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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM
These cross appeals by the Revenue and the assessee are directed
against the order of Commissioner of Income Tax(Appeals)-IT/TP, Pune dated 28.07.2014 for the assessment year 2007-08.
The brief facts of the case as emanating from records are: The
assessee-company is engaged in manufacturing and supply of carton
packages based on aseptic technology. During the period relevant to the assessment year under appeal, the assessee made foreign remittances for
acquiring software license, IT support services and for certain other
transactions. The Assessing Officer issued notice to the assessee on
18.09.2012 for furnishing details of foreign remittances made during Financial Year 2005-06 to 2011-12. The assessee vide communication dated
21.09.2012 complied with the directions of Assessing Officer and furnished
requisite details of foreign remittances. The Assessing Officer vide order
dated 30.03.2013 passed u/s.201(1) and 201(1A) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) held that the overseas payments
made by the assessee were taxable under the provision of the Act, as well as
under India’s Double Taxation Avoidance Agreement (DTAA) with respective
countries. The assessee ought to have deducted tax at source on such payments made to the parties abroad. Accordingly, the Assessing Officer
raised demand of Rs.70,19,865/- for assessment year 2007-08 towards tax
and interest.
3 ITA No. 1856/PUN/2014 ITA No.1863/PUN/2014 A.Y.2007-08
Aggrieved by the order u/s.201(1) and 201(1A) of the Act, the assessee
filed appeal before the Commissioner of Income Tax (Appeals) inter-alia
challenging validity of the said order on the ground of limitation. The
Commissioner of Income Tax (Appeals) rejected the ground raised by the
assessee challenging validity of order passed u/s.201(1) of the Act. However,
on merits, part relief was granted to the assessee. Hence, the present cross
appeals by the Revenue and assessee.
Shri Nikhil Pathak appearing on behalf of the assessee submitted at
the outset that before examining the issue on merits, it would be necessary
to first adjudicate the issue of validity of order passed by the Assessing
Officer u/s.201(1) of the Act. The ld. AR of the assessee submitted that the
Assessing Officer has passed order u/s.201(1) and 201(1A) of the Act on
30.03.2013 for the assessment year 2007-08. The provision of sub-section
(3) to section 201(1) as they were applicable prior to the amendment by
Finance No. (2) Act, 2014 w.e.f. 01.10.2014 provides that the Assessing
Officer should have passed order for Financial Year commencing on or before
1st April, 2007 any time on or before 31st March, 2011. Whereas, in the
present case, the order has been passed after the date specified under the
Act. Thus, the order passed by the Assessing Officer beyond period of
limitation as mandated under sub section (3) to section 201 is not
sustainable. The ld. AR in support of his contentions placed reliance on the
decision of Co-ordinate Bench of the Tribunal in the case of Sandvik Asia
Private Limited Vs. DDIT, International Taxation-II, Pune in ITA No.
1515/PUN/2014 for assessment year 2007-08 decided on 11.01.2019.
On the other hand, Shri Sanjeev Ghei representing the Department
vehemently defended the validity of order passed u/s.201(1) of the Act.
4 ITA No. 1856/PUN/2014 ITA No.1863/PUN/2014 A.Y.2007-08
We have heard the submissions made by representatives of rival sides
and have perused the orders of Authorities below. Before adverting to the
merits of the addition, it is imperative to first adjudicate the validity or
otherwise of the order passed u/s. 201(1) and 201(1A) of the Act vide which
the assessee is held to be assessee ‘in default’ and demand has been raised.
Sub-section (3) to section 201 was inserted by Finance No. (2) Act, 2009
w.e.f. 01.04.2010. Thereafter, it was amended by the Finance Act, 2012 with
retrospective effect from 01.04.2010. The provisions of sub-section (3) as
they were applicable to assessment year 2007-08 reads as under:
“(3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of- (i) two years from the end of the financial year in which the statements is filed in a case where the statement referred to in section 200 has been filed; (ii) six years from the end of the financial year in which payment is made or credit is given, in any other case: Provided that such order for a financial year commencing on or before the 1st day of April, 2007 may be passed at any time on or before the 31st day of March, 2011.”
A bare perusal of the proviso to sub section (3) would show that any
order for Financial Year commencing on or before 1st April, 2007 is to be
passed at any time on or before 31.03.2011. In the present case, the order
relating to Financial Year 2006-07 (relevant to assessment year 2007-08) has
been passed on 30.03.2013 i.e. much beyond the date of 31.03.2011
specified in proviso to sub section (3) to section 201(1) of the Act. Therefore,
the order is barred by limitation and hence, the same is non-est.
We find that similar issue had come up before the Co-ordinate Bench
of Tribunal in the case of Sandvik Asia Private Limited Vs. DDIT,
5 ITA No. 1856/PUN/2014 ITA No.1863/PUN/2014 A.Y.2007-08
International Taxation-II, Pune (supra.) where the Co-ordinate Bench of the Tribunal after considering the facts and proviso to sub section (3) to section 201 held that the orders passed on 25.03.2013 u/s.201(1) and 201(1A) for the assessment year 2007-08 are in-valid and unsustainable.
Thus, in view of the facts of the case and proviso to sub section (3) to section 201(1), as it was applicable to assessment year under appeal, the order passed by the Assessing Officer u/s.201(1) and 201(1A) dated 30.03.2013 is void-ab-initio and hence, quashed. Consequently, subsequent proceedings arising there from are vitiated.
In the result, appeal of the assessee is allowed and that of the Revenue is dismissed. Order pronounced on Monday, the 3rd day of June, 2019.
Sd/- Sd/- (डी. क�णाकरा राव/D. KARUNAKARA RAO) (�वकास अव�थी /VIKAS AWASTHY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 3rd June, 2019. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-13, Pune. 4. The Pr. CIT-5, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy// आदेशानुसार / BY ORDER,
�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.
6 ITA No. 1856/PUN/2014 ITA No.1863/PUN/2014 A.Y.2007-08
Date 1 Draft dictated on 06.03.2019 Sr.PS/PS 2 Draft placed before author 29.05.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order