2011 (1) TMI 1561 - AT - Income Tax

Summary

Issues Involved:
Assessee's appeals against levy of interest u/s 201(1) and 201(1)(A) of the IT Act for multiple assessment years.

Summary:

Issue 1: Levy of interest u/s 201(1) and 201(1)(A) of the IT Act

The assessee, a Government of Karnataka undertaking, entered into agreements with foreign entities for consultancy services and project implementation. The AO observed that the assessee failed to deduct tax at source at the required rate, resulting in short remittance of tax. Consequently, the AO declared the assessee as assessee in default u/s 201(1) and levied interest u/s 201(1A). The CIT(A) upheld the AO's orders.

Issue 2: Additional Grounds of Appeal

The assessee raised additional grounds of appeal related to limitation and tax treatment of income. The Tribunal considered these grounds, including the argument that the orders for certain financial years were time-barred and the nature of income should be taxed at specific rates under the Act or DTAA provisions.

Issue 3: Limitation Period for Initiating Proceedings u/s 201(1) and 201(1A)

The assessee argued that the proceedings u/s 201(1) and 201(1A) were barred by limitation. The Special Bench's decision in the case of M/s Mahindra & Mahindra Ltd. was cited, which prescribed a 6-year limitation period for initiating proceedings if the income exceeded a certain threshold. The Tribunal followed this decision and directed the AO to verify the limitation period in each case.

In conclusion, the assessee's appeals were allowed for statistical purposes, with proceedings quashed if found to be initiated after the prescribed limitation period. The issue on merits was remitted to the CIT(A) for further consideration.

Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.