L&T Thales Technology Services Private Limited, CHENNAI V. DCIT International Taxation 2(2), CHENNAI

ITA 1157/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4128 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Set aside
• Section: 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, C HENNAI . . . , , ! ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 1157/CHNY/2019 / ASSESSMENT YEAR : 2010-11 M/S. L&T THALES TECHNOLOGY SERVICES PRIVATE LTD., RR V TOWER, 7 TH FLOOR, 33A DEVELOPED PLOTS, SIDCO INDUSTRIAL ESTATE, GUINDY, CHENNAI 600 032. [PAN: AACCT 4657M] VS. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION -2(2), CHENNAI 600 034. ( / APPELLANT) ( #$%& /RESPONDENT ) %& ' ( / APPELLANT BY : SHRI. ASHIK SHAH, CA #$%& ' ( / RESPONDENT BY : SHRI. AR V SREENIVASAN, JCIT * '+! /DATE OF HEARING : 20.11.2019 ,-. '+! /DATE OF PRONOUNCEMENT : 18.02.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI IN ITA NO. 39/CIT(A)-16/2017-18 DATED 07.02.2019 FOR ASSESSMEN T YEAR 2010-11. :-2-: ITA NO.1157/CHNY/2019 2. M/S. L & T THALES TECHNOLOGY SERVICES PVT. LTD., THE ASSESSEE MADE PAYMENTS TO VARIOUS NON-RESIDENCE DURING THE P ERIOD RELEVANT TO ASSESSMENT YEAR 2010-11. THE DCIT, INTERNATIONAL T AXATION-2(2), CHENNAI, THE AO, PASSED AN ORDER U/S. 201/201(1)(A) DATED 31.03.2017, TREATING REIMBURSEMENT OF EXPENSES AS FTS, PAYMENTS OF SOFTWARE LICENSE AS ROYALTY AND TRAINING FEES AS FEE FOR TEC HNICAL SERVICES (FTS). AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED AP PEAL BEFORE THE CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL. AGGR IEVED AGAINST THAT ORDER THE ASSESSEE FILED THIS APPEAL. 3. THE PRIMARY CONTENTION OF THE LD. AR WAS THAT TH E LOWER AUTHORITIES FAILED TO APPRECIATE THAT THE PROCEEDIN GS INITIATED U/S. U/S. 201/201(1)(A) IS BARRED BY PERIOD OF LIMITATION AND CONSEQUENTLY, THE PROCEEDINGS ARE BAD IN LAW AND SHOULD BE QUASHED. IN THIS REGARD, HE INVITED OUR ATTENTION TO THE PAPER BOOK, WHEREIN TH E NOTICE ISSUED BY THE DCIT, INTERNATIONAL TAXATION-2(2) DATED 17.03.2 017 WAS PLACED AND INVITING ATTENTION TO THE COPIES OF RETURN FILED WH ICH WAS PLACED IN THE PAPER BOOK, THE LD. AR SUBMITTED THAT THE RETURN WA S FILED ON 26.11.2009. THEREFORE, REFERRING TO SECTION 201(3) OF THE ACT AS IT STOOD AT THE RELEVANT POINT OF TIME, THE LD. COUNSEL SUBM ITTED THAT THE TIME LIMIT PROVIDED FOR PASSING ORDER U/S. 201 OF THE AC T IS TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE STATEMENT WA S FILED. THE ORDER PASSED BY THE ASSESSING OFFICER IS ADMITTEDLY BEYON D THE PERIOD OF TWO :-3-: ITA NO.1157/CHNY/2019 YEARS, THEREFORE, IS BARRED BY LIMITATION. IN THIS REGARD, THE LD. CIT(A) HAS NOT ADJUDICATED THE MATTER. THEREFORE, THE LD. COUNSEL SUBMITTED THAT THE ORDER PASSED BY THE LOWER AUTHORITIES ARE NOT IN ACCORDANCE WITH LAW AND