2024 (9) TMI 1620

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...., bad in law and without natural justice. 2. The order passed by AO is TDS demand is time barred as per section 201(3) the Financial Act, 2012. 3. The non-deduction TDS and interest thereon u/s 201(1) and 201(1A) on share application money of Rs. 55,89,527/- amounting to Rs. 22,45,596/- is incorrect, illegal, bad in law and without natural justice and the same is to be deleted. 4. That the levy of TDS on advance Share Capital from resident/ non-resident Rs. 11,06,205 + Interest u/s 201(1A) of Rs. 10,06,647 total Rs. 22,45,596/- is incorrect, illegal, bad in law and without natural justice and same is to be deleted. 5. Appellant craves a right to add, modify, alter, or withdraw and of the ground/s of appeal during the course of hearing. PRAYS: Appellant prays before your honor to delete the non-deduction TDS and interest thereon u/s 201(1) and 201(1A) of Rs. 22,45,596/- or the appropriate relief is to be granted as the Honorable ITAT may think fit.." 3. During the course of hearing, the Registry has pointed out a delay of 218 days in filing the present appeal before the Tribunal. While going through the record available before us, we f....

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.... interest on share application money for the purposes of accounting whereas the assessee has no liability to pay interest on the share application money. It is usual practice of the assessee to reverse the provision of expenditure of interest, therefore, the assessee has not deducted TDS for the same and considering this, as contingent liability. He submitted that the assessee made provision of interest payable on share allotment money, however, the same was not certain to pay share application money. The assessee claimed the same as contingent liability, therefore, the assessee reversed and not claimed this expenditure while computing its income and filling of income tax return for respective assessment year. The assessee had omission which are corrected in the F.Y. 2019-20. The assessee had forgotten to disallow the interest being contingent expenditure of Rs. 55,89,527, for the F.Y. 2012-13 and F.Y. 2013-14. The assessee corrected the omission and claim disallowance of Rs. 55,89,527, in F.Y. 2019-20 and carry forward the buyback income. He submitted that the contingent provisions for expenses are not liable for TDS. As per the IT return and computation from F.Y. 2014-15 to F.Y. ....

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....his Tribunal in the case of Bheemarasetty Sunitha cited supra and this Tribunal after considering the decisions of Hon'ble Delhi High Court in the case of Bharti Airtel Limited & Anr Vs. Union of India & Anr and the decision of NHK Japan Broadcasting Corporation [305 ITR 0137], the decision of Hon'ble Supreme Court in the case of GE India Technology Centre and the decision of Hon'ble Bombay High Court in the case of Mahindra & Mahindra Ltd. [365 ITR 0560 (Bom)] held that the reasonable time limit for issue of notice u/s 201(1)/201(1A) is 4 years. In cases, where the notice is issued beyond 4 years, the Coordinate Bench of ITAT held that the same is barred by limitation. For the sake of clarity and convenience, we extract relevant part of the order of this Tribunal in para No.6 to 7 which reads as under:- "6. We have heard both the parties and perused the materials placed on record. The relevant provisions of section 201(1A) of the Act is reproduced as under: "201(1A) Without prejudice to the provisions of sub- section (1), if any such person, principal officer or company as is referred to in that subsection does not deduct or after deducting fails to pay the tax a....

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.... to the assessee is required to be taken. Accordingly following the decision of Hon'ble Delhi High Court we hold that reasonable period is 4 years for initiating of proceedings u/s 201/201(1A). In the instant case the property was registered on 18.7.2007 and the assessee is liable to deduct the TDS during the F.Y.2007-08 and the 4 years time limit for initiating action u/s 201/201A expires before March 2012. In the instant case, notice u/s 195 treating the assessee as assessee in default was issued on 11.08.2013 beyond the 4 years of the financial year in which the assessee required to deduct tax at source. As held by Hon'ble Delhi High Court, the time limit for initiating the proceedings u/s 201 and 201(1A) is 4 years and it is barred by limitation. Therefore, following the decision of Hon'ble Delhi High Court, we are unable to sustain the orders of the lower authorities. Accordingly, the order passed u/s 201 / 201(1A) is set aside and the appeal of the assessee is allowed." 8. Similarly, the Hon'ble AP High Court in the case of M/ s U.B.Electronic Instruments Limited cited supra held that the 4 years is reasonable time. For ready reference, we extract relevant part of th....

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....cedents as discussed in the earlier paras, we are of the considered view that treating the assessee as an assessee in default u/s. 201 of the Act is not valid in law. We therefore are inclined to quash the order of the Ld. CIT(A). It is ordered accordingly." 7. Here, it is pertinent to refer to the judgments of the Hon'ble Supreme Court rendered in GE India Technology Centre GE India Technology Centre v/s CIT, [2010] (10) SCC 29, and the judgment of the Hon'ble Jurisdictional High Court in Mahindra & Mahindra Ltd. [2014] 365 ITR 0560 (Bom.) wherein it has been held that the reasonable time limit for issue of notice u/s 201(1)/201(1A) is 4 years. In cases, where the notice is issued beyond 4 years, the Co-ordinate Bench of ITAT held that the same is barred by limitation under section 201(1) of the Act passed in September 2021. Since, in the present case, the orders are beyond 4 years from end of financial year, hence not sustainable and is quashed. It is pathetic to note that the entire proceeding arose out of a survey under section 133A(2A) conducted on 09/12/2019, at the office premises, which is our firm opinion is belated and unsustainable and is hereby quashed. However, we a....