2018 (2) TMI 179 - AT - Income Tax

TDS u/s 194C - non deduction of tds - Assessee in default under the provisions of Sec. 201(1) and 201(1A) - period of limitation - Held that - Keeping in view the judgment of the Hon ble High Court of Bombay in the case of Director of Income tax (International taxation) Vs. Mahindra & Mahindra Ltd. (2014 (7) TMI 265 - BOMBAY HIGH COURT) and finding ourselves to be in agreement with the view taken by the Tribunal in the case of the assessee for the aforementioned years, therefore, are of the considered view that the order passed by the A.O under Sec. 201(1A) as on 28.03.2011 being substantially beyond the period of one year from the end of the financial year in which the proceedings under Sec. 201(1)/201(1A) were initiated, therefore, the respective orders passed by the A.O U/ss. 201(1)/201(1A) are clearly barred by limitation. - Decided in favour of assessee.

Issues Involved:

1. Limitation period for passing orders under sections 201(1) and 201(1A) of the Income Tax Act.
2. Applicability of Section 194C for payments made for pay channel costs.
3. Levy of interest under Section 201(1A).
4. Condonation of delay in filing the appeal.

Issue-wise Detailed Analysis:

1. Limitation Period for Passing Orders under Sections 201(1) and 201(1A):
The assessee contended that the order under sections 201(1) and 201(1A) passed by the Assessing Officer (A.O) was beyond the reasonable time limit. The A.O issued a show cause notice on 23.09.2003, but the order was passed on 28.03.2011. The Tribunal referred to the judgment of the Hon’ble Bombay High Court in the case of DIT Vs. Mahindra & Mahindra Ltd., which held that even though no specific limitation period is prescribed, the statutory powers must be exercised within a reasonable time, typically within one year from the end of the financial year in which the proceedings were initiated. The Tribunal found that the order was indeed barred by limitation and quashed the A.O’s order under sections 201(1) and 201(1A).

2. Applicability of Section 194C for Payments Made for Pay Channel Costs:
The assessee argued that the payments for pay channel costs were not for a contract of work but for the distribution of signals, and therefore, Section 194C was not applicable. The A.O and CIT(A) held that the payment for obtaining telecast signals was a works contract, thus attracting TDS under Section 194C. The Tribunal, however, did not delve into the merits of this contention due to the decision on the limitation period.

3. Levy of Interest under Section 201(1A):
The CIT(A) upheld the A.O’s decision to levy interest under Section 201(1A), stating that the payment of interest is mandatory from the date the tax was deductible to the date it was actually paid. The Tribunal did not specifically address this issue separately, as the primary ground of limitation was upheld, rendering the order void.

4. Condonation of Delay in Filing the Appeal:
The appeal involved a delay of 658 days. The assessee explained that the delay was due to an inadvertent mistake by an employee who failed to forward the CIT(A)’s order to the Chartered Accountant. The Tribunal, referencing the Hon’ble Supreme Court’s judgments, concluded that the delay was bona fide and not due to any malafide intent or dilatory strategy. The Tribunal condoned the delay, allowing the appeal to be heard on merits.

Conclusion:
The Tribunal allowed the appeal of the assessee, primarily on the ground that the order under sections 201(1) and 201(1A) was barred by limitation. Consequently, the order of the CIT(A) was set aside, and the A.O’s order was quashed. The Tribunal did not find it necessary to address the applicability of Section 194C and the levy of interest under Section 201(1A) separately, given the decision on the limitation issue.

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