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TMI Blog2019 (4) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the assessee s claim mainly on the ground that genuineness of the payment is not proved and that non-compete fee is not an intangible asset and therefore, depreciation thereon is not allowable. Tribunal had remitted the issue to the file of the AO for deciding afresh and also to decide the allowability of depreciation claimed on such non-compete fee. However, in the order of the Tribunal against the penalty u/s 271C for the A.Y 2008-09, it has been held that the contention of the assessee that the non-compete fee is the business expenditure of the assessee, has been upheld. This finding is thus an erroneous recording of facts and therefore, there is a mistake apparent from record. X X X X Extracts X X X X X X X X Extracts X X X X ..... not to deduct tax from non-compete fee which is a reasonable cause. Hence Commissioner of Income Tax (Appeals)-8 is not justified in holding that the Appellant did not prove that there was reasonable cause for not deducting tax at source in respect of non-compete fee. 4. Commissioner of Income Tax (Appeals)-8 ought to have seen that interest u/s.201 (lA) is leviable for the period from 07-02-2008 (date on which tax was deductible on non-compete fee) to 30-09-2008 (date of furnishing return of income). In fact the return of income of Sri Ramoji Rao (HUF) was e-filed on 3009-2008 itself and it is only a hard copy of return that was filed before the Assessing Officer on 1310-2008. Hence Commissioner of Income Tax (Appeals)8 is not justified in holding that interest is leviable upto 13-10-2008. Further the Commissioner of Income Tax (Appeals)-8 ought to have seen that due date for deducting tax from non-compete fee credited on 30-01- 2008 is 07-02-2008. Hence Appellant submits that Commissioner of Income Tax (Appeals)-8 is not justified in holding that interest is leviable for the period 30-01-2008 to 13-102008. Further Appellant submits that such direction amounts to enhancement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs that the issue raised by the applicant in ground No.2 viz., that Commissioner of Income Tax (Appeals)-8 is not justified in holding that interest levied u/s.201(1A) is within the time limit has not been disposed off by the Hon'ble Appellate Tribunal. OMISSION TO CONSIDER THE RATIO OF DECIDED CASES CITED BY THE APPLICANT: 3.1 In support of the contention that the learned CIT(Appeals) erred holding that the order charging interest u/s.201(lA) is within time limit, the applicant pleaded that where there is no time limit stipulated in the statute, proceeding should be initiated within reasonable time and that in the case of the applicant, initiation of proceedings was done after a lapse of about 6 and % years and that in the light of the ratio of decided cases relied on by the applicant, the proceedings ought not to have been upheld by the learned CIT (Appeals). 3.2 The Applicant relied upon the decision of Hon'ble Delhi High Court in the case of C.I.T vs Goyal M.G Gases (I.T.A No: 335/2011 dated 23-02-2011) (Paper book pages 4 to 11) in which the appeal filed by Dept. was dismissed. In this case the CIT, in his order u/s.263, directed A.O to compute interest on mercan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default, the finding of the Hon'ble I.T.A.T that levy of interest u/s.201(lA) cannot be said to be within reasonable time is legal and valid. This decision of jurisdictional High Court directly applies to the applicant's case and is binding on the Hon'ble Appellate Tribunal. 3.5 The Applicant also relied upon the decision of Hon'ble High Court of Delhi in the case of C.I.T vs C.J International Hotels (p) Ltd., 372 ITR 684 DELHI HC (paper book pages 46 to SO), The years involved in this case were A.Vs: 1999-00 to 200102. In this case, the Department contended, (vide paragraph 3 of the judgment) that had the parliament intended, it would have engrafted a specific period for initiation of proceedings and in the absence of any such limitation, no limitation can be imputed. In rebuttal the assessee's counsel submitted ( vide paragraph 4) that two division benches of the Delhi High Court consistently ruled and concluded the issue, in C.I.T vs NHK Japan Broadcasting Corpn., 305 ITR 137 DEL and C.I.T vs Hutchinson Esssar Telecom Ltd., 323 ITR 230 DEL, by holding that where no limitation was prescribed, four years was the foundational requisite for initiation of proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant submits that this constitutes mistake apparent from record. The applicant prays that the Hon'ble ITAT may kindly recall the order and rectify the mistake apparent from record". 