HATWAY NASIK CABLE NETWORK P. LTD, MUMBAI V. TRO (TDS) 1, MUMBAI

ITA 5190/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8191 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 10-01-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 13-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANOJ DIXIT SHRI M C O
• Keywords: Period of limitation; Competent authority; Time period of passing order
• Section: 194C; 201(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNALH BENCH, MUMB AI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.5190/MUM/2014 ( / ASSESSMENT YEAR: 2003-04) HATHWAY NASIK CABLE NETWORK PRIVATE LIMITED RAHEJAS, 4 TH FLOOR, CORNERS OF MAIN AVENUE & V.P.ROAD, SANTACRUZ (WEST) MUMBAI - 400054 / VS. THE TAX RECOVERY OFFICER (TDS) RG. -1 SMT. K.G.MITTAL AYURVEDIC HOSPITAL BLDG. CHARNI ROAD WEST, MUMBAI - 400002 ./ ./ PAN/GIR NO. AAACH9070Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 10.01.2017 /DATE OF PRONOUNCEMENT:. 15.02.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 22.05.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-12, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2003- 04. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- ASSESSEE BY: SHRI NITESH JOSHI & MANOJ DIXIT REVENUE BY: SHRI M. C. OMI NINGSHEN ITA NO.5190.M.14 A.Y. 2003-04 2 1(A) THE APPELLANT SUBMITS THAT THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF LEARNED TAX RECOVERY OFFICER (HEREINAFTER REFERRED TO AS THE ASSESSING OFFICER) THAT PAYMEN T FOR PAY CHANNEL COST AMOUNTING TO RS.2,40,62,454/- AND FEED CHARGES AMOUNTING TO RS.24,78,250/- MADE TO DISTRIBUTOR OF SIGNAL IS A CONTRACT FOR WORK AND LIABLE FOR DEDUCTION UNDER SECTION 194C OF THE ACT AND ACCORDINGLY ERRED IN HOLDING THAT THE ASSESSEE IS AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) OF THE ACT. (B) THE APPELLANT SUBMITS THAT AS REGARDS PAYMENTS FOR COST OF PAY CHANNELS, THE PAYEES MERELY DISTRIBUTE SIGNALS TO THE APPELLANT AND ACCORDINGLY, THERE IS NO QUESTION OF ANY INVOLVEMENT OF WORK. THE PAYMENT OF FEED CHARGES ARE FOR FACILITATING THE RELAY OF SIGNALS BY APPELLANTS GROUP COMPANIES TO CERTAIN AREAS WHICH COULD NOT BE RELAYED BY THE APPELLANT A ND UNDER NO CIRCUMSTANCES CAN BE REGARDED AS PAYMENT MADE FOR A WORK SO AS TO ATTRACT THE PROVISIONS OF SECTION 194C OF THE ACT. (C) THE APPELLANT SUBMITS THAT THE PAYMENT MADE FOR PROCUREMENT OF SIGNALS ARE NOT TO ANY BROADCASTERS OR TELECASTERS AND ACCORDINGLY, THE PROVISIONS OF SECT ION 194C ARE NOT APPLICABLE AND THEREFORE NO TAX WAS REQUIRED TO BE DEDUCTED 2(A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFI CER OF LEVYING INTEREST UNDER SECTION 