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TMI Blog2017 (12) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... to sub-section 3 of section 201(1), which was in force till 1.10.2014, we are of the opinion that the order of the AO treating the assessee as “an assessee in default” is clearly barred by limitation and ground of appeal No.2 is allowed. Charging of interest u/s 201(1A) - Held that:- The Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages Ltd (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) has clearly held that the interest u/s 201(1A) is compensatory in nature and that even if the payee has paid the tax on the receipt, the payer is liable to pay interest u/s 201(1A) of the Act from the date of deductibility to the date of payment of tax by the payee. It is therefore, held that the assessee is liable to pay the interest u/s 201(1A) of the Act TDS on non-compete fee - Held that:- 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 ₹ 108,47,26,715 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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 ₹ 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 the assessee company. In the said letter, the assessee also took the objection that the action of the DCIT in issuing the notice dated 15.12.2014 for treating the assessee as an assessee in default is time barred. According to the assessee, under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 after considering non-compete fee as income and therefore Appellant was requested by the recipient of Non-compete fee not to deduct tax from non-compete fee which is a reasonable cause. Hence Commissioner of Income Tax (Appeals)-8 is not justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 payment has been made to Shri Ramoji Rao (HUF) by the assessee on 28.02.008 falling within the financial year 2007-08 which ends on 31.3.2008. Therefore, as per the proviso to section 201(3), an order treating the assessee as an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pient 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 ₹ 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 assessee under had a reasonable cause to deduct the tax at source. Therefore, ground of appeal No.3 is also rejected. 10. In the result, appeal in ITA No.546/Hyd/2017 is only partly allowed. ITA No.547/Hyd/2017 ..... 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