Delhi High Court
Commissioner Of Income Tax-Tds vs Moradabad Toll Road Company on 11 February, 2015
Author: S.Ravindra Bhat
$~45
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 11th February, 2015
+ ITA 85/2015
COMMISSIONER OF INCOME TAX-TDS ..... Appellant
Through: Mr.Rohit Madan, Adv.
versus
MORADABAD TOLL ROAD COMPANY ..... Respondent
Through: None.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
1. The Revenue is aggrieved by the order of the Income Tax Appellate
Tribunal (ITAT) dated 25.11.2011, inasmuch as the ITAT affirmed an order
of the CIT (Appeals) to the effect that the treatment of the assessee's
company as one in default for the purpose of proceeding under Section 201
of the Income Tax Act(hereinafter referred to as "the Act"), is barred by
time.
2. The relevant facts are that the assessee company was sought to be
treated as assessee in default for the Assessment Year (AY) 2002-03 and
Financial Year (FY) 2003-04. The Assessing Officer (AO) sought to add
back certain amounts and consequently demanded the relative sums of
money. The assessee's position was that treating the assessee company as
one in default irrespective of the past assessment years, by Order dated 4th
ITA No.85/2015 Page 1
March, 2009 and the action under Section 201 is belated since its returns
were filed much earlier. This contention was accepted by the CIT
(Appeals), who followed the Division Bench ruling of this Court in
Commissioner of Income Tax vs. NHK Japan Broadcasting Corporation
(2008) 305 ITR 137 (Del) and CIT vs. Hutchison Essar Telecome Ltd.
(2010) 323 ITR 230 (Delhi) and concluded the issue. In NHK Japan (supra)
the Court had said that even though no specific period of limitation was
prescribed for an action under Section 201 of the Act, the income tax
authorities have to initiate proceedings within reasonable time and it was
determined to be four years.
3. Learned counsel for the Revenue urges that the subsequent
developments after NHK Japan (supra) have modified its ratio. He relies
upon the amendment by which Section 201(3) was substituted with effect
from 01.04.2010, whereby the period of limitation indicated was six years;
and subsequently, by another substitution, w.e.f. 01.10.2014, by Finance Act
No.2 of 2014, whereby the period of limitation was extended to seven years.
As a result, the provision which exists as on date is as follows:
"201 (3) No order shall be made under sub-section
(1) deeming a person to be an assessee in default
for failure to deduct the whole or any part of the
tax from a person resident in India, at any time
after the expiry of seven years from the end of the
financial year in which payment is made or credit
is given"
4. We have considered the arguments of the Revenue and are of the
opinion that the previous judgment of this Court in Commissioner of Income
ITA No.85/2015 Page 2
Tax (TDS)-I vs. C.J.International Hotels Pvt. Ltd. in ITA No.57/2015,
decided on 09.02.2015, has discussed elaborately two reasons for the Court
to reject the submissions;
(i) Section 201 itself was amended by introduction of Section 201(1A) of the
Act; significantly that amendment was given retrospective effect from
01.04.1966;
(ii) The Parliament consciously did not amend Section 201 by inserting sub-
section (3) with retrospective effect.
This amounts to an acceptance by the legislature of this Court's ruling,
which was decided in an Appeal by Special Leave of Supreme Court.
Although the Supreme Court left the issue open, we are of the opinion - that
above the two reasons - and subsequent developments indicated by us
render the decision in NHK Japan (supra) still a good law for the period
prior to 01.04.2010.
5. For the above reason, no substantial question of law arises and
consequently the appeal is dismissed.
S. RAVINDRA BHAT, J
R.K.GAUBA, J
FEBRUARY 11, 2015
mr
ITA No.85/2015 Page 3
