M/S CGI INFORMATION SYSTEMS AND MANAGEMENT CONSULTANTS PRIVATE LIMITED ,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE-1(1), BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “ C ” BENCH: BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA. Nos.2832 & 2833/Bang/2018 (Assessment Years : 2010-11 & 2011-12) M/s. CGI Information Systems & Management Consultants Private Limited, E-City Tower, No.95/1 & 95/2, Electronic City Phase 1 (West), Bangalore-560 100 ….Appellant. PAN AAACII994C Vs. Dy. Commissioner of Income Tax (I.T), Circle 1(1), Bangalore. ….Respondent.

Assessee By: Smt. Tanmayee Rajkumar, Advocate. Revenue By: Shri Pradeep Kumar, CIT (D.R)

Date of Hearing : 16.07.2019 Date of Pronouncement : 09.08.2019

O R D E R PER SHRI PAVAN KUMAR GADALE, JM : The assessee has filed appeal against the order of Commissioner of Income Tax (Appeals)-2, Bangalore were different orders passed under Section 201(1) and 201(1A) of the Income Tax Act, 1961. Since both the appeals filed by the

2 ITA Nos.2832 & 2833/Bang/2018 assessee for the Assessment Years have common issues and identical, they are clubbed and heard together and disposed by a consolidated order. For the sake of convenience we shall take up the assessee's appeal in ITA No.2832/Bang/2018 for Assessment Year 2010-11 and the grounds of appeal raised as under :-

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5 ITA Nos.2832 & 2833/Bang/2018 decision of Hon'ble Karnataka High Court in assessee's own case and further held that the time limit specific in Section 201 of the Act is equally applicable to non- residents. Whereas while remitting the amounts towards the CGI net charges, the assessee relied on the ITAT order which has upheld the decision of CIT(Appeals) in respect of CGI Group towards CGI net charges as not taxable in India. Subsequently, the ITAT decision was over-ruled by Hon'ble Karnataka High Court on 9.6.2014 and the assessee company challenged the Hon'ble High Court order before the Hon'ble Supreme Court. Whereas the ld. AR pointed out that in the financial year, the payments were made to Non-Residents and details were called for on reimbursement of CGI net charges and the assessee company has submitted the details and objected on the jurisdictional issue and furnished the information / details explaining that the statutory period of limitation for initiating proceedings under Section 201 of the Act for FY 2008-09 to 2010-11 has expired and A.O finally concluded that the proceedings are not bared by any limitation and passed the order under Section 201(1) & 201(1A) of the Act dt.20.03.2017 determining the tax under Section 201(1) Rs.1,04,19,242 and interest under Section 201(1A) of Rs.93,39,248 and raised the demand of Rs.1,97,58,490. Aggrieved by the order of Assessing Officer, the assessee filed an appeal with the CIT(Appeals) whereas in the appellate proceedings the CIT(Appeals) considered the grounds of appeal and submissions on the judicial decisions on the disputed issue of limitation, but

6 ITA Nos.2832 & 2833/Bang/2018 the CIT(Appeals) has confirmed the order passed by the Assessing Officer as far as the payments made to CGI, Canada, the CIT(Appeals) relied on the judicial decisions and the assessee's own case and the DTAA provisions and Amendment to Finance Act and the agreement entered by the assessee and the decision of the Hon'ble Karnataka High Court and treated such payments as Royalty and confirmed the demand and dismissed the appeal. Aggrieved by the CIT (Appeals) order, the assessee has filed an appeal with the Tribunal. 3. At the time of hearing, the learned Authorised Representative argued that the CIT(Appeals) has erred in confirming the action of the Assessing Officer on limitation and also treatment of CGI payments made towards net charges as Royalty. The learned Authorised Representative filed voluminous material and agreements and dealt on the provisions of DTAA to substantiate that the A.O. order was passed beyond the limitation period and the CGI payments are not Royalty payment. The learned Authorised Representative further emphasized that the limitation period is not prescribed in the Act and supported her arguments with the case laws and prayed for allowing the appeal. Contra, the learned Departmental Representative supported the orders of learned CIT (Appeals) and filed written submissions. 4. We heard the rival contentions and perused the material on record. The learned Authorised Representative argued on the two disputed issues (i) limitation