3. Having regard to the rival contentions and the material on record, we find that it is a fact that in Ground No.2 in ITA No.546/Hyd/2017, the assessee had raised the issue of time limit of 4 years for completion of proceedings u/s 201(1) and 201(1A) of the Act. This Tribunal has dealt with this ground in Paras 6 to 8 of its order. However, the mistakes that have crept in the order are that (i) at the end of Para 6, it is erroneously held that ground of appeal No.2 is allowed; and (ii) Para 8 erroneously starts with "Ground No.3". Therefore, we deem it fit to rectify the same as under:- The last seven words of Para 6 are deleted and it shall end with "barred by limitation". The first sentence of Para 8 shall be read as "Further, assessee's grievance is against charging of interest u/s 201(1A) of the Act". 4. The next grievance of the assessee in this M.A is that the Tribunal has not specifically adjudicated on the ground taken by the assessee that interest levied u/s 201(1A) is also not with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to recall the order of the Tribunal in ITA No. 546 /Hyd/2017 dated 29.11.2017 for rehearing of the parties on the decisions relied upon by the learned Counsel for the assessee. The appeals are thus directed to be fixed for hearing in due course after notice to the parties. 8. In the result, M.A. No.49/Hyd/2018 is allowed. M.A. No.37/Hyd/2018 9. For the sake of clarity and ready reference, the contents of the application in M.A. No.37/Hyd/2018 are as under: "Application under Sec.254 (2) of Income Tax Act, 1961: 1.1 This application is filed by the applicant company under Sec.254(2) of the LT Act, '61 seeking rectification of certain mistakes apparent from the record that have crept into the order of the Hon'ble Income Tax Appellate Tribunal in its order in LT A No.547/Hyd/2017 dated 29-11-2017. 2.1 Aggrieved by the decision of the C.IT (Appeals), the applicant filed appeal before the Hon'ble I.T.A.T. Grounds of appeal raised by the applicant before the Hon'ble I.T.A.T are enclosed hereto as annexure IIA" for ready reference. 2.2 During the Course of hearing the Appeal, the applicant filed concise grounds of Appeal which are enclosed hereto as anne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessity to pay the non-compete fee to the file of the assessing officer, vide paragraph 28 of its order in I.T.A.No.26/HYD/2011 dt.22-10-2014. The under mentioned extract from the said order of the Hon'ble Tribunal is relevant in this connection. "therefore considering the totality of the facts and circumstances we are of the view that as the impact of acquisition of 39% of equity shares by M/S. Equator Trading Enterprises Pvt. Ltd has not at all been examined by the Aa at the time of assessment proceeding or by the learned CIT (A) while disposing of assessee's appeal and further as the additional evidences produced before us were not examined either by the Aa or by CIT(A), which certainly have a crucial bearing on the issue as to whether the payment of non-compete fee is genuine and necessary, we are inclined to remit the matter back to the file of A. 0 for deciding afresh. Only after the issue relating to genuineness of noncompete fee paid and necessity to pay such fee is resolved, Aa will decide the allowability of depreciation claimed on such non-compete fee by keeping in view the statutory provision as well as the ratio laid down in the decisions referred to he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may prevent the A.O from passing the consequential order and hence filed appeal before the High Court. The Hon'ble Delhi High Court, inter alia, held (in page 5 of its order) that it was of the view that where no period of limitation is prescribed, then, in any event, a reasonable period of limitation ought to be adopted and in the light of the time allowed by CI.T, three years and eight months was certainly much beyond the reasonable period that could be allowed to the A.O to pass the order. In paragraph 4 of the order on page 5, the Hon'ble High Court held that even if there is no period of limitation prescribed under Section 153(3)(ii) of the Act, the Assessing Officer was required to pass the order within reasonable period and non-specification of period of limitation would not mean that Assessing Officer can wait for indefinite period. This is a case where the principle that action should be taken within reasonable period has been reiterated and about 3 years and eight months has been held as beyond reasonable period. 