ACIT (International Taxation) Vs Allscripts (India) Pvt. Ltd. (ITAT Ahmedabad)
Ahmedabad: The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, has dismissed an appeal filed by the Assistant Commissioner of Income-Tax (International Taxation) against Allscripts (India) Pvt. Ltd., reinforcing the principle of consistency in tax matters when the facts remain unchanged across assessment years.
The dispute centered on a demand raised by the Assessing Officer (AO) against Allscripts (India) Pvt. Ltd. under sections 201(1) and 201(1A) read with section 195 of the Income Tax Act, 1961, for the Assessment Year 2014-15. The demand, amounting to Rs. 72,20,450, stemmed from an alleged shortfall in Tax Deducted at Source (TDS) on data line charges of Rs. 1,54,44,813 paid by the company, with the AO proposing a TDS rate of 25% along with applicable interest.
The Revenue’s appeal before the ITAT challenged the decision of the Commissioner of Income-Tax (Appeals) [CIT(A)], who had deleted the demand. The Revenue raised several grounds, primarily questioning the CIT(A)’s reliance on the issue of limitation for passing the order under section 201 of the Act, particularly in the context of payments made to non-residents.
The Revenue contended that the CIT(A) erred in applying the limitation period, citing the Delhi High Court decision in the case of NHK Japan Broadcasting Corporation (305 ITR 137), which, according to the Revenue, was relevant only for periods prior to April 1, 2010, when no specific limitation existed for proceedings under section 201 for non-residents. The Revenue argued that the legal provisions under section 201 do not prescribe any limitation for payments to non-residents and that the CBDT’s memorandum explaining the substitution of section 201(3) from April 1, 2010, explicitly stated that the limitation bar under section 201(3) does not apply where the deductee is a non-resident. They further argued that even for resident deductees, the order under section 201 could be passed within six years from the end of the financial year of payment or credit.