7 ITA Nos.2832 & 2833/Bang/2018 of passing of order under Section 201(1) and 201(1A) of the Act by the Assessing Officer and (ii) Treatment of payment of CGI net charges as Royalty. On the first disputed issue, the contention of the learned Authorised Representative that there is an amendment in the Act where under Section 201(1)(3) of the Act the limitation is four years from the end of the financial year in which the payments are made, and substantiated with the judicial decisions but we find that the disputed issue on the limitation of passing the order has been considered by the co- ordinate Bench of Tribunal in the case of Wipro Ltd. Vs. Addl. CIT in ITA Nos.1215 to 1220/Bang/2014 and ITA Nos.18 to 23/Bang/2017 for the Assessment Years 2007-08 to 2012-13 and we consider it proper to refer the observation at page 26 to 42 in paras 30 to 36 which read as under : “ 30. The second objection raised by the ld. AR for the assessee is with respect to the order passed by the Officer was barred by limitation (ground No.5 & 6). In this regard, the ld. AR had submitted that the assessment year under consideration was 2007-08 and 2012-13 and law amendments were made in s. 201 and earlier limitation was not provided under the Act and subsequently by virtue of amendment, limitation was provided and therefore it was submitted that in the absence of limitation provided, the maximum period for passing the order was four years in the light of decision rendered in the matter of Mahindra & Mahindra and further it was submitted that combined order passed by authorities below as separate order was required to be passed distinctly dealing with limitation issue, the taxability and also the issue of DTAA. 31. Per contra, the ld. DR had submitted that section 201 makes no distinction between resident and non-resident payee. However, limitation was provided by the proviso only with respect to resident for initiation of proceedings u/s. 201 for declaring assessee as assessee in default and no limitation was provided by the Act for non-residents. He however relies on decision of coordinate Bench in the matter of Google in ITA No. 1511 to 1516/B/2013 where the coordinate Bench have considered various aspects of section 90 and 201 and had held that there cannot be discrimination of non-resident and resident after considering the provisions of the Act. He pointed out that the tribunal also held that limitation provided for the non-resident for declaring assessee as assessee in default is required to be 6 years and he had drawn our attention to the following paras of this tribunal order:-

8 ITA Nos.2832 & 2833/Bang/2018 “91. For the purpose of above, it was submitted that the reasoning which was given by courts/Tribunal referred by the assessee are not available as all the judgments referred by the learned counsel for the assessee were for the period prior to introduction of amendment in section 201(1) of the Act. It was submitted that on the analogy and reasoning given by the Special Bench in the case of Mahindra & Mahindra (supra) in paras.14.2, 17.10 and 17.11 are no more available to the assessee as the said reasoning were given by the Special Bench in the case of Mahendra & Mahendra (supra) in the absence of limitation for initiation of proceedings or passing of order u/s 201 of the Act as applicable on said date and therefore, the Special Bench has applied the limitation as provided u/s 143(2), 149, 153, 154 and 263 to the proceedings under section 201 of the Act. The special bench after detailed examination in para.14.2, in the case Mahindra & Mahindra has came to the conclusion that, as there is no limitation provided under un-amended section 201, therefore, period of 4 years will be the reasonable period for initiation of proceedings. Further it was held that the period of completion of proceedings shall be one year form the end of the relevant financial year. 92. On the basis of above it was submitted by the learned Standing Counsel that the reasoning as given by the Special Bench, Hon’ble jurisdictional High Court as well as by other High Courts is no more available for initiation of proceedings against non-resident for period of 4 years, in view of the fact that same logic and reasoning is required to be followed by the Tribunal by laying down the reasonable period of limitation for initiation of proceedings against non-resident entity. In the written submissions it was submitted by the DR as under: “1. Section 201(3) of the Act has been amended by providing Limitation only in respect of payments made to the resident in India. In the Circular Explaining the Finance Act, it has been specifically referred that the payments made to the nonresidents, no limitation is applicable. In view of the specific provision providing Limitation only to the payments made to the resident in India and not providing any limitation to the payments made to the non-resident, no limitation can be prescribed or read into the section. 2) Without prejudice to the above contention if the contention of the assessee is to be accepted that in the absence of any limitation being provided under the Act, reasonable time limit has to be read into the section as held by various high courts in the case of NHK Japan, Bharath Hotels, the limitation provided for payments to residents has to be applied(six years). Otherwise it amount to discrimination between the payments made to the resident and the non-resident. 3) Insofar as the judgements relied on by the assessee, all the judgements were rendered in respect of the orders passed prior to amendment to section 201(3) of the Act and period of four years has been arrived at on the analogy of various other provisions under the Act. Even in the absence of any limitation being provided under section 201(3) of the Act for payments to the nonresident's, even certain limitation is to be provided, applying the same analogy as held by the various courts in the judgements relied on by the assessee, period of six years has to be read/considered in view of the legislative interference by introduction of section 201(3) of the Act. In the absence of such an analogy and any other Limitation other than period of six years would amount to discrimination in the limitation between the payment to resident and non-resident. 4) The assessee has relied on the judgement of the Delhi High Court in the case of Bharathi Hotels Ltd (2016) 76 taxman.com 256 (Delhi) to contend that even after introduction of section 201(3) of the Act and in the absence of any limitation provided by the Act in respect of payments to the nonresident's, the reasonable limitation has to be read into. With great respect, the Delhi High Court has not provided any

