2017 (12) TMI 193

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....n of Form No.26AS of Shri Ramoji Rao (HUF) for the A.Y 2007-08, the AO noticed that no TDS was deducted on the non-compete fee of Rs. 670 crores paid by the assessee to Shri Ramoji Rao (HUF). By virtue of the above deficiency noticed, the AO observed that the assessee company was liable for proceedings u/s 201 & 201(1A) of the I.T. Act. Therefore, a show-cause notice dated 15.12.2014 was issued to the assessee as to why the assessee should not be treated as "an assessee in default" and levied the interest u/s 201(1A) of the Act. Vide letter dated 19.12.2014, the assessee filed written submissions along with the copies of the non-compete agreement dated 30.01.2008, the return of income filed by Shri Ramoji Rao (HUF), the assessment order for the A.Y 2008-09 passed u/s 143(3) dated 24.12.2010 by the AO and the ledger extract of Ramoji Rao (HUF) in the books of M/s. Ushodaya Enterprises Pvt. Ltd for the financial year 2007-08. From the above documents, the AO observed that the amount of non-compete fee of Rs. 670 crores was paid to Shri Ramoji Rao (HUF) on 28.02.2008 by crediting his account in the books of M/s. Ushodaya Enterprises Pvt. Ltd as verified by the ledger folio filed by th....

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....ding that the contention of the Appellant that the time limit of 4 years for completion of proceedings u/s.201 (1) and 201 (1A) of the Act is required to be counted from the date of occurrence of default is not based on interpretation of statute. Commissioner of Income Tax (Appeals)-8 ought to have seen that no time limit was provided in the Act for completion of proceedings u/s.201 (1) & 201 (1A) at the relevant time when the alleged default had occurred. It is only later that a provision was introduced in Sec.201 providing time limit for completion of proceedings u/s.201 (1) & 201 (1A) and even such period had expired in Appellant's case by the time proceedings were initiated u/s.201 (1) & 201 (1A). Hence Commissioner of Income Tax (Appeals)-8 is not justified in holding that interest levied u/s.201 (1A) is within the time limit. 3. Commissioner of Income Tax (Appeals)-8 is not justified in holding that the Appellant is not prevented by a reasonable cause in complying with the provisions of Sec.194J(d) in not deducting tax from non-compete fee. Commissioner of Income Tax (Appeals)-8 ought to have seen that the recipient of non-compete fee did not have taxable income even a....

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.... proceedings u/s 201(1) of the Act. We find that sub-section (3) of section 201 of the Act provided for the time limit for deeming a person to be "an assessee in default" for failure to deduct the whole or any part of the tax from a person resident in India. Prior to 1.4.2010, the time limit prescribed u/s 201(3) was 4 years from the end of the financial year in which the payment is made or credit is given. By the Finance Act of 2012, it was amended with retrospective effect from 1.4.2010 increasing the period to 6 years from the end of the financial year in which the payment is made or credit is given and a proviso thereto provided that such order for a financial year commencing on or before 1st of April, 2007 may be passed at any time on or before 31.3.2011. Thus, while amending the provisions of section 201(3) by the Finance Act 2012, the Legislature, in its wisdom, has sought to retain the period of 4 years for an order u/s 201(1) of the Act to be passed for a financial year commencing on or before 1st day of April, 2007 as the period of 4 years therefrom would end on 31.3.2011. Financial year before us is 2007-08 i.e. commencing on 1.4.2007 relevant to the A.Y 2008- 09. The pa....

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.... regards the period for which the interest u/s 201(1A) is payable, the same is not pressed by the assessee and therefore, is rejected. 9. As regards Ground No.3, the learned Counsel for the assessee submitted that the recipient of non-compete fee did not have taxable income even after considering the non-compete fee and therefore, the assessee is justified in not making TDS. However, we find that this contention is not substantiated by any evidence. Except for an oral statement in the grounds of appeal, the assessee has not been able to produce any evidence in support of such a contention. In fact, the AO has clearly brought out on record that the recipient Shri Ramoji Rao (HUF) has taxable income, and that after taking into consideration the noncompete fee received by him, the assessee has been assessed to tax at Rs. 108,47,26,715. The learned Counsel for the assessee has not been able to rebut this finding of the AO except to state that the TDS was required to be effected on non-compete fee which is taxable as business income and in view of the carry forward business loss, nothing remains to be taxed. Therefore, we are not convinced with the argument of the assessee that the ass....