201(1A) OF THE AC T AMOUNTING TO RS.5,85,269/- ON THE GROUND THAT PAYMENT OF INTEREST IS MANDATORY. (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN LAW IN HOLDING THAT THOUGH THE ASSESSEE SHOULD NOT BE HELD TO BE AN ASSESSEE IN DEFAULT, TH E APPELLANT WOULD BE LIABLE TO INTEREST UNDER SECTION 201(1A) OF THE ACT FOR THE PERIOD COMMENCING FROM THE DATE ON WHICH TAX WAS DEDUCTED TO THE DATE ON WHICH TAX IS ACTUALLY PAID. 3. THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED: (I) NOT TO TREAT THE PAYMENTS MADE BY THE APPELLANT TO THE DISTRIBUTORS OF SIGNALS (WHICH INCLUDES PAYMENT IN ITA NO.5190.M.14 A.Y. 2003-04 3 RESPECT OF FEED CHARGES) AS A CONTRACT FOR WORK FAL LING WITHIN THE PURVIEW OF SECTION 194C OF THE ACT. (II) TO DELETE THE LEVY OF TAX UNDER SECTION 201(1) OF THE ACT AMOUNTING TO A SUM OF RS.5,57,355/-. (III) TO DELETE THE INTEREST LEVIED UNDER SECTION 2 01(1A) OF THE ACT AMOUNTING TO A SUM OF RS.5,85,269/- AND TO MODIFY THE ORDER AS PER THE PROVISIONS OF THE LAW. 4. EACH OF THE ABOVE GROUNDS OF APPEAL ARE INDEPEND ENT AND WITHOUT PREJUDICE TO EACH OTHER. 5. THE APPELLANT CRAVES LIBERTY TO ADD, TO ALTER AN D /OR AMEND THE GROUNDS OF APPEAL AS AND WHEN GIVEN. ADDITIONAL GROUNDS:- 1. THE APPELLANTS SUBMITS THAT A SURVEY ACTION UNDER S ECTION 133(A) OF THE ACT 1961 WAS CONDUCTED IN THE CASE OF M/S.HATHWAY NASIK CABLE NETWORK PVT. LTD. ON 17.09.2003 AT THEIR OFFICE PREMISES AND CORPORATE F INANCE DEPARTMENT SITUATED AT 4 TH FLOOR, RAHEJA, CORNER OF MAIN AVENUE & V.P.ROAD, SANTACRUZ WEST MUMBAI 400054. 2. THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER HA S PASSED ORDER UNDER SECTION 201(1)(1A) ONLY ON 28 TH MARCH, 2011. 3. THE APPELLANT SUBMITS THAT EVEN IF NO PERIOD OF LIM ITATION IS PRESCRIBED, THE STATUTORY POWER MUST BE EXERCISE D WITHIN A REASONABLE PERIOD. THIS REASONABLE PERIOD TAKING INTO CONSIDERATION THE VARIOUS PROVISIONS OF THE INCOME TAX ACT, 1961, HAS BEEN HELD TO BE FOUR YEAR S IN A NUMBER OF CASES. THE APPELLANT, IN SUPPORT OF ITS CONTENTIONS, RELIES ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: CIT V. NHK JAPAN BROADCASTING CORPORATION[(2008) 305 ITR 137 (DEL HC)] THE HONBLE COURT HELD THAT, THE DATE OF KNOWLEDGE WAS NOT RELEVANT FOR THE PURPOSES OF THE EXERCISING JURISDICTION IN SO FAR AS THE PROVISIONS OF THE ACT WERE CONCERNED. THE TIME LIMIT OF FOUR YEARS PRESCRIBED BY THE TRIBUNAL CALLED FOR NO INTERFERENCE AND ACTION WAS TO BE INITIATED BY THE COMPETENT AUTHORITY UNDER THE ACT WHERE ITA NO.5190.M.14 A.Y. 2003-04 4 NO LIMITATION WAS PRESCRIBED WITHIN THE PERIOD OF F OUR YEARS. THE ACCEPTANCE OF LIABILITY BY THE ASSESSEE WOULD NOT BY ITSELF EXTEND THE PERIOD