9 ITA Nos.2832 & 2833/Bang/2018 limitation with respect to payments to non-residents. Without prejudice to the above contention even if the contention of the assessee that in the absence of any limitation, reasonable time limit has to be read into the section is to be accepted, applying the same analogy as held by the various courts relied upon by the assessee and considered by the Delhi High Court, the period of six years provided by the statute to the payments ma1e to resident in India under section 201(3) of the Act would be equally applicable to the payments made to the nonresident's. If any limitation other than six years is read into the section in respect of payments to non-resident, it would amount to discrimination among the payments to residents and the nonresident. 93. In rebuttal, learned counsel for the assessee submitted that prior to amendment, there was no statutory period for initiation of proceedings against the non-resident. Once the amendment came into force for resident only, it should not implicitly apply to non-resident as it was only restricted to resident. It was submitted that principle of literal interpretation is required to be invoked for the purpose of interpreting this kind of provisions and this tribunal cannot supply the word which is not intended to be supplied by the legislature. Lastly, our attention was drawn to the judgment passed by the Hon’ble Delhi High Court in the case of Bharti Airtel vs. Union of India (76 taxman.com.256) and special attention was drawn to paras.11,12, 13, 14 & 17. 94. We heard rival submissions and perused material on record available. In our view, before we deal with issue of limitation, it would be relevant to reproduce the reasoning given by the Special Bench in the case of Mahindra & Mahindra (supra) which is as under: 14.2 After considering the rival submissions in the light of the material placed before us and the precedents relied upon it is obvious that sub-sections (1) and (1A) of section 201 do not prescribe any time limit for the initiation of the proceedings or the passing of the order. We find that for the most of the actions under the Act, the particular time limit has been given for the commencement and completion of the proceedings. For example time limit for issuing of notice for the purposes of making assessment is laid down in section 143(2). Similarly time for issuing notice of reassessment has been set in section 149. Section 153 deals with the time provided for the completion of assessment and reassessments. Similarly time limit for rectification of order is given in section 154; for passing revising order under section 263 etc. etc. In such a scenario the question arises that if no time limit is provided, then can any time limit be artificially imported by the authorities. The ld. DR has contended that the Tribunal is not competent to lay down any time limit. If this contention is brought to the logical conclusion it will mean that the unlimited time will be available to the Departmental authorities at their sweet-will for taking action under this section. In our considered opinion this contention raised on behalf of the revenue is bereft of any force for the simple reason that certainty is the hallmark of any proceedings. It is beyond our comprehension that how, in the absence of any time limitation provided in the section, the action can be taken in indefinite period. It is wholly impermissible to argue that unlimited time limit be granted to the revenue for taking action under this section. The sword of taxing authorities cannot be allowed to hang, forever, over the head of the tax payers. If this proposition of the learned D.R. is accepted that will give license to the authorities to take action even after 30, 40 or 50 years. The canons of limitation are ordinarily provided expressly in the Act and in their absence, they are to be impliedly inferred by taking into consideration the scheme of the relevant provisions. The ld. DR has relied on some cases for suggesting that no time limit be laid down by the Tribunal for the purposes of passing order under section 201(1) or (1A). In our opinion before applying the ratio of any judgment, it is imperative to look into text and the context in which it is rendered. It is equally important to bear in mind the relevant provision in the background of which such judgment was rendered. It is not

