2022 (11) TMI 777 - AT - Income Tax

Time-barred assessment order overturned due to limitation period; retrospective application of amendment rejected

The tribunal held that the assessment order dated 30.03.2018 was time-barred, as it exceeded the two-year limitation period under the unamended provisions ... Default u/s 201(1)/1A - period of limitation - TDS u/s 194C OR 194I - Short deduction of TDS - mall owners have collected/recovered expenses in the form of Common Area Maintenance charges on which the deductors/tenants have deducted tax - HELD THAT:- As noted that earlier section 201(3) of the Act as amended by Finance Act, 2012 amended on 28/5/2012 was specifically made applicable retrospectively w.e.f. 1/14/2012, 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) of the Act 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. - At this stage, it is required to be noted that while making amendment in section 201(3) of the Act by Finance Act No.2 of 2014, does not so specifically provide that the said amendment shall be made applicable retrospectively. As specifically stated that the said amendment will take effect from 1/10/2014. As observed hereinabove, in the present cases, limitations provided for passing order under section 201(1) of the Act for A.Y. 2011-12 had already been expired on 31/3/2014 i.e. prior to section 201(3) came to be amended by Finance Act No.2 of 2014. Similar view was taken by the Hon'ble High Court of Gujarat in the case of Tata Teleservices Vs. Union of India [2016 (2) TMI 414 - GUJARAT HIGH COURT] and also in Oracle India Private Limited [2015 (11) TMI 408 - DELHI HIGH COURT] against which SLP filed before the Hon'ble Supreme Court was dismissed [2016 (8) TMI 612 - SC ORDER] Thus we have no hesitation to hold that the assessment order dated 30.03.2018 is barred by limitation. Appeal of assessee allowed . Issues Involved:1. Validity of the addition made by the Assistant Commissioner of Income-tax.2. Time-barred assessment order.3. Interpretation of the amended provisions of sub-section (3) of Section 201.4. Classification of common area maintenance charges as rent under Section 194I.5. Ignoring judicial precedents regarding common area maintenance charges.6. Assessee's default for lower tax deduction and primary liability of the recipient.7. Revisiting the order with additional demand.8. Charging interest under Section 201(1A).9. Excessive assessment contrary to natural justice.Detailed Analysis:1. Validity of the Addition:The assessee contended that the addition upheld by the CIT(A) was 'bad in law, contrary to the facts and must be quashed.' The tribunal did not delve into the merits of this issue due to the decision on the time-barred assessment.2. Time-Barred Assessment Order:The primary issue was whether the assessment order dated 30.03.2018 was barred by limitation. The assessee argued that the order was passed after the expiry of the two-year limitation period as per the unamended provisions of Section 201(3). The tribunal agreed, noting that the quarterly TDS returns were filed timely, and the limitation period expired on 31.03.2014. The amendment by the Finance Act 2014, which extended the time limit to seven years, was not retrospective.3. Interpretation of the Amended Provisions:The tribunal examined whether the amendment to Section 201(3) by the Finance Act 2014, effective from 01.10.2014, applied retrospectively. It concluded that the amendment was not expressly retrospective and thus did not apply to orders that had already become time-barred under the old-time limit.4. Classification of Common Area Maintenance Charges:The assessee argued that common area maintenance charges should not be classified as rent under Section 194I but as business receipts. The tribunal did not address this issue in detail due to the decision on the time-barred assessment.5. Ignoring Judicial Precedents:The assessee claimed that the CIT(A) ignored the Mumbai High Court's judgment, which held that common area maintenance charges are business receipts. This issue was not further analyzed due to the primary decision on the time-barred assessment.6. Assessee's Default for Lower Tax Deduction:The tribunal did not address the issue of the assessee being in default for deducting tax at a lower rate due to the primary decision on the time-barred assessment.7. Revisiting the Order with Additional Demand:The assessee contended that the AO revisited the order with an additional demand regarding common area maintenance charges. This issue was not further analyzed due to the primary decision on the time-barred assessment.8. Charging Interest under Section 201(1A):The tribunal did not address the issue of interest charged under Section 201(1A) due to the primary decision on the time-barred assessment.9. Excessive Assessment:The assessee argued that the assessment was highly excessive and contrary to natural justice. This issue was not further analyzed due to the primary decision on the time-barred assessment.Conclusion:The tribunal held that the assessment order dated 30.03.2018 was barred by limitation. Since the order was time-barred, the tribunal did not find it necessary to address the merits of the case. The appeal of the assessee was allowed.