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Facts
The Revenue filed an appeal against the order of the Ld.CIT(A) who deleted a demand raised by the AO for shortfall in TDS on data line charges. The AO had raised a demand under Section 201(1) and 201(1A) of the Act. This issue was identical to one adjudicated for the preceding assessment year.
Held
The Tribunal held that the facts and circumstances of the present assessment year were materially identical to the preceding year where the CIT(A)'s order was confirmed by the ITAT. Therefore, following the principle of consistency, the Revenue's appeal was dismissed.
Key Issues
Whether the deletion of demand by the CIT(A) was justified, considering the previous year's identical issue and the applicability of limitation provisions for non-resident deductees.
Sections Cited
250, 201(1), 201(1A), 195, 201(3), 12.4.b
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SMT.ANNAPURNA GUPTA & SHRI T.R. SENTHIL KUMAR
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER
The above appeal has been filed by the Revenue against order passed by the Ld.Commissioner of Income-Tax(Appeals)-13, Ahmedabad [hereinafter referred to as “ld.CIT(A)] dated 14.05.2024 under section 250 of the Income Tax Act, 1961 ("the Act" for short) pertaining to Assessment Year 2014-15, whereby the ld.CIT(A) deleted the demand raised by the AO in pursuance of order passed by him under section 201(1) and 201(1A) read with section 195 of the Act.
The grounds raised by the Revenue are as under:
(i) Whether the Hon'ble CIT(A) has erred in law and on facts in upholding the limitation of order u/s. 201 of the Act in light of Hon'ble Delhi High Court decision in the case of NHK Japan Broadcasting Corporation 305 ITR 137 (Del.), which is relevant only for the cases pertaining to the period prior to 01.04.2010, when no limitation was in existence for proceedings w/s. 201 of the I. T. Act? (ii) Whether the Hon'ble CIT(A) has erred in law and on facts by ignoring the legal provision under Sec. 201 of the Act which does not prescribe any limitation In respect of payment made to non-resident? (iii) Whether the Hon'ble CIT(A) has erred in law and on facts by ignoring the CBDT's memorandum, explaining the provisions of the amendment by which Section 201(3) was substituted with effect from 01,04.2010 which explicitly says that bar of limitation u/s, 201(3) does not apply where the deductee is a non-residents? (iv) Whether the Hon'ble CIT(A) has erred in law by wrongly inserting limitation clause for non-resident deductee, which is neither available as per the provisions of the Act nor by the CBDTs memorandum, explaining the provisions of Section 201 (3) of the IT Act? (v) Whether the Hon'ble CIT(A) has erred in law and on facts by ignoring the provisions of Section 201(3) of the Act existing on the date when the order under consideration was passed i.e. even in the case of resident deductee, order u/s. 201 could be passed within 6 years from the end of financial year in which payment is made or credit is given? (vi) Whether the Hon'ble CIT(A) has erred in law and on facts in no appreciating the fact that the third party vendor has provided or made accessible the experience or a skill or a process, or service which consist of the development and transfer of a technical plan or technical design to the assessee and the same falls in definition of fee for included services as per article 12.4.b of India USA treaties ?
A perusal of the above grounds would reveal that the Revenue is aggrieved by the action of the ld.CIT(A) in deleting the demand of Rs.72,20,450/- raised by the AO vide order passed under section 201(1) and 201(1A) of the Act on account of short fall of TDS amount on data line charges of Rs.1,54,44,813/- at the rate of 25% and interest under section 201(1)/201(1A) of the Act.
The Ld.CIT(A) deleted the demand raised noting that on identical issue for A.Y 2013-14,i.e the immediately preceding year, the Ld.CIT(A) had deleted the demand and his order was confirmed by the
Aggrieved by the action of the ld.CIT(A), the Revenue has come up before the Tribunal for the impugned assessment year as well.
At the outset itself, the ld.counsel for the assessee submitted that identical issue arose in the Asstt.Year 2013-14 also, which was however, deleted by the ld.CIT(A) and in the appeal preferred by the Revenue before the ITAT in the Tribunal affirmed the action of the ld.CIT(A) dismissing the appeal. Therefore, following the order of the ITAT in the assessee’s own case for AY 2013- 14 on similar facts and circumstances, the present appeal of the Revenue, it was contended, was also liable to be dismissed.
On the other hand, the ld.DR though relied on the order of the AO, did not dispute the factum of the matter that similar and identical issue for the Asst.Year 2013-14 in the assessee’s own case, was allowed by the ld.CIT(A), and confirmed by the ITAT in the appeal preferred by the Revenue (supra). He was also unable to point out any material distinction between the facts of 2013-14 and the present Asst.Year 2014-15 as put-forth by the assessee.
We have carefully considered the submissions made by both parties and examined the orders issued by the Revenue authorities, as well as the decision of the ITAT in the Revenue’s appeal concerning the Asstt Year 2013-14 in the assessee’s own case, wherein an identical issue was raised and adjudicated. The learned counsel for the assessee has also placed on record a copy of the Tribunal order for AY 2013-14 for our consideration.
On consideration of impugned orders and the material available on record, we find that both the ld.CIT(A) and the Tribunal, in their respective orders for AY 2013-14, have arrived at a concurrent finding allowing the assessee’s claim on merits. This establishes a precedent in favor of the assessee on the same issue under consideration.
Accordingly, for the adjudication of the present appeal filed by the Revenue, it is sufficient to rely upon and refer to the ITAT’s decision in AY 2013-14, as the facts and circumstances in both assessment years are materially identical. Since the ITAT had already considered and decided the issue in favor of the assessee in the earlier assessment year, there is no justifiable reason to depart from that view. The relevant portion of the ITAT’s order is as follows:
7. We have heard both the parties and perused all the relevant material available on record. There is delay of 324 days on part of Revenue in filing present appeal which was properly explained by the Revenue through letter dated 22.12.2021. Hence, we are condoning the delay. It is pertinent to note that Section 201(3) specifies the time limit in respect of TDS for residents only. The CIT(A) observed that the order dated 25.03.2019 is beyond four years in light of Hon'ble Delhi High Court decision in case of NHK Japan Broadcasting Corporation (Supra). The decision of Jurisdictional High Court referred by the CIT(A) is opt in present case as regards to limitation. Further on merit, the assessee before the AO as well as before the CIT(A) has given the details as well as agreement between the assessee and Allscripts USA. The agreement between the parties can be specific and its length or pages does not matter. Merely on the length of the agreement, the AO cannot overlook the contents of the agreement. The payment made to the non-resident was at no point of time pointed out by the Revenue that the said is coming under the purview of TDS deduction. The amount paid to Allscripts USA is on actual cost basis without any element of markup and for the reimbursement of expenses incurred by way of using the network connectivity provided by the service provider and the amount is not chargeable to tax on any accounts. Thus, the CIT(A) has rightly deleted the addition.
As noted, during the course of the proceedings before us, the ld.DR has not brought to our notice any material change in facts or law distinguishing the present assessment year from AY 2013-14. In the absence of any variation in the factual or legal matrix, it would be impermissible to take a contrary view for the subsequent assessment 5 year i.e. present year under consideration. Accordingly, applying the well-established principle of consistency in judicial discipline, we uphold the order of the ld.CIT(A) and dismiss the Revenue’s appeal.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Court on 7th February, 2025 at Ahmedabad.