The Commissioner of Income Tax vs. M/s. Idea Cellular Limited

[ 3386 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THURSDAY, THE NINETEENTH DAY OF OCTOBER TWO THOUSAND AND TWENTY THREE PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY INCOME TAX TRIBUNAL APPEAL Nos: 1't 13 and 14 of 2021 |.T.T.A.No.11 of 2021 lncome Tax Tribunal Appeal Under Seclion 260-4 of the lncome Tax Act, against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad in ITA No.168lHYDl2O1g dated 11-03-2020, Assessment Year 2008- 2009 preferred against the Order of the Commissioner of lncome Tax (Appeals)-10, Hyderabad, ITA No 19, 18, 17,23, 22,21 & zllclT (A)-10120'17-18 CIT (A), Hyd- 10013 to 1001912017-18 dated 15-1 '1-2018, preferred against the Order of the Deputy Commissioner of lncome Tax-1 , Hyderabad, PAN/GIR No. HYD100916G dated 31-03-201 7. Between: : The Commissioner of lncome Tax (lT & TP), Hyderabad. ...Appellant AND M/s. ldea Cellular Limited, H.No.5-9-62, Khan Lateef Khan Estate, Fatemaidan Road, Nampally, Hyderabad. PAN. AAACB2100P. ...Respondent Counsl for the Appellant: SRI K. MAMATA (Sr. SC FOR tT DEPT) for the Respondent: SRI VIMAL VARMA VASI REDDY & SRI SANCHITH JOLLY (Appearing virtuatty) Couns

I.T.T.A.No.13 of 2021 lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad in ITA No.l 67 lHYDl2019 dated 1 1 -03-2020, Assessment Year 2OO7' 2008 preferred against the Order of lhe Commissioner of lncome Tax (Appeals)-10, Hyderabad, ITA No 19, 18, 17,23,22,21 & Z1lCtT (A\-1O12017-18 CIT (A)' Hvd- 10013 to 1OO19t2017-18 dated '15-1 1-2018, preferred against the Order of the Deputy Commissioner of Income Tax-1, Hyderabad, PAN/GIR No. HYD100916G dated 31-03-20'17. Between: The Commissioner of lncome Tax (lT & TP), Hyderabad ...Appellant AND M/s. tdea Cellular Limited, H.No.5-9-62, Khan Lateef Khan Estate, Fatemaidan Road, Nampally, Hyderabad. PAN. AAACB2100P. ...Respondent Counsel for the Appellant: SRI K. MAMATA (Sr. SC FOR lT DEPT) Counsel for the Respondent: SRMMAL VARMA VASI REDDY & SRI SANCHITH JOLLY (Appearing virtually) l.T.T.A.No.14 of 2021 lncome Tax Tribunal Appeal Under Section 260-A of the lncome Tax Act, against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad in ITA No.170lHYDt2O1g dated 11-03-2020, Assessment Year 2O10- 2011 preferred against the order of the commrssioner of lncome Tax (Appeals)-10' Hyderabad, ITA No.19, 18, 17,23,22,21 & 2OlClI (A)-1012017-18 CIT (A), Hvd- .10013 to 1OO1gt2O17-18 dated 15-1 1-2018, preferred against the order of the Deputy Commissioner of lncome Tax-1 , Hyderabad, PAN/GIR No' HYD100916G dated 3'l'03-2017. I BetweeA: The Commissioner of lncome Tax (lT & TP), Hyderabad' ...Appellant : I I i .: ; i I ! l

AND tvl/s. ldea Cellular Limited, H.No.5-9-62. Khan Lateef Khan Estate, Fatemaidan Road, Nampally, Hyderabad PAN. AAACB2100P. ...Respondent Counsel for the Appellant: SRI K. MAMATA (Sr. SC FOR lT DEPT) Counsel for the Respondent: SRI VIMAL VARMA VASI REDDY & SRI SANCHITH JOLLY (Appearing virtually) The Court made the following: ORDER I

THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY I.T.T.A.Nos.11 13 and L4 of2O2l aOI4!4Q-N1fIDGUENTj ftter t lott'bte sn./,{srrce P. sr4}, Kosrv/ These three appeals are arising out of one common order passed in bunch of five appeals in rcspcct ol the same assessee for the different assessment 1'eeLrs rvhich arc under challenge in the present appeals. 2. Heard Ms. l(. Mamata, learned counsel for the appellant and Mr. Sanchith Joll1', learned counsel for the respondenl (appearing virtually). 3. !'or sake of convenience, the lacts in I.T.T.A.No.11 of 2O2l are discussed herein under 4. The instant appeal is flled by the Revenue questioning the order passed by the Income Tax Appellate Tribunal, Hyderabad 'B' Bench, Hyderabad, (for short 'the Tribunal') in I.T.A.Nos. 166, 167, 168, 169 and l7O/Hydl2Ol9 deiided on 11.03.2020. I I I t ' i i a I a :I i I t t i I I : ! i :

'cu.ry# \ >>s \" --.,.'..::... \ '' 2 5 The question of larv [o be considered was "whether the PaYments made to tl-re tnternational telecom operators be held to be in the nature of fees for technical ser-vices ot not." 6. InitiallY the Assessrng Officer had issued a show cause notice orr 25'll'2016 to rvhich the assessee gave his explanation categorically taking a stand that the payments made by the assessee to the internationerl telecom operators do not fa1l in the category of 'fees for technical services,. The Assessing ofhcer not being convinced with the submissions had passed al order hoiding that the assessee is iiable to make TDS' Since the TDS was not made, the assessee was ordered to be declared as oan assessee in default" under Section 20 1 (1) and interest under Section 201(1A) of the Income Tax Act' 1961- (for I I 1 i short 'the Act')' T.Theassesseeimmediatelypreferredanappealbefore the Commissioner of lncome Tax (Appeals)-10' Hyderabad' wh granted relief to the assessee relYing upon the High Court in the case of ich decision of the ' jurisdictional

3 CoMMIS,SI0IVER O.F TNCOME_TAX u. U. B. ELEyTRONT\ INSTRTTMENTS LIMITED: and held that the shou, cause notice issued by the Assessing Officer initiating proceeclings under Section 201(1) IS barred by limitation. Agarnst the satci order of the Commissioner of Income Tax (Appeals), the appellant/Revenue preferred an appeal before the Tribunal. It is these rejections of the appeals by the Tribunal vide the impugned order which has led to the filing of the present appeals. 8. A plain perusal of the order passed by the Commissioner of Income Tax (Appeals) so also the Tribunal would evidently reflect that the two forums had proceeded and taken into consideration four (4) years as the prescribed period within which the. proceedings under Section 201(1) and 201(1A) had to be initiated. 9. [t would be relevant at this juncture to take note of the decision of this High Court itself in the case of Dr. Reddgs Lqboratories Limited a. The Deputg I [201s1 371 rTR 314 (T & AP) __--

4 EE-@ \r Ts Commissioner of Income Tax P wherein the Division Bench of this High Court vide its judgment dated 21.06.2023 in paragraph Nos.26 to 3i held as under: '26. With utmost respect, tue are unabLe to agree uith Lhe uieus expressed by the Delh.i Hiqh Court. As tue haue alreadg seen, initialLA tlTe sialute did not prouide Jor ang limitation, be it a resident lndian or a non r,:sldent Indian. Subsequentlg, bg u-tay of amendment, sub sectiort (3) utas inserted in Section 2O 1 of the Act. Presently, the limitation for possing of an order under Sectiort 2O 1 (1) of the Act post the last amendment is .seuen 4ears insofar a person resident in India is concemed. The present case couers the assessmen, gear 2016-2017, tuhich is well after the last of the amendments Luere made and Luhen limitatiort penod qua resident Indian-s is seuen Aears. 27. We haue also seen that the legislature has consciouslg not prescribed anA time timit for an order under Section 201(1) of the Act insofar a non-resident is concerned.; the reason being that if the deductee ls o non-resident, it muy not be administratiuelg possible to recouer the tax from the non-resident- Therefore, it tuould be urong to read into Section 2O1(3) of tlae Act a period of timitatior-L insofar non resident is concented; doing so raouLd. amount to legi-slating by the Court uhich is not pennisstbte. 28. At the same time, it must also be kept in mind that euen though there b no limitation prescibed bg the statute, the order under Section 201(1) of the Act qui ron_ resident h.a.s to be passed wtthin a reasonabte peiod_. 29. Now the question is, tuhat is a reasonable period in the ttbsence of ang statutory timitation ? In our consid.ered opinion, there cannot be a straight jacket answer to such a question- Wh-at is a reasonable peiod Luoutd depen-d. upon the facts and circt-tm-stances of-each "or.. fh"r'"yoii,'as o generol pinciple it maA not be possibte as utell is feasible on the patt of the Court to .s,ag defnitetg that a ieriod of four years or one aedr taoutcl ie tie peri6a oy tiitlitii 1or passing an order under Section 201(t) or botllel o1 tn" Act uhen the legislature has consciouslg not'presJibed ang such limitation. But one thing is uery cteir, that s, I 2 wP tsl3 of20t9 of High courr lor rhe State o[Telangana dared 21.06.202J

5 tDlten the legislature has prescribed a penod of seuett yeers .r-s the limitation for a resident Indian, it utouLd not be .justLikcl to read a limitatictn oJ less than seuen gears in lhe c'rrsr' of a non resldent. Tlrc diffatlty that tu<tu[d accnte to re ct Llsetion oJ tax qua a nonresident u.toutd be mut:h rnore i.l..en that of a person, u.tho is a residenl. In our uietu, lim.italutrt peiod of seuen gears prescibecl for a res[dent lnclrctn would- be o useful guide to deterrntne uthat would be a rc:asonoble period in the case of a non-residatt Indian 30. ln the instant case, il is seen that following o suruelJ operetron under Section 133A of the Act on 30.12.2O15, tt LLtas detected thot pettttoner had made two paAments to truo .ioreLgn companies but did not deduct TDS under ,Seclrr.rr I95 of the AcL It uas thereafter that the show crtusa nciice was issued on 20.01.2O16. It uould be inter<'stinq to note that on the ground that the tu.to foretgn cornp.r/r rcs hctd filed applications before the 4,4R a's to taxctbititg of such transoctions, petitioner had Jiled an ctpplit'tttiort before respondent No. I to keep the proceedhgs under Section 201 of the Act in abeyance. Such an oction of ttr petitioner uould nin counter to its uery contentiotl that the proceedings concluded bg respondent No l tuas begoncl linitation. 3l. Be thrtt as it maA, such a contention u.)as rejected ba re spondcnt No . 1 aid insofar limitation -is - concemed ' reipondent No.l hetd. that though the Act dld not Prouide for ont) Lime ltmit for passing an order under Section 2o 1(1) 'i1 ,n"- err, nonet'heliss piiciples oJ natural iustice.ttLould reqtire tiat proceedings should be completed uttthin a ,eisonabte tiie Respondent No'l Jurlher noted that the ,iri.u ru"t conductid on 30.12'2015, shotu cause notice io" Lrr"a on 20.01.2O16 ond the proceedings came to be ionctua"a on 14 12 2O18 which was utithin a reasonable Line.'' 10. Though at the stage of admission' Sri Sanchith Jolly' learnedCounselappearingfortherespondent(appearing virtualty) contended that the core issue involved in the case is, "as to $'hether th-e payments made to the international teiecom operators be held to be in the nature of fees for

rE\"# 6 technical services or not" has been now lard to rest by the Department itself u'herein the Joint Director of Income Tax (OSD)(LNR) New Delhi, vide its correspondence dated 21.04.2022 had decided as a matter of principle not to challenge any further the judgment of the High Court of Commissioner of Income Tax ?DS, Bangalore US Vod afone South Ltd.3, Thus the present appeals according to the learned counsel for the respondent is icft only with academic interest and prayed for rejection of the appeals 11. However, the learned counsel for the respondent does not dispute the fact that the Division Bench of this very High Court itself recently had taken a view that there is no specific period of limitation prescribed for initiating a proceeding under Section 201(1) and 20 1(1A) of the Act. 12. In the given factual backdrop and the recent decision of the Division Bench of this very High Court in the case of Dn Reddgs La.boratories Lhnlted (supra), which as a Karnataka in an identical issue in the case of 1 zOrc SZl rErxmann.com 347 (Karnataka) ;);-'

7 I \ matler ol juclit:ial proprietl' binds this Bench a-lso, \\'le are inclined to cndorse the vieu' of the Division Bench of this Court. What needs to be considered is the fact that the Division Bench in the case of Dr. Reddgs Laborqtories Limlted (supra) irave also considered the decision of the High Court ol Delhi and have reached to a specific conclusion that the term 'reasonable period' in the absence of an1' statutory limitation cannot be accepted as a straight jacket ansu cr. 13. It was also held by the Division Bench of this Court that rvhat is a reasonable period would depend on the facts and circumstances of each case. The Division Bench went on to quote that neither a period of four (4) years nor a period of one ( 1) )'ear can be said to be the period of iimitation for passing of an order under Section 20l Sirice the Commissioner of Income Tax (Appeals) so also the Tribunalhavedecidedthetwoappealsacceptingtheperiod of limitation to be four (4) years, which in the teeth of the order of the Division Bench in the case of Dr' Reddgs Ldboratories Limited (supra) cannot be said to be proper' legal or justified. I I

B w L4, We are of the considered opinion that the orders therefore, are not sustainable and the same deserves to be and are ordered accordingly. The matter is further ordered to be remitted back to the Commissioner of Income Tax (Appeals) for passing of fresh orders in the light of the observations made by the Division Bench of this Court while deciding the case of Dr. Reddgs Laboratries Limited (supra) . 15. Accordingly, the appeals stald allowed. No order as to CoStS As a sequel, miscellaneous petitions, if any pending, shall stand closed //TRUE COPY// sd/-M JvJi$IAP8't?F:[ v SECTION OFFICER To, kam VH 1 . The lncome Tax Appellate Tribunal' Hyderabad Bench 'B" Hyderabad 2. The Commissioner of lncome Tax (Appeals)-'l0' Hyderabad 3. The Deputy Commissioner of lncome Tax-l ' Hyderabad 4. One CC to SRI K. MAMATA (Sr' SC FOR lT DEPT) [OPUC] 5. One CC to SRI VIMAL VARMA VASI REDDY' Advocate IOPUCI o. l*o CD CoPies I I

HIGH COURT DATED:1911012023 COMMON JUDGMENT lTTA.Nos.11,13 and 14 of 2021 ii r,l ii.u'l ?r?3 .2t+ ,< 1t\E STAI€ I ,.+ 7 o \' ,* e ( 'I ,-. :--:-- ::==a'- THEIAPPEALS SrA(OS ALLOWED {V\