2019 (3) TMI 1453 - AT - Income Tax

Tribunal grants assessee's appeal, quashes time-barred orders. Delay condoned; interest levy not addressed.

Hathway Nasik Cable Network Private Limited Versus The Tax Recovery Officer (TDS) - Rg. -1, Smt. KG Mittal Ayurvedic Hospital Bldg., Mumbai

Hathway Nasik Cable Network Private Limited Versus The Tax Recovery Officer (TDS) - Rg. -1, Smt. KG Mittal Ayurvedic Hospital Bldg., Mumbai - TMI Issues Involved:1. Whether the order under section 201(1) and 201(1A) was barred by limitation.2. Applicability of section 194C to payments for distribution of satellite signals.3. Levy of interest under section 201(1A).4. Condonation of delay in filing the appeal.Issue-wise Detailed Analysis:1. Limitation Period for Orders under Section 201(1) and 201(1A):The assessee argued that the orders passed by the Assessing Officer (AO) under section 201(1) and 201(1A) were barred by limitation as they were issued beyond a reasonable period. The Tribunal noted that the AO issued the orders on 28.03.2011, which was beyond the period of one year from the end of the financial year in which the proceedings were initiated. The Tribunal referred to the Bombay High Court's ruling in the case of Director of Income Tax (International taxation) vs. Mahindra & Mahindra Ltd. (2014) 365 ITR 560 (Bom), which held that even though section 201 does not prescribe a limitation period, the revenue must exercise its powers within a reasonable time. The Tribunal found that the AO's order was issued beyond the reasonable period and thus quashed the orders under section 201(1) and 201(1A) for both assessment years 2001-02 and 2004-05.2. Applicability of Section 194C to Payments for Distribution of Satellite Signals:The assessee contended that the payments made to distributors for satellite signals were not subject to tax deduction at source under section 194C, as these were distribution agreements and not contracts for work. The AO, however, treated these payments as liable for deduction under section 194C. The Tribunal did not specifically address this issue in detail, as the primary ground of limitation was decided in favor of the assessee, making the other grounds infructuous.3. Levy of Interest under Section 201(1A):The assessee challenged the levy of interest under section 201(1A), arguing that since the payments were not subject to tax deduction under section 194C, no interest should be levied. The Tribunal, having quashed the orders under section 201(1) and 201(1A) on the ground of limitation, did not need to adjudicate this issue separately.4. Condonation of Delay in Filing the Appeal:The assessee filed the appeals with significant delays of 661 days and 648 days for the assessment years 2001-02 and 2004-05, respectively. The Tribunal condoned the delays, noting that similar delays had been condoned in the assessee’s case for the assessment year 2003-04 due to a bona fide mistake by an employee. The Tribunal found the reasons for the delay to be genuine and consistent with previous findings, thus allowing the appeals to be heard on merits.Conclusion:The Tribunal allowed the appeals filed by the assessee for both assessment years 2001-02 and 2004-05, quashing the orders passed under section 201(1) and 201(1A) on the ground that they were barred by limitation. The other grounds of appeal became infructuous as a result of this decision.