Income Tax Appellate Tribunal - Bangalore
M/S Acer India Pvt Ltd, Bengaluru vs Assistant Commissioner Of Income Tax ... on 14 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH : BANGALORE
BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER
AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
ITA Nos. 2570 to 2572/Bang/2017
Assessment years : 2009-10 to 2011-12
The Assistant Commissioner of Vs. M/s. Acer India Pvt. Ltd.,
Income Tax (TDS), No.13, 6th Floor, Embassy Heights,
Circle 1(1), Magrath Road,
Bangalore. Next to Hosmat Hospital,
Bangalore - 560 025.
PAN: BLRAO 1844D
APPELLANT RESPONDENT
CO Nos. 51 to 53/Bang/2018
[in ITA Nos. 2570 to 2572/Bang/2017]
Assessment years : 2009-10 to 2011-12
M/s. Acer India Pvt. Ltd., Vs. The Assistant Commissioner of
Bangalore - 560 025. Income Tax (TDS),
PAN: BLRAO 1844D Circle 1(1), Bangalore.
CROSS OBJECTOR RESPONDENT
Revenue by : Smt. Padmameenakshi, Jt.CIT(DR)(ITAT), Bengaluru.
Assessee by : Shri Manju Prasad L.
Date of hearing : 25.07.2018
Date of Pronouncement : 14.09.2018
ITA Nos. 2570 to 2572/Bang/2017
& CO Nos.51 to 53/Bang/2018
Page 2 of 11
ORDER
Per N.V. Vasudevan, Judicial Member
ITA Nos.2570 to 2572/Bang/2017 are appeals by the Revenue against a common order dated 28.9.2017 of CIT(Appeals)-13, Bengaluru, relating to FYs 2008-09 to 2010-11. The Assessee has filed Cross- Objections in C.O.Nos.51 to 53/Bang/2018 against the very same order of the CIT(A).
2. The Assessee is a company engaged in the business of providing Information Technology related services. There was a Survey conducted by the Revenue in the business premises of the Assessee u/s.133A of the Income Tax Act, 1961 [the Act] on 17.6.2015 to verify the compliance by the Assessee with regard to various Tax Deduction at Source (TDS) under the Act. In the course of such survey, the Survey team noticed that:-
(i) there was delay on the part of the Assessee to deduct tax at source on provision for expenses made in the end of the year; (ii) short deduction of tax at source on payments made towards supply of manpower; and
(iii) non-deduction of taxes on payments made to distributors towards price protection and special price clearance discounts.
3. The respondent herein issued a show cause notice dated 8.2.2016 for all the three FYs in these appeals u/s/201(1) & 201(1A) of the Act for treating the Assessee as an Assessee in default for taxes not deducted at source and for charging interest on taxes not deposited into the Government Account on or before the dates, respectively. Sec.201(1) & 201(1A) of the Act reads thus:-
ITA Nos. 2570 to 2572/Bang/2017 & CO Nos.51 to 53/Bang/2018 Page 3 of 11 "Consequences of failure to deduct or pay.
201.(1) Where any person, including the principal officer of a company,--
(a ) who is required to deduct any sum in accordance with the provisions of this Act; or (b ) referred to in sub-section (1A) 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 no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax.] (1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-
section (3) of section 200]."
4. There was no period of limitation for passing order treating a person as an Assessee in default u/s.201(1) of the Act and for levying interest on non-deposit of tax not deducted at source or deducted but not paid to the credit of the Central Government Account, u/s.201(1A) of the Act. A period ITA Nos. 2570 to 2572/Bang/2017 & CO Nos.51 to 53/Bang/2018 Page 4 of 11 of limitation was introduced for the first time by the Finance Act, 2009. The following sub-sections (3) was inserted after sub-section (2) of section 201 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :-
"(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--
(i ) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed;
(ii ) four years from the end of the financial year in which payment is made or credit is given, in any other case :
Provided that such order for a financial year commencing on or before the 1st day of April, 2007 may be passed at any time on or before the 31st day of March, 2011."
5. Sub-Section (3) quoted above was substituted by the Finance (No.
2) Act, 2014, w.e.f. 1-10-2014, 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."
6. It was the plea of the Assessee in reply to the show cause notice issued by the respondent on 8.2.2016 that the Assessee had filed TDS returns for the relevant FYs as per the details given below:-
A.Y. 2009-10 For quarter ended 30 June 2008 on 22 September 2008; For quarter ended 30 September 2008 on 31 March 2009;
ITA Nos. 2570 to 2572/Bang/2017 & CO Nos.51 to 53/Bang/2018 Page 5 of 11 For quarter ended 31 December 2008 on 31 March 2009; and For quarter ended 31 March 200 on 15 July 2009. A.Y. 2010-11 For quarter ended 30 June 2009 on 25 February 2010; For quarter ended 30 September 2009 on 25 February 2010; For quarter ended 31 December 2009 on 25 February 2010; and For quarter ended 31 March 2010 on 16 June 2010. A.Y. 2011-12 For quarter ended 30 June 2010 on 22 July 2010; For quarter ended 30 September 2010 on 15 October 2010; For quarter ended 31 December 2010 on 17 January 2011; and For quarter ended 31 March 2011 on 14 May 2011.