OF LIMITATION NOR W OULD IT EXTEND THE REASONABLE TIME THAT WAS POSTULATED BY T HE SCHEME OF THE ACT. CIT V. HUTCHION ESSAR TELECOM LTD. [(2010) 323 ITR 230 (DEL HC)] THE HONBLE COURT HELD DISMISSING THE APPEAL THAT, THE PROCEEDINGS UNDER SECTION 201/201(1A) COULD BE INIT IATED ONLY WITHIN THREE YEARS FROM THE END OF THE ASSESSM ENT YEAR OR WITHIN FOUR YEARS FROM THE END OF THE RELEV ANT FINANCIAL YEAR. THE PROCEEDINGS UNDER SECTION 201(1)/201(1A) WERE ADMITTEDLY INITIATED BEYOND THE PERIOD OF THREE YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AS ALSO BEYOND THE PERIOD OF FOUR Y EARS FROM THE END OF THE FINANCIAL YEARS. CONSEQUENTLY, THE TRIBUNAL HAD CORRECTLY CONCLUDED THAT THE PROCEEDIN GS WERE BEYOND TIME. CIT V. SATLUJ JAL VIDYUT NIGAM LTD. [(2012) 345 IT R 552 (HP HC)] THE HONBLE HIGH COURT HELD THAT, EVEN IF NO PERIOD OF LIMITATION IS PRESCRIBED, THE STATUTORY POWER MUST BE EXERCISED WITHIN A REASONABLE PERIOD. THIS REASONA BLE PERIOD TAKING INTO CONSIDERATION THE VARIOUS PROVIS IONS OF THE INCOME TAX ACT, 1961, HAS BEEN HELD TO BE FOUR YEARS AND ACCORDINGLY, HELD THAT ORDER UNDER SECTION 201(1)/201(1A) OF THE ACT PASSED BY THE ASSESSING OFFICER BEYOND FOUR YEARS WAS BARRED BY TIME LIMITA TION ADDITIONAL GROUND OF APPEAL NO.2: 1. A SHOW CAUSE NOTICE DATED 23 RD SEPTEMBER, 2003 WAS ISSUED BY THE ASSESSING OFFICER ON 24 TH SEPTEMBER, 2003 UNDER SECTION 201(1)/(A) OF THE ACT. HE HAS THEREA FTER PASSED ORDER UNDER SECTION 201(1)/(1A) ONLY ON 28 TH MARCH, 2011. 2. THE APPELLANT SUBMITS THAT EVEN IF NO PERIOD OF LIM ITATION IS PRESCRIBED, THE STATUTORY POWER OF PASSING THE O RDER MUST BE EXERCISED WITHIN A REASONABLE PERIOD FROM I SSUE OF SHOW CAUSE NOTICE. THIS REASONABLE PERIOD TAKIN G INTO CONSIDERATION THE VARIOUS PROVISIONS OF THE INCOME TAX ITA NO.5190.M.14 A.Y. 2003-04 5 ACT, 1961, HAS BEEN HELD TO BE ONE YEAR. THE APPEL LANT, IN SUPPORT OF ITS CONTENTIONS, RELIES ON THE FOLLOW ING JUDICIAL PRONOUNCEMENT: DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) V. MAHINDRA & MAHINDRA LTD. [(2014) 365 ITR 560 (BOM HC)] THE HONBLE COURT HELD THAT, EVEN THOUGH SECTION 20 1 DOES NOT PRESCRIBE ANY LIMITATION PERIOD FOR ASSESS EE BEING DECLARED AS AN ASSESSEE IN DEFAULT YET REVENU E WILL HAVE TO EXERCISE POWER IN THAT REGARD WITHIN A REASONABLE TIME. THE PASSING OF THE ORDER UNDER SE CTION 201(1) HAS TO BE WITHIN ONE YEAR FROM THE END OF TH E FINANCIAL YEAR IN WHICH PROCEEDINGS UNDER SECTION 2 01(1) WERE INITIATED. 