HENCE, IT MAY BE QUASHED. PER CONTRA, LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS. SUB-SECTION (3) OF SECTION 201 OF THE ACT AS IT STANDS NOW READS AS FOLLOWS:- CONSEQUENCES OF FAILURE TO DEDUCT OR PAY 201. (1) .. .. .. .. .. (2) .. .. .. .. .. (3) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) DE EMING 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 TIM E AFTER THE EXPIRY OF SEVEN YEARS FROM THE END OF THE FINANCIAL YEAR IN W HICH PAYMENT IS MADE OR CREDIT IS GIVEN [ OR TWO YEARS FORM THE END OF THE FINANCIAL YEAR IN WHICH THE CORRECTION STATEMENT IS DELIVERED UNDE R THE PROVISO TO SUB- SECTION (3) OF SECTION 200, WHICHEVER IS LATER]. 5. BY FINANCE ACT, 2014 WITH EFFECT FROM 01.10.201 4, PROVISIONS OF SUB-SECTION (3) WAS AMENDED. BEFORE THE AMENDMENT, SUBSECTION (3) OF SECTION 201 OF THE ACT READS AS FOLLOWS:- (3) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) DE EMING 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 TIM E AFTER THE EXPIRY OF - :-4-: ITA NO.1157/CHNY/2019 (I) TWO YEARS FROM THE END OF THE FINANCIAL YEAR I N WHICH THE STATEMENT IS FILED IN A CASE WHERE THE STATEMENT RE FERRED TO IN SECTION 200 HAS BEEN FILED ; (II) SIX YEARS FROM THE END OF THE FINANCIAL YEAR I N WHICH PAYMENT IS MADE OR CREDIT IS GIVEN, IN ANY OTHER CA SE : PROVIDED THAT SUCH ORDER FOR A FINANCIAL YEAR COMME NCING ON OR BEFORE THE 1ST DAY OF APRIL, 2007 MAY BE PASSED AT ANY TIME ON OR BEFORE THE 31ST DAY OF MARCH, 2011. 6. IN VIEW OF THE ABOVE, WHEN THE ASSESSEE FILED S TATEMENT UNDER SECTION 200 OF THE ACT ON 26.11.2009, THE ASSESSING OFFICER WAS EXPECTED TO PASS ORDER WITHIN TWO YEARS FROM THE EN D OF THE FINANCIAL YEAR IN WHICH THE STATEMENT WAS FILED. THEREFORE, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF THE LANGUAGE EMP LOYED BY PARLIAMENT IN SUB-SECTION (3) TO SECTION 201 OF THE ACT, THE A SSESSING OFFICER CANNOT PASS ANY ORDER AFTER EXPIRY OF TWO YEARS BEF ORE 01.10.2014. IN THIS CASE, ADMITTEDLY, THE ORDERS WERE PASSED BEYON D THE PERIOD OF TWO YEARS AFTER THE DATE ON WHICH THE STATEMENT UNDER S ECTION 200 OF THE ACT WAS FILED FOR THE RESPECTIVE ASSESSMENT YEAR. T HEREFORE, ORDERS PASSED BY THE ASSESSING OFFICER ARE BARRED BY LIMIT ATION AS CLAIMED BY THE ASSESSEE. ACCORDINGLY, THOSE ORDERS CANNOT STAN D IN THE EYE OF LAW. IN VIEW OF THE ABOVE, THE ORDERS OF THE AUTHORITIES ARE SET ASIDE AND THE TAX AND INTEREST DEMAND FOR THE ASSESSMENT YEAR IS DELETED. :-5-: ITA NO.1157/CHNY/2019 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON TUESDAY, 18 TH FEBRUARY, 2020 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ! ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, / /DATED: 18 TH FEBRUARY, 2020 JPV '#+0121.+ /COPY TO: 1. %& / APPELLANT 2. #$%& /RESPONDENT 3. * 3+ ) ( /CIT(A) 4. * 3+ /CIT 5. 14#+ /DR 6. 567 /GF