7. The Assessee submitted that since it had filed return of TDS for the relevant Financial Years as stated above, the provisions of Section 201(3)(i) of the Act would apply to the case of the Assessee and as per the provisions of Sub-Section (3)(i) of Sec.201(1) of the Act as it existed prior to its substitution by the Finance (No.2) Act, 2014 w.e.f. 1.10.2014, any action in the case of an Assessee who has filed a return of TDS u/s. 200 of the Act has to be passed within a period of 2 years from the end of the financial year in which the return of TDS u/s. 200 was filed. The Assessee pointed out that the time limit for passing an order u/s.201(1) & 201(1A) of the Act for the FYs 08-09 to 10-11 would be 2 years from the end of the relevant FY as per 201(3)(i) of the Act, would expire two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed. The show cause notice issued by the AO dated 8.2.2016 was invalid as the time limit for passing orders for the relevant FYs u/s.201(1) & 201(1A) of the Act had already expired.
ITA Nos. 2570 to 2572/Bang/2017 & CO Nos.51 to 53/Bang/2018 Page 6 of 11
8. The respondent vide its orders dated 30.3.2016 for all the three FYs held that the substituted provisions of Sec.201(3) substituted by the Finance (No. 2) Act, 2014, w.e.f. 1-10-2014, referred to in paragraph-5 would apply to the case of the Assessee and therefore the proceedings u/s.201(1) & 201(1A) of the Act are not barred by time and that the AO would have a period of 7 years from the end of the relevant financial year in which there was default to comply with the relevant provisions of law relating to tax deduction at source. The Assessee had contended before the AO that there was no default u/s.201(1) of the Act and consequently no order could be passed u/s.201(1) & 201(1A) of the Act. These contentions were also rejected by the AO.
9. The Assessee preferred appeal before CIT(A) against the orders of the respondent herein for FY 2008-09 to 2010-11. The Assessee reiterated its plea that the proceedings were barred by time and that there was no default u/s.201(1) of the Act. The CIT(A) agreed with the Assessee on the plea of limitation and quashed the orders passed u/s. 201(1) & 201(1A) of the Act for all the three FYs. He did not decide the question as to whether there was at all default u/s.201(1) of the Act. Aggrieved by the order of the CIT(A) quashing the orders passed u/s.201(1) & 201(1A) of the Act for all the three FYs as barred by limitation, the revenue has preferred the appeals before the Tribunal. The Assessee has filed cross objections before the Tribunal contending that there was no default u/s.201(1) of the Act and consequently no order could be passed u/s.201(1) & 201(1A) of the Act.
10. We have heard the submissions of the learned DR who reiterated the stand of the revenue as reflected in the grounds of appeal filed before the Tribunal, which reads as follows:
ITA Nos. 2570 to 2572/Bang/2017 & CO Nos.51 to 53/Bang/2018 Page 7 of 11 "1. The order of CIT(A) is opposed to law and facts of the case.
2. The CIT(A) has erred in law as well as on facts in cancelling the order u/s. 201(1) and 201(1A).
3. The learned CIT(A) erred in treating the assessment as barred by limitations as per sub-section (1) of section 201(3) are not applicable in the present case as the assessee has not adhered to the provisions of Section 200 of the I.T. Act with regard to timely filing of Quarterly TDS Returns.
For these and other grounds that may be raised during the course of appeal and actual hearing, the appellant prays that the order of learned Commissioner of Income Tax (Appeals) may be set aside and cancelled."
11. As can be seen from the grounds of appeal of the revenue, the only point raised by the revenue in these appeals is that the returns of TDS filed by the Assessee in the present case for the three FYs were belated and therefore the provisions of Sec.201(3)(i) of the Act does not apply in the present case. A plain reading of the provisions of Sec.201(3) of the Act as it existed prior to its substitution by the Finance Act, 2014 shows that the said provisions dealt with two type of cases; (i) a case where the statement referred to in section 200 has been filed; (ii ) in any other case. There was no third category of case where a statement referred to in Sec.200 is filed belatedly. The argument of the revenue as put forth in the grounds of appeal is therefore devoid of any merit.
12. As far as the question whether, section 201(3) as amended by Finance Act (No.2) 2014 would be applicable retrospectively or not, the Hon'ble Gujarat High Court in the case of TATA teleservices Vs. Union of India and Special Civil Application Nos. 1623, 2115 and 4771 of 2015 Judgement dated 16/02/2016, relating to Assessment Year 2008-09 took the view that section 201(3), as amended by Finance Act No.2 of 2014 ITA Nos. 2570 to 2572/Bang/2017 & CO Nos.51 to 53/Bang/2018 Page 8 of 11 shall not be applicable retrospectively and therefore, no order under section 201(1) of the Act can be passed for which limitation had already expired, prior to amended section 201(3) as amended by Finance Act No.2 of 2014. The facts of the case before the Hon'ble Gujarat High Court was that the petitioner was engaged in the business of providing tele- communication services and selling service products across the country. According to the petitioner, it is governed by Tele-Communication Interconnection Usage Charges Regulation, 2003 issued by TRAI under the TRAI Act, 1997. The petitioner filed its TDS statement regularly for the F.Y. 2007-08 & 2008-09 for respective quarters. The petitioner was served with the summons dated 09/10/2014 requiring personal attendance in connection with proceedings under the Income Tax Act for A.Y. 2008-2009 and 2009-2010 seeking details regarding TDS for F.Y. 2007-2008 and 2008-2009. The petitioner made submissions dated 15/12/2014 and contended that the assessment proceedings sought to be initiated are time barred in view of Section 201(3) as it stood at the end of the respective FY 2007-2008 and 2008-2009. On a writ petition filed by the Assessee to quash the proceedings as barred by limitation, the Hon'ble Gujarat High Court held that it is clear that earlier section 201(3) as amended by Finance Act, 2012 amended on 28/5/2012 was specifically made applicable retrospectively w.e.f. 1/4/2012, whereby limitation period was substituted from four years to six years for passing orders where TDS Statement had not been filed. However, section 201(3) as amended by Finance Act No. 2 of 2014, as mentioned in the memorandum of the Finance Bill No.2 of 2014 is stated to have effect from 1st October, 2014. Thus, wherever the Parliament / Legislature wanted to make provisions applicable retrospectively, it has been so provided. The Hon'ble Gujarat High Court referred to the case of S.S. Gadgil AIR 1965 SC 720, wherein the Hon'ble ITA Nos. 2570 to 2572/Bang/2017 & CO Nos.51 to 53/Bang/2018 Page 9 of 11 Supreme Court had observed and held that in absence of an express provision or clear implication, legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorize the Income Tax Officer to commence proceedings which before the new Act came into force had upon the expiry of the period provided, become barred. The Gujarat High Court also noticed that similar view has been taken by the Hon'ble Supreme Court in the case of J. P. Jani, Income Tax Officer, Circle IV, Ward-G, Ahmedabad and another, versus Induprasad Deveshanker Bhatt, reported in AIR 1969 S.C. 778 and while interpreting section 297(2)(d)(ii) of the Income Tax Act, after considering the earlier decision of the Hon'ble Supreme Court in the case of S. S. Gadgil versus Lal and Co., [1964-53 ITR 231 = AIR 1965 SC 171. Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, the Hon'ble Gujarat High Court held that the facts of the case before it and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred and/or for the aforesaid financial years, limitation under section 201(3)(i) of the Act had already expired on 31/3/2011 and 31/3/2012, respectively, much prior to the amendment in section 201 as amended by Finance Act, 2014 and therefore, as such a right has been accrued in favour of the assessee and considering the fact that wherever legislature wanted to give retrospective effect so specifically provided while amending section 201(3)(ii) of the Act as was amended by Finance Act, 2012 with retrospective effect from 1/4/2010, it is to be held that section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable retrospectively and therefore, no order under section 201(1) of the Act can ITA Nos. 2570 to 2572/Bang/2017 & CO Nos.51 to 53/Bang/2018 Page 10 of 11 be passed for which limitation had already expired prior to amendment to section 201(3) by Finance Act No.2 of 2014.
13. It is not in dispute before us that the proceedings u/s.201(1) of the Act were barred by time if the law applicable for the relevant period is the law as it prevailed prior to amendment to Sec.201(3) by the finance Act No.2 of 2014. In these circumstances, we find no error in the order of the CIT(A) in holding that the orders passed for FY 2008-09 to 2010-11 were barred by limitation and consequently quashing them. We find no grounds to interfere with the order of the CIT(A) and therefore dismiss the appeals by the revenue.
14. Since the appeals of the revenue are dismissed as barred by time, there is no necessity to decide the question raised in the Cross Objections by the Assessee as to whether the Assessee can be considered as an Assessee in default u/s.201(1) of the Act.
15. In the result, the appeals as well as the Cross Objections are dismissed.
Pronounced in the open court on this 14th day of September, 2018.
Sd/- Sd/-
( INTURI RAMA RAO ) ( N.V. VASUDEVAN)
Accountant Member Judicial Member
Bangalore,
Dated, the 14th September, 2018.
/ Desai Smurthy /
ITA Nos. 2570 to 2572/Bang/2017
& CO Nos.51 to 53/Bang/2018
Page 11 of 11
Copy to:
1. Revenue
2. Assessee
3. CIT
4. CIT(A)
5. DR, ITAT, Bangalore.
6. Guard file
By order
Senior Private Secretary
ITAT, Bangalore.