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Income Tax Appellate Tribunal, “D” BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
Manoj Kumar Aggarwal (Accountant Member)
1 Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 arises out of the order of learned Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 18-10- 2023 in the matter of an order passed by Ld. AO u/s 201(1) & (IA) on 30- 03-2022. 1.2 The grounds taken by the assessee are as under:
The order of the Commissioner of lncome tax (Appeals) is contrary to law, facts and circumstances of the case.
The Commissioner of Income tax (Appeals)-16 erred in confirming the initiation of proceedings under section 201 beyond a reasonable time of 4 years and the same should be treated as time barred.
1 The Commissioner of Income tax (Appeals) ought to have appreciated that the proceedings u/s 201 was initiated for the above assessment year by notice dated 25.02.2022 as it is beyond 6 years from the end of the relevant financial year.
The Commissioner of Income tax (Appeals erred in confirming the levy of tax and interest of Rs.8,01,150/- and Rs.7,69,104/- under 201(1)/201(1A) of the Income Tax Act 1961. 3.1 The Commissioner of Income tax (Appeals) erred in confirming the Appellant in default for non-deduction of tax on payment to non-residents under section 40(a)(i) without considering the exact nature of service for which payment was made, without examine the correct provisions of the law read with provisions of the Double Taxation Avoidance Agreement(DTAA).
2 The Commissioner of Income tax (Appeals) ought to have appreciated that since the non-resident was paid service charges for providing Co-Location and Telecom voice services in UK and USA and the recipient did not have any permanent establishment in India, the service was not chargeable in India in the absence of its permanent establishment in India in view of section 9(1)(i) of the Act.
3 The Commissioner of Income tax (Appeals) ought to have appreciated that in Indo-USA DTAA as well as lndo-UK DTAA as well as the provisions of the Act the sum of Rs.80, 11,496/- cannot be taxable in India and the need to deduct TDS on the same does not arise and hence payment towards co-location charges and payment towards PSTN &. Local loop charges cannot constitute Royalty/FTS payments.
4 The CIT(Appeals) erred in not appreciating the submissions filed by the Appellant in proper perspective.
3 This appeal was heard along with revenue’s appeals for AY 2010- 11 and 2011-12 which have separately been disposed-off. Having heard rival submissions, the appeal is disposed-off as under. Proceedings before lower authorities
1 An assessment was framed against the assessee u/s 143(3) wherein a sum of Rs.127.95 Lacs was disallowed u/s 40(a)(i) for want of TDS on connectivity charges. Pursuant to receipt of said information, present Ld. AO initiated proceedings u/s 201(1) & 201(IA). During proceedings, it transpired that the assessee paid connectivity charges to 4 entities but did not deduct TDS. In first appeal against 143(3) order, the payment made to three entities for Rs.80.11 Lacs was confirmed. Considering the same, Ld. AO held the assessee to be assessee-in- default and raised demand of Rs.15.70 Lacs including interest for Rs.7.69 Lacs. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us.
2 The Ld. CIT(A) also considered the amendment to Sec. 201(3) which provide that no order u/s 201(1) shall be made after the expiry of 7 years from the end of financial year in which the payment was made. In the present case, the order was passed by Ld. AO on 31-03-2022 and therefore, the same was not time-barring. Accordingly, the legal ground was also dismissed. Aggrieved, the assessee is in further appeal before us. Proceedings before lower authorities
We find that first appellate order for AY 2015-16 has been confirmed by Tribunal in its common order dated 11-01-2023 (ITA Nos.1985 to 1987/Chny/2019 for AYs 2012-13 to 2015-16 dated 11-01- 2023; 148 Taxmann.com 98). Similar view has been taken by us in revenue’s appeals for AYs 2010-11 and 2011-12. This being so, the impugned demand as raised against the assessee is quite justified. We also concur with the adjudication of legal grounds by Ld. CIT(A). The amendment is effective from 01-10-2014 and it provide extended time limit of 7 years to the revenue to raise such a demand.
In the result, the appeal stand dismissed. Order pronounced on 3rd December, 2024 (MANU KUMAR GIRI) (MANOJ KUMAR AGGARWAL) "ाियक सद# / JUDICIAL MEMBER लेखा सद# / ACCOUNTANT MEMBER चे3ई Chennai; िदनांक Dated : 03-12-2024 DS
आदेशकीHितिलिपअ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/Appellant
" थ"/Respondent 3. आयकरआयु</CIT, Chennai. 4. िवभागीय"ितिनिध/DR 5. गाडAफाईल/GF