Dy. Commissioner of Income Tax-1, International Taxation, Hyderabad V. Emaar Hills Township Private Limited , Hyderabad

ITA 1770/Hyd/2019

AI Insights

The case involves the Deputy Commissioner of Income Tax-1, International Taxation, Hyderabad as the appellant and Emaar Hills Township Pvt. Ltd., Hyderabad as the respondent. The dispute arose from the assessment year 2006-07, where the Assessing Officer had imposed tax liability and interest under sections 201(1) and 201(1A) of the Income Tax Act for failure to deduct TDS on foreign remittance made for architectural fees. The CIT(A) reversed this decision, citing the order was time-barred, a decision which the Revenue challenged in the Tribunal. The Tribunal upheld the CIT(A)'s decision, emphasizing the importance of adhering to statutory time limits for tax assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133178 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 15-08-2023
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2019
• Other Referred Cases: Bheemarasetty Sunitha vs. DDIT, Mahindra & Mahindra vs. DCIT, CIT vs. Acer India Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 201(1); 195

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT & SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA-IT No. 1770/Hyd/2019 (निर्धारण वर्ा / Assessment Year: 2006-07) Deputy Commissioner of Income Tax-1, International Taxation, Hyderabad Vs. Emaar Hills Township Pvt. Ltd., Hyderabad [PAN No. AABCE2557N] अपीलधर्थी / Appellant प्रत्‍यर्थी / Respondent निर्धाररती द्वधरध/Assessee by: Shri A.V.Raghuram, AR रधजस्‍व द्वधरध/Revenue by: Shri Shakeer Ahamed, DR सुिवधई की तधरीख/Date of hearing: 16/08/2023 घोर्णध की तधरीख/Pronouncement on: 24/08/2023 आदेश / ORDER PER K. NARASIMHA CHARY, JM: Aggrieved by the order dated 13/09/2019 passed by the learned Commissioner of Income Tax(Appeals)-10, Hyderabad (“Ld.CIT(A)”) in the case of M/s. Emaar Hills Township Private Limited (“the assessee”) for the assessment year 2006-07, Revenue preferred this appeal. ITA-IT No. 1770/Hyd/2019 Page 2 of 6 2. Brief facts of the case are that the assessee was incorporated as a Special Purpose Vehicle (SPV) and its parent company, Emaar PJSC, Dubai entered into a collaboration agreement with the Adhara Pradesh Industrial Infrastructure Corporation Limited (APIIC) to develop a township. Learned Assessing Officer found from the balance sheet of the assessee company for the financial year 2005-06, an amount of Rs. 2,54,94,928/- was shown as ‘Architectural Fee’ under capital work in progress being the foreign remittance made to Emaar PJSC, Dubai, but without discharging its obligation to make TDS under section 195 of the Income Tax Act, 1961 (for short “the Act”). 3. Though the assessee pleaded that the payment is in the nature of reimbursement, and no TDS is required to be affected on such reimbursement, learned Assessing Officer stated that the assessee failed to produce any evidence to prove the said fact, passed an order under section 201(1) and 201(1A) of the Act fastening the tax liability and interest thereon, by order dated 03/03/2014. 4. Aggrieved by such an action of the learned Assessing Officer, assessee preferred appeal before the learned CIT(A) and argued that the reimbursement does not require any TDS and further that the impugned order was also barred by limitation since such an order was passed beyond seven years from the end of the financial year 2005-06. 5. Learned CIT(A), followed the decision of ITAT, Visakhapatnam in the case of Bheemarasetty Sunitha vs. DDIT in ITA No. 119/Viz/2016, dated 23/06/2017, following the decision of the Special Bench of the Tribunal in the case of Mahindra & Mahindra vs. DCIT [2009] 30 SOT 374 ITA-IT No. 1770/Hyd/2019 Page 3 of 6 (Mumbai)(SB), wherein it was held that the time limit for initiating proceedings under section 201(1) and 201(1A) of the Act is four years from the end of the financial year in which the assessee was required to deduct tax at source, and accordingly, held that the order under section 201(1) and 201(1A) of the