [2016] 382 ITR 114 (Delhi) 4 [2011] 332 ITR 340 (Delhi) 2023:DHC:2883-DB ITA 235/2020 10.03.2023, the Court had, recorded the following with respect to the Application for condonation of delay:

“4. A perusal of the condonation of delay applications shows that the appellant/revenue has preferred the instant appeals, for the reason that the Bangalore Bench of the Tribunal had decided this very issue in its favour.

4.1.

We are told that the aforementioned bench has held that the aforementioned payment would constitute royalty.

4.2.

It is not in dispute that the Bangalore Bench rendered its decision on 30.12.2014, which is, as is obvious, prior to the date when the impugned order was passed by the Delhi Bench of the Tribunal.

4.3.

Furthermore, in any case, in the impugned order, there is a reference to the decision of the Bangalore Bench, which the Delhi Bench has chosen not to follow because of the decision of the juri ictional High Court i.e., this court.”

[Emphasis is ours]

10.

Section 260A of the Income Tax Act, 1961 [hereinafter called “the Act”] provides that all Appeals from orders of ITAT must be filed within a period of 120 days from the date on which ITAT order is received by the Assessee or Revenue. As discussed herein, the Appeal has been filed, even according to the Appellant/Revenue, after a delay of 4 years and 100 days.

11.

The law requisites that an applicant seeking condonation of delay is required to explain the delay in filing the Appeal. The reasons as cited in the Application for condonation of delay as filed by the Appellant/Revenue completely fails to explain the immense delay of over 4 years and a 100 days.

12.

The record before this Court shows that even after the filing of the Appeal, the Appellant/Revenue has taken adjournments on almost each date of hearing over the last two years.

13.

So far as concerns, the reliance placed by the Appellant/Revenue on 2023:DHC:2883-DB ITA 235/2020 the Additional Affidavit, a perusal of order dated 29.08.2022 passed by a Coordinate Bench is apposite to be referred to here. The said order is reproduced below:-

“Though this Court was inclined to dispose of the matters today itself, yet on persistent requests made by Mr. Sunil Kumar Agarwal, learned senior standing counsel for the appellant, last and final opportunity is granted to the revenue to file an affidavit within four weeks.

List on 20th October, 2022. It is made clear that no adjournment shall be granted on the next date of hearing.”

13.

1 Further, the Additional Affidavit inter-alia seeks to rely upon on the Judgments of Supreme Court in Collector (LA) v. Katiji,5 and State of Haryana v. Chandra Mani6. A review of these decisions shows that in the Katiji case (supra), the delay by the Government department was only 4 days, whereas, there was a delay of about 109 days in the Chandra Mani Case (supra). As referred to above, the delay in the present case is a huge 1589 days. Therefore, these decisions cannot come to the assistance of the Appellant/Revenue. 14. to the Katiji case (supra) [relied on by the Appellant/Revenue above] ______________________ 5 (1987) 2 SCC 107 6 (1996) 3 SCC 132 7 (2012) 3 SCC 563 2023:DHC:2883-DB ITA 235/2020 even while refusing to condone a filing delay of 663 days. It was held:

No doubt, some leeway is given for the government inefficiencies but the sad part is that the authorities keep on relying on judicial pronouncements for a period of time when technology had not advanced and a greater leeway was given to the Government [LAO v. Katiji [LAO v. Katiji, (1987) 2 SCC 107] ]. This position is more than elucidated by the judgment of this Court in Postmaster General v. Living Media (India) Ltd. [Postmaster General v. Living Media (India) Ltd., (2012) 3 SCC 563: (2012) 2 SCC (Civ) 327 : (2012) 2 SCC (Cri) 580: (2012) 1 SCC (L&S) 649] wherein the Court observed as under: (Postmaster General case [Postmaster General v. Living Media (India) Ltd., (2012) 3 SCC 563 : (2012) 2 SCC (Civ) 327: (2012) 2 SCC (Cri) 580 : (2012) 1 SCC (L&S) 649] , SCC pp. 573-74, paras 27-30)

“27. It is not in dispute that the person(s) concerned were well aware or conversant with the issues involved including the prescribed period of limitation for taking up the matter by way of filing a special leave petition in this Court. They cannot claim that they have a separate period of limitation when the Department was possessed with competent persons familiar with court proceedings. In the absence of plausible and acceptable explanation, we are posing a question why the delay is to be condoned mechanically merely because the Government or a wing of the Government is a party before us....

x x x .....

30.

Considering the fact that there was no proper explanation offered by the Department for the delay except mentioning of various dates, according to us, the Department has miserably failed to give any acceptable and cogent reasons sufficient to condone such a huge delay.”

[Emphasis is ours]

15.

As such, we find that the Appellant/Revenue has not been able to give any adequate or sufficient reasons, to explain the delay. We are therefore unable to condone the huge delay of more than 4 years and 100 days in filing of the present Appeal, which is dismissed as being time barred.

16.

We clarify that we have not examined the matter on merits, since the Appeal is being dismissed on the ground of limitation. 2023:DHC:2883-DB ITA 235/2020 17. The parties will act based on a

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