3. THE FACTS OF THE CASE ARE THAT A SURVEY ACTION U /S.133(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) WAS CONDUCTED I N THE ASSESSEES CASE ON 17.09.2003 AT THEIR PREMISES SITUATED AT 4 TH FLOOR, RAHEJA, CORNER OF MAIN AVENUE AND V.P.ROAD, SANTACRUZ(W), MUMBAI 400054. DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS FOUND FROM THE ASSESS EE COMPANYS P & L ACCOUNT AND BALANCE SHEET THAT, THE COMPANY HAS FAI LED TO DEDUCT TAX AT SOURCE ON THE EXPENSES CLAIMED UNDER FOLLOWING HEAD S. THE DETAILS OF WHICH ARE AS UNDER:- S. NOS. NAME OF THE COMPANY F.Y. FEED CHARGES PAY CHANNELS COST 1 M/S. HATHWAY NASIK CABLE NETWORK PVT. LTD. 2003-04 24,78,250/- 2,40,62,454/- AS THE ASSESSEE FAILED TO DEDUCT TAX AT SOURCE ON T HESE EXPENSES AS REQUIRED U/S.194C OF THE ACT THEREFORE A SHOW CAUSE NOTICE D ATED 23.09.2003 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 24.09.2004. THEREAFTER, THE ASSESSEE FILED THE REPLY DATED 02.10.2003, 12.02.2004, 05.03 .2004 AND 08.02.2011 ITA NO.5190.M.14 A.Y. 2003-04 6 AND CONSIDERING THE SAID REPLY, THE ASSESSING OFFIC ER WAS ARRIVED AT THIS CONCLUSION THAT THE ASSESSEE FAILED TO DEDUCT THE T AX AT SOURCE REQUIRED U/S.194C OF THE ACT IN RESPECT OF FEED CHARGES AND PAY CHANNEL COST PAID OR CREDITED DURING THE FINANCIAL YEAR RELEVANT TO THE A.Y.2003-04. THE ASSESSEE ALSO FILED TO PAY THE TAX DEDUCTED TO CREDIT OF THE CENTRAL GOVERNMENT AS REQUIRED U/S.200 OF THE ACT WITHIN THE SPECIFIED TI ME. IN VIEW OF THE SAID CIRCUMSTANCES, THE ASSESSEE WAS DEEMED TO BE IN DEF AULT IN RESPECT OF THE SUM OF RS.5,57,355/- BEING THE AMOUNT OF TAX DEDUCT IBLE. THE INTEREST WAS ALSO CHARGEABLE U/S.201(1A) OF THE ACT AMOUNTING TO RS.5,85,269/-. THEREFORE, AN AMOUNT OF RS.11,42,624/- WAS ASSESSED U/S.201(1) AND 201(1A) OF THE ACT. FEELING AGGRIEVED, THE ASSESSE E FILED AN APPEAL BEFORE CIT(A) WHO CONFIRMED THE ORDER, THEREFORE, THE ASSE SSEE HAS FILED THE PRESENT APPEAL BEFORE US. ADDITIONAL GROUNDS:- 4. FIRSTLY THE ASSESSEE RAISED THE LEGAL ISSUES TO THE FACT THAT THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE DATED 23 .09.2003 AND 24.09.2004 U/S.201(1A) OF THE ACT AND THEREAFTER, T HE ORDER WAS PASSED U/S.201(1) AND 201(1A) OF THE ACT ON 28.03.2011 WHI CH IS WRONG BECAUSE THE ORDER U/S.201(1) OF THE ACT WAS REQUIRED TO BE PASSED WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH PROCEED ING U/S.201(1) OF THE ACT WAS INITIATED AND ALSO PLACED RELIANCE UPON THE LAW SETTLED BY HONBLE BOMBAY HIGH COURT IN DIRECTOR OF INCOME TAX (INTERN ATIONAL TAXATION) VS. MAHINDRA & MAHINDRA LTD. [2014] 365 ITR 560, AND TH E CASE DECIDED BY HONBLE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH IN ITA NOS.3512 TO ITA NO.5190.M.14 A.Y. 2003-04 7 3514/MUM/2004 FOR A.Y.2002-03 TO 2004-05 IN CASE OF HATWAY CABLE AND DATACOM LIMITED (FORMERLY KNOWN AS HATHWAY CABLE AN D