9911796707
TMI Blog2018 (4) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... ase are as follows: The assessee is a company engaged in providing software development services towards customers based in India. The assessee-company had been paying managerial service fees to its affiliate UST Global Inc., USA (USTG) from the assessment year 2007-08 to 2013-14 under the Managerial Services Agreement (MSA). For the assessment year 2007-08, the assessee had paid a total sum of Rs. 82,11,622/- to USTG without deducting tax at source under section 195 of the I.T. Act. The Assistant Commissioner of Income-tax (international Taxation), Trivandrum (Assessing Officer) was of the view that these payments made by the assessee to non-resident company, namely USTG Inc, USA requires withholding of tax u/s. 195 of the I.T. Act. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22/Coch/2013 (order dated 27/09/2013). However the Ld. Counsel for the assessee argued that the order passed u/s. 201(1) and 201(1A) of the Act is barred by limitation, since it was passed beyond the period of six years from the end of the financial year in which the transaction was made. The ld. Counsel for the assessee strongly relied on the judgment of the Hon'ble Bombay High Court in the case of Director of Income-tax (International Taxation) vs. Mahindra & Mahindra Ltd. reported in 365 ITR 560. 5. The Ld. DR on the other hand strongly supported the orders of the Assessing Officer and the CIT(A). 6. We have heard the rival submissions and perused the material on record. As regards the issue on merits, it was fairly admitted by the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six years prescribed u/s. 201(3) will not apply to the present case. In view of the above, it is held that the order passed by the Assessing Officer is legally valid." 6.2 The CIT(A) held that the order passed u/s 201(1) and 201(1A) was not barred by limitation u/s 201(3) of the I.T. Act for the reason that the payee in the instant case is a non-resident, whereas, the limitation prescribed u/s 201(3) of the I.T.Act would apply only to payments made to Indian resident company. Section 201(3) and (4) was inserted by the Finance (No.2) Act, 2009 with effect from 01.04.2010 and it was later substituted by the Finance (No.2) Act, 2014 with effect from 01.10.2014. Prior to the time limit being prescribed by virtue of insertion of section 201(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural Income-tax Act, 1950 did not prescribe a time limit for initiating a suo moto revisional proceedings. However, the Hon'ble Kerala High Court held that the Commissioner has to pass an order within a reasonable time and what is a reasonable time limit depends on the fcts of that particular case. 6.4 The Hon'ble Delhi High Court in the case of CIT v. NHK Japan Broadcasting Corporation reported in [(2008) 305 ITR 137 (Delhi)] had held that the order passed u/s 201 of the I.T.Act beyond four years was not reasonable and had quashed the same as barred by limitation. Similar view was taken by the Hon'ble Himachal Pradesh High Court in the case of CIT v. Satluj Jal Vidyut Nigam Ltd. reported in [(2012) 345 ITR 552 (HP)]. As mentioned earlier, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (supra). 6.5 In the instant case, the financial year concerned is 2006-2007 and notice for initiating proceedings u/s 201(1) / 201(1A) was issued on 30.04.2014, i.e. more than seven years from the end of the financial year. The orders u/s 201(1) / 201(1A) of the I.T. Act was finally passed on 30.05.2016, which is more than eight years from the end of the financial year. Therefore, it cannot be stated in facts of this case, the order u/s 201(1) / 201(1A) was passed within a reasonable time, going by the dictum laid down by the judicial pronouncement mentioned supra and the prescription of limitation mentioned u/s 201(3) and (4) of the I.T.Act. In view of the aforesaid reasoning, we hold that the order passed u/s 201(1)/ 201(1A) of the I. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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