2024 (4) TMI 1335 - HC - Income Tax

Section 201 orders on payments to non-residents must respect reasonable limitation period, cannot remain pending indefinitely

HC considered whether orders u/s 201 for payments to non-residents are barred by limitation on the basis of a 'reasonable time limit' when no statutory ... Orders passed u/s.201 - 'reasonable time limit'- payments to non-residents - whether barred by limitation on the basis of 'reasonable time limit' - whether no time limit has been prescribed by the Parliament in case of non-residents? - HELD THAT:- It is brought to our notice that the above substantial questions of law are answered by the High Court of Delhi in the case of Bharti Airtel Ltd. and Another [2016 (12) TMI 1601 - DELHI HIGH COURT] Subsequently, this Court by following the above cited order of the High Court of Delhi has disposed of several appeals and one such appeal is [2023 (2) TMI 1433 - KARNATAKA HIGH COURT] Substantial questions of law are answered in favour of the Assessee. Revenue appealed against the ITAT order holding that orders under Sections 201(1) and 201(1A) of the Income-tax Act for A.Y. 2008-09 were barred by limitation in respect of payments to non-residents. The core questions were whether, in the absence of an express statutory time limit for non-residents, the Tribunal could apply a 'reasonable time limit,' rely on the Delhi High Court decision in *Bharti Airtel Ltd. v. UOI*, and disregard the memorandum to Finance Bill 2009 stating that no time limits are prescribed where the deductee is a non-resident. The Court noted that these substantial questions of law had already been answered by the Delhi High Court in *Bharti Airtel* and had been followed in earlier Karnataka High Court decisions, including ITA No. 5/2023. Applying that reasoning, proceedings initiated under Section 201 in 2013 for A.Y. 2008-09 were time-barred. The appeal was dismissed; questions answered in favour of the assessee.