TENTH PLANET TECHNOLOGIES PVT. LTD.,CHENNAI vs. DCIT (INTERNATIONAL TAXATION) 2(2), CHENNAI

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ITA 2947/CHNY/2018Status: DisposedITAT Chennai28 February 2020AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO's order under sections 201(1) and 201(1A) was barred by limitation as it was passed after the expiry of the prescribed period under the pre-amended provisions of Section 201(3)(ii).

What were the facts?

The Assessing Officer (AO) treated the assessee as an assessee in default for not deducting tax at source on software purchase payments, deeming them as royalty. The CIT(A) upheld this order.

What were the issues?

Whether the order passed by the AO under sections 201(1) and 201(1A) was barred by limitation based on the pre-amended provisions of Section 201(3)(ii).

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201(1A),Section 201(3)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI MAHAVIR SINGH & SHRI M. BALAGANESH

Pronounced: 28.02.2020

आदेश / O R D E R

PER M. BALAGANESH, ACCOUNTANT MEMBER:

1.

This appeal of the assessee arise out of the order of the Ld. Commissioner of Income Tax (Appeals)-16, Chennai vide proceedings in dated 09.08.2018 against the order passed by the DCIT, International Taxation-2(2), Chennai (AO) u/s. 201(1) & 201(1A) of the Income Tax Act, 1961

(A.Y 2010-11) M/s. Tenth Planet Technologies Pvt. Ltd. :- 2 -: (hereafter ‘the Act’) dated 31.03.2017 for the Assessment Year (A.Y)

2010-11.

2.

We have heard the rival submissions and perused the material available on record. The Ld. AO framed the assessment u/s. 201(1) and 201(1A) of the Act on 31-3-2017 treating the assessee as ‘assessee in default’ for non deduction of tax at source in respect of payments made towards purchase of software in the sum of Rs. 24,95,136/- by treating the same as royalty. This order was upheld by the Ld. CIT(A).

3.

We find that before us the Ld. AO raised a preliminary objection that the assessment framed by the Ld. AO u/s. 201(1) and 201(1A) of the Act for the A.Y 2010-11 on 31-3-2017 was barred by limitation.

To support his argument, the Ld. AR drew our attention to the pre- amended provisions of s. 201(3)(ii) of the Act, which stipulates that the order under sub s. (1) to s. 201(1) could be passed only within 6 years from the end of the financial year in which the payment was made. There is no dispute in the instant case that payment for purchase of software was made by the assessee during the financial year 2009-10 relevant to A.Y 2010-11. Hence, six years from the end of the financial year would expire on 31-03-2016, which would be the last date for framing the assessment u/s. 201(1) of the Act in terms of (A.Y 2010-11) M/s. Tenth Planet Technologies Pvt. Ltd. :- 3 -: pre-amended provisions of s. 201(3)(ii) of the Act. This section was later amended w.e.f 01-10-2014 substituting six years with seven years. We find that the the Ld. CIT(A) simply applied the amended provisions for the A.Y 2010-11 ignoring the fact that the said amendment is applicable only w.e.f 01-10 2014. Accordingly, we hold that the order passed by the Ld. AO u/s. 201(1) and 201(1A) of the Act on 31-03-2017 is barred by limitation and hence, the same is hereby quashed.

4.

Since, the appeal of the assessee is decided on a technical issue, we refrain to give our opinion on the merits of the case.

Accordingly, the grounds raised by the assessee are allowed.

5.

In the result, the appeal of the assessee is allowed.

Order pronounced on 28th day of February, 2020 in Chennai.

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