10 ITA Nos.2832 & 2833/Bang/2018 permissible to pick up a case from one enactment and insist for the application of the ratiodecidendi of that case to an altogether different legislation, which has no resemblance with the former. The Hon'ble Rajasthan High Court in Arihant Tiles & Marbles (P.) Ltd. v. ITO [2007] 295 ITR 148/166 Taxman 274 has held that the interpretation of any expression used in the context of one statute is not be automatically imported while interpreting similar expression in another statute. Similar view has been earlier expressed by the Hon'ble Supreme Court in CIT v. Venkateswara Hatcheries (P.) Ltd. [1999] 237 ITR 174/103 Taxman 503. 95. In para.14.2 (supra in Mahindra and Mahindra) it has been held by the Special Bench that in sub- section (1) and (1A) of section 201, no limit for initiation of proceeding or passing of the order is prescribed. Thereafter, the Special Bench noticed the period of limitation provided for issuance of notice u/s 143(2), 149, 153, 154, 263 and thereafter it was held that certainty in taxing provision is hall-mark of any proceeding and it was noticed that “it is beyond our apprehension that how in absence of time limit provided in the section, action can be taken in indefinite period. It is impermissible to argue that no time limit be granted to revenue.” 96. Thus it is clear from reading of the abovementioned paragraphs that the logic and reasoning given by the Special Bench for coming to reasonable period of 4 years was based on analysis of the provisions viz., 143, 147, 148, 149 and 153 and absence of time limit u/s 201(1) of the Act. In our view, there is a change in the position after passing of judgment by the Special Bench as the section 201 has been amended by the legislature and now specific provision is incorporated by the Legislature to dealing with limitation or initiation of proceedings u/s 201 of the Act in the case of resident , however no period of limitation is provided in the case of non-resident. 97. Recently Allahabad high court in the matter of Mass Awash (P.) Ltd. [2017] 83 taxmann.com 306 (Allahabad) had occasion to deal with all judgments referred before us and thereafter it was held as under – “71. In the entirety of the discussion, we find it difficult to hold that period consumed by Revenue in prosecuting matter against main payee would have resulted in accrual of a right upon Assessee so as to deprive Revenue from proceeding under Section 201(1) and 201(1A), though, admittedly, Assessee- petitioner has committed default by not complying Section 195 by non-deduction of TDS on the amount paid to Smt. Nidhi Raman. Defence of petitioner that it was misrepresented by seller by not disclosing by any of them that she was an N.R.I. would equally be available to Revenue also for explaining delay and also their bonafide is fortified that they make all possible efforts to recover entire amount of tax from person liable to pay tax and as a last resort they have sought to exercise power under Section 201(1) and 201(1A) against Assessee. 72. The view taken by Delhi High Court that period of limitation of four years, as applicable for making Assessment under Section 147, should be made applicable for exercising power under Section 201(1) and 201(1A), we find it difficult to subscribe inasmuch as we do not impose a fixed time and prescribe a period of limitation, which has not been prescribed by Legislature in its wisdom. Such legislative action, by way of judicial precedent, in our view, would not be appropriate exercise of judicial review under Article 226 of Constitution. As we have already discussed above, even Supreme Court says that if time period is not prescribed for exercise of power, a reasonable time would depend upon the facts of each case and cannot be quantified or prescribed like a period of limitation.

11 ITA Nos.2832 & 2833/Bang/2018 73. In Uttam Namdeo Mahale (supra), the judgment delivered by Three Judge Bench, Court has said as under: "Mr. Bhasme, learned counsel for the appellant, contends that in the absence of fixation of the rule of limitation, the power can be exercised within a reasonable time and in the absence of such prescription of limitation, the power to enforce the order is vitiated by error of law. He places reliance on the decisions in State of Gujarat v. Patil Raghav Natha; Ram Chand v. Union of India and Mohd. Kavi Mohamad Amin v. Fatmabai Ibrahim. We find no force in the contention. It is seen that the order of rejectment against the applicant has become final. Section 21 of the Mamlatdar's Court Act does not prescribe any limitation within which the order needs to be executed. In the absence of any specific limitation provided there under, necessary implication is that the general law of limitation provided in the Limitation Act (Act 2 of 1963) stands excluded. The Division Bench, therefore, has rightly held that no limitation has been prescribed and it can be executed at any time, especially when the law of limitation for the purpose of this appeal is not there. Where there is statutory rule operating in the field, the implied power of exercise of the right within reasonable limitation does not arise. The cited decisions deal with that area and bear no relevance of the facts." (Emphasis added) 74. We also find that Bombay High Court has taken a different view in the matter of prescribing limitation and Calcutta High Court has declined to prescribe any such limitation. 75. In our view, the dictum laid down by Apex Court in the cases referred above is very clear. While exercising power of judicial review in the case like present one, it would be appropriate to consider whether power has been exercised by competent authority within a reasonable period and whether delay is unjust, arbitrary, whimsical or it is for valid reasons. If Court finds that delay in exercise of power is for valid and bonafide reasons, alleged delayed exercise of power cannot be held invalid.” 98. The contrary judgment of Hon’ble Delhi High Court in the matter of Bharti Airtel Ltd v. Union of India [(2016) 76 taxmann.com 256] was relied upon by the Ld. AR. The DR relied upon Bhura Exports Ltd [2011] 13 taxmann.com 162 (Calcutta) and Mass Awash (P.) Ltd. [2017] 83 taxmann.com 306 (Allahabad). In our view the decision of the Special Bench and other judgments apply with equal force in favour of both i.e. resident as well as non-resident providing period of limitation of four years from the end of the financial year for initiation of proceedings on the analogy and principle mentioned in section 147, 148, 153 etc. prior to amendment in law. However there are contrary judgments in favour of the revenue post amendment which does not provide any limitation for initiation of proceedings u/s.201 of the Act. 99. In view thereof, there is conflict of judgments of various courts. One set of judgment are in favour of the assessee and the other set of judgments are in favour of the Revenue. There is no direct judgment after the amendment of Section 201, by the jurisdictional High Court which deals with the issue of initiation of proceedings under the amended provision of 201. In the absence of any binding judgment by the Hon’ble jurisdictional High Court, we are bound to adopt the same logic as upheld by the jurisdictional High Court, by treating the resident and the non-resident at par after relying upon the decision of Special Bench in the matter of Mahindra and Mahindra (supra), in case relating to pre amendment assessment year. In our opinion, after the amendment of law same logic and limitation is required to be applied for non-resident well as resident thus treating non-resident at par with resident. In other words, period of imitation for initiation of proceedings for resident as well as non-resident u/s 201 should be 6 years from the end of the financial year. Further the payer is required to maintain books