Act is invalid and bad under law. 6. Revenue has preferred this appeal challenging the order of learned CIT(A) stating that the proviso to section 201(1) of the Act is applicable only to resident assessees, so also section 201(3) of the Act prescribing time limit for completion of proceedings under section 201(1) of the Act. 7. Per contra, learned AR submitted that in the case of Mahindra & Mahindra (supra), the Special Bench of the Tribunal considered the order passed under section 201(1) of the Act for violation of the provisions under section 195 of the Act and held that the expression ‘any such person’ referred to in section 201(1) of the Act extends to person deducting and failing to deposit tax, but also to person failing to deduct the tax at source. He submits that in the case of Bheemarasetty Sunitha (supra), while following the decision of the Hon’ble Delhi High Court in the case of Bharathi Airtel vs. UOI, 76 taxmann.com 256 (Del) held that four years is the reasonable period to pass the order under section 201(1) and 201(1A) of the Act. 8. We have gone through the record in the light of the submissions made on either side. Admittedly, the alleged lapse committed by the assessee was in the financial year 2005-06, which ended by 31/03/2006. The impugned order under section 201(1) and 201(1A) of the Act was passed on 03/03/2014, well beyond seven years thereafter. Further, it ITA-IT No. 1770/Hyd/2019 Page 4 of 6 could be seen from the record that on 06/07/2010, the learned Assessing Officer passed an order under section 201(1) and 201(1A) of the Act, alleging certain payments in violation of the provisions under section 194C, 194-I and 194-J of the Act. Four years thereafter, the order impugned in this appeal is passed. 9. Having regard to this passing of orders under section 201(1) and 201(1A) of the Act on a piece meal basis, we are of the considered opinion that the public policy demands that such orders must pass within reasonable time and cannot be extended to limitless period of time. Section 201(3) of the Act was introduced by Finance Act, 2009 w.e.f. 01/04/2010 setting time limit to pass an order under section 201(1) of the Act as four years from the end of the financial year in which the payment was made or credit was given. And later on, it was extended to seven years, by amendment by insertion of a new section by Finance Act, 2014. 10. The order passed under section 201(1) and 201(1A) of the Act in this case was beyond even the period of seven years. When the Revenue had an opportunity to verify the record on the occasion of the first order dated 06/07/2010, it would be quite unreasonable to accept the order passed four years later, because the order under challenge is passed clearly beyond seven years. In the case of CIT vs. Acer India Pvt. Ltd., (2022) 286 Taxman 570 (Kar) for the assessment year 2009-10, the Hon’ble Karnataka High Court held that at relevant point of time, limitation of two years was existing but it was subsequently substituted by Finance Act, 2014. However, a right was accrued to the assessee prior to the Finance Act, 2014 and, therefore, the subsequent amendment will be reviving the ITA-IT No. 1770/Hyd/2019 Page 5 of 6 period of limitation and take away the vested right accrued to the assessee. 11. Respectfully following the decisions referred to above, we hold that the impugned order under section 201(1) and 201(1A) of the Act is barred by limitation. We, therefore, do not find anything illegality or irregularity in the orders passed by the learned CIT(A). 12. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on this the 24 th day of August, 2023. Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER Hyderabad, Dated: 24/08/2023 TNMM ITA-IT No. 1770/Hyd/2019 Page 6 of 6 Copy forwarded to: 1. Deputy Commissioner of Income Tax-1, International Taxation, Hyderabad. 2. M/s. Emaar Hills Township Pvt. Ltd., Manikonda Village, Besides Infosys, Gachibowli, Hyderabad. 3. CIT(IT & TP)-Hyderabad. 4. DR, ITAT, Hyderabad. 5. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD