AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 977
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.... of 2010 issued by CBDT, it was clarified that the AO can complete the TDS proceedings for F.Y. beginning from A.Y. 01.04.2007 and earlier years in which TDS proceedings are validly pending before tax authorities. ii. On the facts and circumstances of the case and in law, the ITAT erred in quashing/annulling the order passed by the AO without properly appreciating the factual and legal matrix brought out by the AO in the order u/s 201(1) of the IT Act? iii. On the facts and circumstances of the case and in law, the ITAT failed to appreciate the proviso to section 201(3) and further erred in holding that the proceeding u/s. 201(1) barred by limitation?" 3. The facts of the case in brief are that the Respondent-Assessee provides Cellular Mobile Telephony Services ("CMTS", for short) in the Mumbai telecom circle. A survey under Section 133A was conducted on 25/02/2004 in the Respondent-Assessee's office to examine TDS compliance for Financial Years 1999-2000 to 2003-2004. Subsequently, a notice dated 08/03/2004 was issued under Sections 201(1) and 201(1A) alleging non-deduction of TDS on interconnect usage charges ("IUC", for short) and roaming charges, treating t....
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....efore 01/04/2007, and that the reference is to the financial year, not the date of initiation of proceedings. 9. Per Contra, Mr. Jitendra Singh, learned counsel for the Respondent-Assessee, submitted as follows:- (i) That the impugned notice dated 02/12/2010 is barred by limitation, having been issued beyond six years from the end of the relevant assessment year. (ii) That proviso to the newly inserted sub-section (3) of section 201, with effect from 01/04/2010 was not applicable to the case of the Respondent-Assessee considering that the impugned show cause notice was issued on 02/12/2010 and no proceedings under Section 201(1) and 201(1A) were pending as on 01/04/2010 and hence the impugned notice and the order dated 24/03/2011are bad in law and liable to be quashed. (iii) That during the course of verification proceedings it was brought to the notice of the TDS Officer that the MTNL and VSNL had already declared the amounts received by them in their respective returns. Hence, respondent-assessee could not be treated as an assessee in default for such amounts. (iv) That IUC or roaming charges paid by it to other mobile service providers is n....
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....de Finance Act, 2009 cannot revive proceedings that had already become time-barred. (vi) That the proviso allowing orders till 31/03/2011 applies only to pending proceedings, not to fresh initiation of cases. (vii) Consequently, the Tribunal quashed the entire proceedings and orders passed under Section 201(1) for AYs 2000-01 to 2004-05. (viii) That since the main demand was quashed, the interest under Section 201(1A), being consequential, also did not survive. 12. Based on the aforesaid findings the ITAT allowed the appeals filed by the assessee. Thus, the cross appeal filed by the revenue against the appellate order passed by the CIT(A) came to be dismissed. For convenience we reproduce the reasoning of the ITAT with which we are in agreement with. "19. We have heard the rival contentions and carefully gone through the material on record including the cases relied upon by the parties. As noticed earlier, in the present case, a letter was issued on 08.03.2004 and the assessee was asked to submit details and information regarding deduction of tax at source on by the assessee on payments made to various agencies/third party service providers an....
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....2.12.2010 and it was issued for the first time on that date only. 23. Sub-Section 3 to section 201 was inserted by Finance Act, 2009 w.e.f. 01.04.2010. The same reads as under:- "No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax front a person resident in India, at any time after the expiry of- (i) Two years from the end of the financial year in which the statement filed in a case where the statement referred to in section 200 has been filed. Six years from the end of the financial year in which payment is made or credit is given, in any other case : Provided that such order for a financial year commencing on or before the 1st day of April, 2007 may be passed at any time on or before the 31st day of March, 2011". 24. It is the contention of the Ld. Counsel for the assessee that when this section was inserted the Finance Act, 2009, the then TDS Officer taking advantage of proviso to the said section issued another notice dated 02.12.2010 in order to bring the assessee's case under the said proviso. It was further contended that the proceedi....
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....f four years prescribed for initiating the proceedings u/s 201(1) of the Act by its decision rendered in the case of NHK Japan Broadcasting Corporation (supra) does not require reconsideration, in view of the amendment brought in sec. 201 by insertion of sub-section 3. Accordingly it was held that the ITO could not initiate proceedings u/s 201(1) for periods earlier than four years prior to 31st March 2011. In the instant cases, the time limit of four years from the end of financial year (or three years from the end of assessment year) has expired by 31.3.2004 to 31.3.2008 respectively for assessment years 2000-01 to 2004-05. Hence, the show cause notice issued for the first time on 02-12-2010 for these years is clearly beyond the period of limitation fixed by Hon'ble Delhi High Court in the case of NHK Japan Broadcasting Corporation (supra). 27. The Ld. D.R placed reliance on the Circular issued by CBDT. However we notice that the Hon'ble Gujarat High Court has also considered the above said circular as well as the memorandum explaining the provisions of Finance Bill No. 2 of 2009, through which the provisions of sec.201(3) was inserted. 28. The Ld D.R al....