5.4 The Applicant also relied upon the decision of Hon'ble High Court of Andhra Pradesh in the case of CI.T Vs UB Electronic Instruments Ltd., 371 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the penalty appeal came up before the C.LT (Appeals), assessee contended that the LT.A.T held that the initiation of proceedings U/S.201(1) & 201(lA) in the instant years was beyond the period of six years and hence barred by limitation. Considering the fact that the LT.A.T has quashed the orders U/S.201(1) & 201(lA), the C.LT (Appeals) ordered deletion of penalty U/s.271C of the Act. Against such order of C.LT (Appeals), revenue came up in appeal before the LT.A.T. Hon'ble LT.AT held that where the order U/S.201(1) and 201(lA) is set aside on account of limitation, the effect is that the assessee is not deemed to be in default in respect of any failure to deduct or pay tax at source and in such circumstances, the question of penalty U/S.271C cannot arise. Since the C.LT(Appeals) has ordered for cancellation of penalty on the basis of order of the I.T.A.T, the Hon'ble IT.A.T refrained from considering the submissions by both sides on merits and the order of the C.I.T(A) was upheld and the appeals of revenue were dismissed. 5.7 The Applicant also relied upon the decision of Hon'ble High Court of Delhi in the case of C.I.T vs C.J International Hotels (p) Ltd., 372 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors". In the said case, issue of notice after a period of five years was considered not valid. 5.10 The applicant also relied on the decision of the Hon'ble Supreme Court in the case of C.I.T vs Jai Laxmi Rice Mills, Ambala City 379 ITR 521 SC. (Paper book pages 60 to 62) In the said case, the Hon'ble Supreme Court held that where no satisfaction was recorded for initiation of penalty proceedings, u/s.271E of the Act, impugned penalty order passed under the said section deserved to be quashed. 5.11 The thrust of the submissions of the applicant before the Hon'ble ITAT was that the initiation of proceedings u/s.271C was beyond reasonable period in the light of the various judicial pronouncements relied on by the applicant before the Hon'ble ITAT and in the light of the same, the order u/s.271C needs to be quashed. The applicant humbly submits that the finding of the Hon'ble ITAT that the said cases are distinguishable on facts, without stating how they are distinguishable, constitutes mistake apparent from record. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions by both sides on merits and the order of the C.LT(A) was upheld and the appeals of revenue were dismissed. 6.3 It is also submitted that the Hon'ble ITAT in the combined order dated 29-112017 in LT A.No.546/Hyd/2017 in the assessee's own case held that the order u/s.201(l) & 201(lA) passed by the O.C.I.T, (T05) is barred by limitation. Consequently, the ratio of the decision of the Hon'ble I.T.A.T in the case of Good Health Plan Ltd., (supra) and American School of Bombay Education Trust (supra) squarely applies to the facts of the applicant's case. The applicant humbly submits that the finding of the Hon'ble I.T.A.T that the relied upon by applicant's counsel are distinguishable on facts, constitutes mistake apparent from record. The applicant prays that the Hon'ble I.T.A.T may kindly recall the order and rectify the mistake apparent from record. Hyderabad 18-04-2018" 10. The learned Counsel for the assessee reiterated the submissions made in the application, while the learned DR submitted that there was no mistake apparent from record from the order of the Tribunal which needs any rectification. He further submitted that the non-consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of a reasonable period. The appellant has relied upon various case law in support of this contention. In all these cases, the Courts have held that where there is no limitation period prescribed under the Act, the AO was required to initiate/pass the order within a reasonable period and non-specification for period of limitation would not mean that the AO can wait for indefinite period. According to the assessee, 4 years is a reasonable period. 13. Another contention raised by the assessee is that the assessee was not treated as "an assessee in default" u/s 201(1) of the Act and therefore, there was no scope for levy of penalty u/s 271C of the Act. The Tribunal, after considering the arguments of the assessee, has held that the facts of the cases relied upon by the assessee are distinguishable in facts from the facts of the case of the assessee. According to the learned Counsel for the assessee, the Tribunal ought to have gone through the decisions relied upon by the assessee and due to non-consideration or nonMA discussion about the case law submitted by the assessee, there is a mistake apparent from record. The decisions relied upon by the assessee are the same as in MA N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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