12 ITA Nos.2832 & 2833/Bang/2018 of account and deduct TDS for both resident as well as non-resident. No Separate treatment had been envisaged under the Act, for the payer paying to a non-resident. 100. Further, the non–resident payee cannot be worse off than resident payee under the Income Tax Act and under the provisions of DTAA. Law provides non-discrimination of non- resident with resident and requires equal treatment of non-resident with resident under the provisions of DTAA. It cannot be said that a nonresident would be given special and beneficial treatment in comparison to the resident or treated unequally by providing unlimited time to initiate proceedings under section 201 of the Act. In our opinion, the Constitution of India provides equal treatment and equal protection of law within the territory of India. If the law requires initiation of proceedings within 6 years from the end of financial year for the resident, same treatment is required to be given to the non-resident. For this proposition, we may rely upon on the judgment of Hon’ble Supreme Court in Dr. Subramanian Swamy v. Director, CBI [2014] 8 SCC 682 (SC) in para 22. 101. Keeping in mind the principles set out by the Hon'ble Supreme Court in Dr. Subramanyian Swamy (supra), if we examine the scheme of Section 201 Act, the resident of India cannot be discriminated vis- à-vis. The non-resident under Income Tax Act and similarly under DTAA non-resident cannot be discriminated vis-a-vis resident. If we accept the argument of the Ld. AR that the limitation of 4 years, as held provided by the Special Bench would continue to apply to non-resident even after post amendment to section 201, in that eventuality, hostile discrimination towards the resident-payee will creep in i.e., the limitation for initiation under section 201 against the resident payee would be six years and against the non-resident payee it would be four years. This is neither the intention of the legislature nor the mandate of the Special Bench or the judgment referred herein above. On the contrary, if we accept the argument of the Ld. DR that there is no limitation for initiation of proceedings under 201, in view of Hon’ble Calcutta and Allahabad High Court judgments (supra), if the payee is non-resident then, it will amount to discrimination against the nonresident as the proceedings may be initiated against the resident within four years and there is no limitation for initiation of proceedings against the non- resident. Therefore, the arguments of both the assessee as well as the Revenue cannot be accepted. If we accept the argument of one it would tantamount to discriminating either the resident or the nonresident, which is not permissible in the eyes of law. 102. The assessee / payer in the eyes of law whether making payment to resident or non-resident under the provisions of section 201, constitutes one class only. Accordingly, the same period of limitation is required to be applied equally for payee i.e. Resident or non-resident, Law abhor vacuum and uncertainty. 103. There is no classification given under section 201. Section 201(1) only talks about person who is required to deduct any sum for the payment made. Therefore, borrowing the same reasoning of the special bench, whereby it held that the same period of limitation should be applied to resident as well as non-resident, we are of the considered view that limitation for initiation of proceedings for non-resident payee should be 6 years instead of no-limitation.as is the limitation for resident-payee. In view of the above ground No.12 in assessment year 2007-08 deserves to be dismissed and accordingly we dismiss the same.” 32. On the basis of the above, it was submitted that once common question of law was raised before the lower authorities with respect to applicability of DTAA, provision of section 90 as well as limitation, common order was passed by the authority and there was no prohibition in law for passing a common

13 ITA Nos.2832 & 2833/Bang/2018 order for the common question of law and there is no difference in facts in all the years. He had also drawn our attention to section 143(1) and section 201 and submitted that if comparison is drawn between the two provisions, then the law does not prohibit any passing of the common order u/s. 201. 33. In rebuttal, the ld. AR had filed the written submissions as under:- “Further it is the contention of the assessee that passing a single order for multiple assessment years is unsustainable and untenable under the circumstances. This contention is supported by perusal of the following sections: Section 2(9) of the Act defines "Assessment year" as under: (9) "assessment year" means the period of twelve months commencing on the 1st day of April every year Section 3 of the Act defines "Previous year" as "previous year" means the financial year immediately preceding the assessment year Section 139(1) of the Act reads as under: "139. (1) [very person,— (a) being a company or a firm: or (b) being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed ………………. Section 201(1) of the Act reads as under: (1) Where any person, including the principal officer of a company, – (a) who is required to deduct ally sum in accordance with the provisions of this Act; or (b) referred to in sub-section (IA) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident – (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income,

14 ITA Nos.2832 & 2833/Bang/2018 and the person furnishes a certificate to this effect from an accountant ill such form as may be prescribed: ……………. Section 201(3) of the Act 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 seven years from the end of the financial year in which payment is made or credit is given. Thus bare perusal of the above sections implies that an order u/s 201(1) can be passed only in respect of a particular previous year/assessment year. It is a well settled principle by the judiciary that each assessment year is separate, distinct and independent. The assessee places reliance on the decision of Allahabad HC in Mohd. Ayub vs ITO - 346 ITR 30 - paper book index IV - pages 411 to 413 wherein the Court has held that each assessment year is an independent unit of assessment and the provisions of the Act applied separately. The limitation for passing the order as per section 201(3) has also to be tested for each previous year separately. Thus the impugned common order passed by the AO u/s 201(1) & 201(1A) dt.15.10.2013 for multiple assessment years being AY 2007-08 to 2012-13 are had in law and requires to be vacated. Further the entire tax liability has been fastened on the assessee based on retrospective amendment to Explanation 4 of section 9(1)(vi) inserted by Finance Act 2012 w.r.e.f 1.06.1976 for alleged non deduction of TDS u/s 195 of the Act. Section 195 of the Act reads as under: 195. (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC) or section 194LD or any other sum chargeable under the provisions of this Act not being income chargeable under the head "Salaries") shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :.” As per the above section the obligation of deduction of TDS if any can be discharged in the light of law as it stands at that point of time. An assessee cannot be treated as an "assessee in default" relying on subsequent amendments made to the Act having retrospective effect. The assessee vide written submission dt.22.11.2017 in para 4 has relied on several decisions wherein it is held that retrospective effect cannot be imposed when it comes to deduction of TDS. The assessee also places reliance on the decision of the Hon'ble Allahabad High Court in the case of Jagran Prakashan Limited vs DCIT 345 ITR 288 (Index of Decisions--H pages 110 to 150) which has been affirmed by the Hon'ble Supreme Court in SLP Civil 9861/2013 dt.05.05.2014 (Index of Decisions — II page 151). While dealing on the issue on assessee-indefault, the High Court has held as under: " 74. From the above, it is clear that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. In the present case, the Income tax authorities had not adverted to the Explanation to Section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to deduct the tax at source as an assessee in default, condition precedent is that assessee has also failed to pay tax directly. The fact that assessee has failed to pay tax directly is thus, foundational and jurisdictional fact and only after finding that assessee has failed to pay tax directly, deductor can be deemed to be an assessee in default

15 ITA Nos.2832 & 2833/Bang/2018 in respect of such tax. It is relevant to notice here that Explanation to Section 191 is confined only to the amount of tax which was required to be deducted.” Thus on this count also, the tax liability fastened requires to be deleted. 34. We have heard the rival submissions and perused the record. The grounds of appeal raised before the ld. CIT (A) were similar in all the assessment years under consideration before us and we are not reproducing herein below the common grounds raised by the assessee in each of the assessment years for the sake of brevity. 35. From a perusal of the above, it is amply clear that assessee has raised common grounds of appeal feeling aggrieved by the order of AO, and on the issue of DTAA, the assessee had raised general ground and therefore, in our considered opinion, there is no prohibition for the AO to pass a common order for all the assessment years. In all the cases before the AO, the payee (recipient) was non-resident. It is not disputed that payment was made for purchase of software. It is also not disputed before the AO that tax was not deducted as mandated by law before making payment. Therefore, all the necessary conditions as required under law for invoking provisions of s. 201 were in place and therefore in our view, the action on the part of lower authorities is in accordance with law. We hold accordingly. Regarding the arguments of the learned AR of the assessee that the orders passed by the AO are time barred, we respectfully follow the tribunal order in the case of Google as reproduced above and hold that these orders are not time barred as these are passed within six years. 36. In the result, all the six appeals filled by the assessee in the proceedings u/s 201 & 201 (1A) are dismissed.”

We found the facts of the present case are similar to dealt by the co-ordinate Bench of the Tribunal on the aspect of passing the order under Section 201(1) and 201(1A) of the Act. On applying the Ratio of decision, we found the order passed by the Assessing Officer on 20.3.2017 for the Assessment Year 2010-11 is within the limitation period and accordingly we confirm the order of the CIT(Appeals) on this ground of appeal and dismiss the assessee's grounds of appeal. On the second disputed issue, the learned Authorised Representative submitted that the matter on treatment of Royalty, the assessee has filed SLP before the Hon'ble Supreme Court against the decision of Hon'ble Karnataka High Court and the same is pending.

16 ITA Nos.2832 & 2833/Bang/2018 We found that the payments made by the assessee company to CGI, Canada is treated as Royalty in assessee's own case by the Hon'ble Karnataka High Court in the case of CIT Vs. CGI Information Systems & Management Consultants (P.) Ltd. (2014) 48 taxman.com 264, the Hon'ble High Court has considered the transaction and the payments made by the assessee to the Non-Resident Company for utilizing the facilities as Royalty which is taxable in India. The Hon'ble Karnataka High Court has held at paras 16 to 21 which read as under :

“ 16. The facility which is provided by the Canadian Company used by the assessee is the intranet facility. Therefore, it is necessary for us to understand what “Intranet” facility means. An intranet is a computer network that uses Internet Protocol technology to share information, operational systems, or computing services within an organization. This term is used in contrast to extranet, a network between organizations, and instead refers to a network within an organization. Sometimes, the term refers only to the organization's internal website, but may be a more extensive part of the organization's information technology infrastructure, and may be composed of multiple local area networks. The objective is to organize each individual's desktop with minimal cost, time and effort to be more productive, cost efficient, timely, and competitive. 17. An intranet may host multiple private websites and constitute an important component and focal point of internal communication and collaboration. Any of the well known Internet protocols may be found in an intranet, such as HTTP (web services), SMTP (e-mail), and FTP (file transfer protocol). Internet technologies are often deployed to provide modern interfaces to legacy information systems hosting corporate data. An intranet can be understood as a private analog of the Internet, or as a private extension of the Internet confined to an organization. The first intranet websites and home pages were published in 1991, and began to appear in non-educational organizations in 1994. Intranets are sometimes contrasted to extranets. While intranets are generally restricted to employees of the organization, extranets may also be accessed by customers, suppliers, or other approved parties. Extranets extend a private network onto the Internet with special provisions for authentication, authorization and accounting. 18. Explanation-4 inserted by the Finance Act, 2012 has puts at rest all the controversies and doubts. It expressly states that transfer of all or any rights in respect of any right, property or information includes and has always included transfer of all or any right for use or right to use a computer software including granting of a licence irrespective of the medium through which such right is transferred. Therefore, the terms of Cost Sharing Agreement explicitly mention that the Canadian Company has developed internal telecommunication and communication tool which is accessible only to the members of CGI worldwide. Therefore it is an intranet facility. Further it declares that the Canadian Company

17 ITA Nos.2832 & 2833/Bang/2018 holds the intellectual property rights in the said CGI Information Technology Infrastructure facility. It has allowed the assessee to use the said facility subject to the terms and conditions stipulated in the said agreement. Clauses 4.2 and 4.3 deal with the payment of cost to be paid for using the said facility. Clause 4.4 declares that the cost does not include any mark up and is limited to the actual cost. Further, Clause 4.5 declares the permission granted to the assessee to use the facility on payment of cost does not extend to confer on the assessee any right to sell or licence or lease or in any manner “transfer the right assigned therein to other parties”. Therefore, it is clear that some right is assigned to the assessee under the agreement on payment of cost. That right is a right to use the facility notwithstanding the fact that the cost is paid. Clause 5 declares the rights of such facility vest with the Canadian Company only. Therefore, it is clear that the cost is paid for using the computer software. When the assessee is allowed to use the said facility, it is nothing but a license to use the said facility. If really the cost paid represents the assessee’s share of cost for developing the internal telecommunication and communication tool, on such payment, the Canadian Company can never claim to be the absolute owner of the said intellectual property. If CGI group companies were to pay costs for using the said facility, then the title of the said facility i.e. intellectual property should equally vest proportionate to the cost share by this group companies. That is not the intention behind this agreement. Therefore, we have no hesitation to hold that this Cost Sharing Agreement is only a device to avoid payment of tax as contemplated under the aforesaid provision. It is nothing but a royalty. Therefore, the order passed by the Tribunal is erroneous and requires to be set aside. 19. Learned Senior Counsel for the assessee contended that reimbursement is permissible in law. The agreement is nothing but an agreement for reimbursing the cost of development of internal telecommunication and communication tool. In support of this contention relied upon several judgments. When we looked into the Cost Sharing Agreement, there is no whisper about reimbursement of cost. On the contrary, under the agreement, the assessee has agreed to share the cost. In that view of the matter, the question of considering the case of the assessee for reimbursement of cost would not arise. Accordingly that argument of the learned Senior Counsel in our opinion, does not arise for consideration in the facts of this particular case. 20. The case of the Canadian Company is that it has obtained the intellectual property right by way of license from Microsoft and license fee is paid. After acquisition of the said property by licence, that facility was permitted to be used by its group members, one of which is the assessee. In law, it makes no difference, whether Canadian Company acquired intellectual property either by way of lease or it independently developed the same. The question for consideration in this case is whether what is paid by the assessee to the Canadian Company represents royalty payable for the licence granted to use the said facility or is it a cost of acquisition of the said intellectual property rights. Similarly in one of the cases, what is provided by the Canadian Company to the assessee was not intranet facility and it is only leased line charges. The same reasoning holds good even in respect of the said facility made available to the assessee. 21. It was also contended that this Court has already held in the case of CIT v/s RANKA AND RANKA reported in 352 ITR 0121 that Instruction No.3/2011 dated 9-2-2011 is retrospective in operation and equally applied to the proceedings pending even prior to 9-2- 2011 notwithstanding the fact that Circular expressly states that it is only prospective and therefore, on that basis, relief has to be granted in the case where tax liability is less than Rs.10.00 lakhs. We do not find any substance in the said contention. The question of extending the benefit of Instruction No.3 would arise only in cases where the tax liability is

18 ITA Nos.2832 & 2833/Bang/2018 admitted and the tax payable is less than Rs.10.00 lakhs. It has no application to the case, where the very liability is disputed. Therefore, in this case, we have held that the assessee is liable to pay tax. In fact, the assessee had paid the tax and therefore, in the facts and circumstances, we are satisfied that the said judgment has no application to the facts of the cases where the tax liability is less than Rs.10.00 lakhs. It is placed on record that the assessee had no doubt paid the tax, after, deducting the tax at source as contemplated under Section 195(1) of the Act after making payment to the Canadian Company. It is after making the payment, the assessee wanted to test the legality and preferred an appeal before the CIT(A) under Section 248 of the Income Tax Act. When we have held that the tax liability exists and the assessee had already discharged the tax liability by paying the money within the time stipulated, the question of Revenue proceeding against the assessee for recovery of the tax would not arise.” On applying the decision of the Hon'ble Karnataka High Court (supra) to the present case, we found that the CIT(Appeals) has dealt on this issue relying on the judicial decisions and upheld the action of the Assessing Officer in treating the payment to CGI, Canada as Royalty and passed a reasoned order. Accordingly we are not inclined to interfere with the order of CIT(Appeals) and dismiss the assessee's ground of appeal. Hence the assessee's appeal for Assessment Year 2010-11 is dismissed, similarly, the assessee has filed appeal for Assessment Year 2011-12 in ITA No.2833/Bang/2018 were the issues are identical and the same decision shall apply as discussed for Asst. Year 2010-11 and applying the ratio of decision the grounds of the appeal of the assessee are dismissed. 5. In the result, the appeals of assessee for Assessment Years 2010-11 and 2011-12 are dismissed. Order pronounced in the open court on 9th August, 2019. Sd/- Sd/- (A.K. GARODIA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 09.08.2019. *Reddy GP

19 ITA Nos.2832 & 2833/Bang/2018

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