DATACOM PVT. LTD.) VS. THE TAX RECOVERY OFFICER (TDS.) IN ASSESS EES OWN CASE DATED 07.09.2016. ON THE OTHER HAND, LEARNED REPRESENTAT IVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. BY GIVING CAREFUL TH OUGHTS OF THE ARGUMENT ADVANCED BY THE LD REPRESENTATIVE OF THE PARTIES AN D PERUSING THE RECORD CAREFULLY, IT CAME INTO THE NOTICE THAT THE ASSESSI NG OFFICER ISSUED THE SHOW CAUSE NOTICE DATED 23.09.2003 AND 24.09.2004 U/S.20 1(1A) OF THE ACT AND SUBSEQUENTLY THE ORDER WAS PASSED ON 28.03.2011. I T IS TO BE SEEN WHETHER IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER T O PASS THE ORDER WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR FOR INI TIATING THE PROCEEDING U/S.201(1) OF THE ACT. THIS QUESTION HAS BEEN ANSW ERED BY THE HONBLE BOMBAY HIGH COURT IN CASE TITLED AS DIRECTOR OF INC OME TAX (INTERNATIONAL TAXATION) VS. MAHINDRA & MAHINDRA LTD. [2014] 365 I TR 560, AND BY THE CASE DECIDED BY HONBLE INCOME TAX APPELLATE TRIBUN AL, MUMBAI BENCH IN ITA NOS.3512 TO 3514/MUM/2004 FOR A.Y.2002-03 TO 20 04-05 IN CASE OF HATWAY CABLE AND DATACOM LIMITED (FORMERLY KNOWN AS HATHWAY CABLE AND DATACOM PVT. LTD.) VS. THE TAX RECOVERY OFFICER (TDS.) PASSED IN ASSESSEES OWN CASE DATED 07.09.2016. IT IS SPECIFI CALLY HELD THAT AFTER ISSUANCE OF NOTICE THE ORDER SHOULD PROBABLY PASSED WITHIN ONE YEAR AND THE PROCEEDING WAS HELD TO BE TIME BARRED. THE FACTS IS NOT IN DISPUTE WHEREIN THE NOTICE HAS BEEN ISSUED ON 24.09.2003 U/S.201(1) / 201(1A) OF THE ACT AND THEREAFTER THE ORDER WAS PASSED U/S.201(1)/ 201(1A) OF THE ACT ON 28.03.2011 AFTER THE EXPIRY OF MORE THAN SEVEN YEAR S . IN VIEW OF THE SAID CIRCUMSTANCES AND IN VIEW OF THE ABOVE MENTIONED LA W, WE ARE OF THE VIEW ITA NO.5190.M.14 A.Y. 2003-04 8 THAT THE CIT(A) HAS DECIDED THIS ISSUE WRONGLY AND ILLEGALLY WHICH IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. SINCE THE ORDER PASSED AFTER THE EXPIRY OF LIMITATION PERIOD, THEREFORE, THE SAME IS HEREBY ORDERED TO BE SET ASIDE AND ACCORDINGLY APPEAL OF THE ASSESSEE IS HER EBY ACCEPTED. SINCE THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATE D ON THE BASIS OF LEGAL ISSUES THEREFORE THE OTHER ISSUES ARE NOT REQUIRED TO BE ADJUDICATED BEING THE SAME WOULD BE IN ACADEMIC IN NATURE. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2017 . SD/- SD/- (D.KARUNAKARA RAO) (AMARJIT SINGH) ! / ACCOUNTANT MEMBER ' #! /JUDICIAL MEMBER MUMBAI; DATED : 15 TH FEBRUARY, 2017 MP MP MP MP / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & ( ) / THE CIT(A)- 4. & / CIT 5. #' (###) , #) , / DR, ITAT, MUMBAI 6. ( *+, / GUARD FILE. / BY ORDER, ## //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI