DEPUTY COMMISSIONER OF INCOME TAX,(TDS)- 2 (3), MUMBAI vs. VODAFONE INDIA LIMITED, MUMBAI

The Revenue has more or less raised common grounds of appeal for both the assessment years, therefore, for the sake of brevity, grounds of appeal filed for assessment year 2003-04 are reproduced as under :-

The brief facts of the case are that the assessee is an Indian company engaged in the business of providing cellular services in the region of Mumbai and Kalyan Circle. A survey action under Section 133A of the Income Tax Act, 1961 (in short ‘the Act’) was conducted at the office premises of the assessee on 25.02.2004. Based on the survey proceedings, the ITO (TDS) issued show cause notices under Section 201(1) and 201(1A) of the Act, on various dates requesting the assessee to submit various details/information in relation to deduction of tax at source on payments made to various agencies/third party service providers. In response, assessee has submitted the necessary details along with legal submissions including applicability of Section 194J of the Act, in respect of interconnect usage charges. The Assessing Officer was not convinced with the explanation furnished by the assessee and accordingly he has completed the proceedings initiated under Section 201(1) and 201(1A) of the Act, vide his order dated 24.03.2011. The assessee carried the matter in appeal before the CIT(A). The ld. CIT(A) vide his order dated 27.04.2012 rejected plea of assessee challenging the validity of order passed by the Assessing Officer on limitation, however, remanded the matter to the file of the Assessing Officer for verifying the applicability of provisions of Section 194J of the Act, in the light of the decision of Hon’ble Supreme Court in the case of CIT vs Bharti Cellular Ltd., 193 taxman 97. The assessee carried the matter in further appeal before the Tribunal. The ITAT Mumbai, vide its order dated 12.03.2018, has disposed of the appeal filed by the assessee and quashed the proceedings initiated by the Assessing Officer under Section 201(1)/(1A) of the Act, on the ground that the show cause notice issued for the first time on 02.12.2010 is clearly beyond the period of limitation. In the meantime, the Assessing Officer had passed order giving effect to the order of the ld. CIT(A) and the said order has been challenged by the assessee before ld. CIT(A). The ld. CIT(A), vide his order dated 31.07.2018, has allowed the appeal filed by the assessee on the ground that the original order passed under Section 201(1)/(1A) of the Act itself is invalid, then appeal effect order passed by the TDS officer for the said assessment year has no legs to stand on. Hence, the appeals preferred against the said appeal effect orders have also become infructuous. Aggrieved by the CIT(A) order, Revenue is in appeal before us.

We have heard both the parties, perused the material available on record and gone through the orders of authorities below. At the time of hearing, both the counsels for the Revenue as well as the assessee, has fairly agreed that the appeals filed by the Revenue have become infructuous, because the original orders passed by the TDS officer have been held to be time barred by the Tribunal and consequently the order giving effect passed by the TDS officer has no legs to stand on. We find that the ld. CIT(A) considered the fact that the original orders passed by the TDS officer under Section 201(1)/(1A) of the Act have been held to be invalid by the Tribunal vide its order dated 12.03.2018 and consequently the appeal effect order passed by the TDS officer has no legs to stand on. We, therefore, are of the considered opinion that the appeals filed by the Revenue against the order of ld. CIT(A) are infructuous and hence, the appeals filed by the Revenue for assessment years 2003-04 and 2004-05 are dismissed as infructuous.

In the result, both the appeals of the Revenue are dismissed.