CIT International Taxation Vs MPHASIS Ltd (Karnataka High Court)
The Karnataka High Court adjudicated an appeal filed by the Revenue challenging an order of the Income Tax Appellate Tribunal (ITAT) relating to Assessment Year 2006–07. The primary issue concerned whether proceedings initiated under Section 201 of the Income Tax Act, 1961 against a non-resident deductee were barred by limitation despite the absence of a prescribed statutory time limit.
Read SC judgment in this case: Unexplained Delay Of 600 Days Not Justified: SC Dismisses SLP Against Mphasis Ltd
The Revenue contended that no limitation period had been prescribed by Parliament for such cases and that the Tribunal erred in applying a “reasonable time limit” based on judicial precedents. It also argued that the Tribunal incorrectly relied on the Delhi High Court decision in Bharti Airtel Ltd. and ignored legislative intent reflected in the Finance Bill, 2009.
The High Court noted that the questions raised had already been addressed by the Delhi High Court in the Bharti Airtel Ltd. case. It further observed that similar matters had previously been decided by following the same precedent.
Relying on this established judicial position, the Court dismissed the Revenue’s appeal and upheld the Tribunal’s finding that the proceedings initiated under Section 201 were time-barred. The substantial questions of law were answered in favour of the assessee and against the Revenue.
