Sodexo SVC India Pvt Ltd. Vs DCIT (ITAT Mumbai)
Conclusion: Order passed by AO under section 201(1)/201(1A) for failure to deduct TDS under section 194C on the reimbursement of the meal vouchers to the affiliates was barred by limitation as the amended limitation period of seven years under section 201(3) was effective from 1-10-2014 and the same would not apply retrospectively to orders which had become time-barred under the old time limit (two years/six years) set by un-amended section 201(3)
Held: Assessee had not deducted TDS under section 194C on the reimbursement of the meal vouchers to the affiliates (restaurants/eating joints etc) by assessee, which used by employees of the assessee’s customers for the purchase of food and non-alcoholic beverages. AO issued show cause notice under section 201(1)/201(1A) asking assessee to show cause as to why assessee should not be treated as assessee in default for failure to deduct TDS under section 194C on the reimbursement of vouchers to various affiliates during the financial year 2010-11. In response to show cause notice, assessee replied that the notice issued by AO for financial year 2009-10 relevant to assessment year 2010-11 was barred by limitation but the AO passed order under section 201(1)/201(1A). It was held amended limitation period of seven years under section 201(3) was effective from 1-10-2014 and the same would not apply retrospectively to orders which had become time-barred under the old time limit (two years/six years) set by un-amended section 201(3). As apparent, assessee filed quarterly returns for financial year 2010-11 on 15-7-2010 and on 13-10-2010. At that point of time, erstwhile sub-section (3) of section 201 was in force and as per section 201(3)(ii) condition of two years was applicable to the facts of assessee’s case and hence, no order under section 201(1)/201(1A) deeming the assessee as one in-default could be passed as limitation had already expired as on 1-10-2014.
FULL TEXT OF THE ITAT JUDGEMENT
These appeals by the assessee are arising out of the orders of Commissioner of Income Tax (Appeals)-60, Mumbai [in short CIT(A)], in appeal No. 60/IT-10160/DCIT/(TDS)-2(2)/2016-17 and No. 60/IT-10020/DCIT/(TDS)-2(2)/2016-17 dated 28.12.2018. The Assessments were framed by the DY. Commissioner of Income Tax(TDS)-2(2) dated 21.03.2016 under section 201(1)/201(1A) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The first common issue in these two appeals of the assessee is against the order of the CIT(A) in holding that the order passed by the Assessing Officer under section 201(1)/201(1A) of the Act is within the time limit allowed under section 201(3) of the Act. For this, the assessee has raised the following three grounds for the assessment year 2010-11:
“1. The Learned Commissioner of Income-Tax [Appeals} erred in holding that the Order passed under Section 201/201[1A} of Income-Tax Act, 1961 (the “Act”) was within the time limit allowed under sub-section [3) to Section 201 of the Act.
2. On an identical position in facts and in law and in the circumstances, the Learned Commissioner of Income-Tan (Appeals) erred in not following the judgement of the IT AT, J-Bench, Mumbai in case of the Appellant itself, for the AY 2012-13, holding that the impugned order under Section 201(1)/201(1A) for the AY 2012-13, wartime barred.
3. The Learned Commissioner of Income-Tan (Appeals), erred in law, by departing from the well-established principle of consistency particularly where, no demands have been raised and/or adverse orders have been passed on account of non-deduction of tax in respect of reimbursements made to the Appellant’s Affiliates under section 194 C of the Act, since inception of the Appellant Company.”
3. Similar are the grounds in assessment year 2011-12 and facts and circumstances are also identical. Hence, we take up the facts from the assessment year 2010-11 and the decision will apply to the assessment year 2011-12 also.
4. Brief issue involved in this appeal of the assessee is, whether the assessee was required to deduct TDS under section 194C of the Act on the reimbursement of the meal vouchers to the affiliates (restaurants/eating joints etc) by the assessee, which used by the employees of the assessee’s customers for the purchase of food and non-alcoholic beverages. For this, the assessee has challenged the very order passed under section 201(1)/201(1A) of the Act as barred by limitation in view of section 201(3) of the Act.
5. The assessee is a private limited company registered under the Companies Act, 1956 and is authorized by the Reserve Bank of India by section 7 of the Payment and Settlement Systems Act, 2007 to carry on the business of operating alternate payment settlement system where it can issue prepaid instruments to its clients. The assessee has been carrying on the aforesaid business since past several years. A survey under section 133(2A) of the Act was conducted by the DCIT(TDS)- 2(2), Mumbai on 21.01.2016. The survey was conducted with the purpose to verify the compliance made by the assessee with respect to TDS. The survey party noted from the transaction carried out by the assessee in the course of business and a statement from the Chief Finance Officer of the assessee was also recorded under section 131 of the Act, wherein, he undertook to submit various details relating to reimbursement made to affiliates. Subsequently on 22.02.2016, the Assessing Officer issued show cause notice under section 201(1)/201(1A) of the Act asking the assessee to show cause as to why the assessee should not be treated as assessee in default for failure to deduct TDS under section 194C of the Act on the reimbursement of vouchers to various affiliates during the financial year 2010-11. In response to show cause notice, the assessee replied that the notice issued by Assessing Officer for financial year 2009-10 relevant to assessment year 2010-11 is barred by limitation but the Assessing Officer passed order under section 201(1)/201(1A) of the Act. Aggrieved, the assessee preferred appeal before the CIT(A).
6. Before the CIT(A), the assessee claimed that the issue under appeal is squarely covered by the decision of the Tribunal in assessee’s own case for the assessment year 2012-13 in ITA No.980/Mum/2018 order dated 28.03.2018 but the CIT(A) noted that the assessee has filed correction statements even on 31.01.2018 and in view of the provisions of section 201(3), the time limit available with the Assessing Officer is seven years in terms of amendment carried out by the Finance Act (No.2), 2014 with effect from 01.10.2014 under the provisions of section 201(3) of the Act. The CIT(A) stated that the facts in assessment year 2012-13 and the relevant assessment year 2010-11 are different and distinguishable and hence, in such a situation, the reliance placed by the assessee on Tribunal’s decision in own case is misplaced. The CIT(A) decided the issue against the assessee by observing in paras 6.1 to 6.8 as under:
“6.1 I have gone through the facts of the case and the appellant’s contention The appellant has submitted a factual details of its TDS statements filed u/s 200(3). Section 200 of the IT Act entails the duty of the person deducting tax. Section 200$) casts a onus on the deductor to prepare such statement and submit it on prescribed time. For clarification purposes, section 200(3) is reproduced below –
“Duty of Person deducting tax
200(3.) Any person deducting any sum on or after the 1st day of April 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section(1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed Income tax authority of the person by such authority such statement in such from and verified in such manner and setting forth such particulars and within such time as may be prescribed.,
Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner 9$ maybe specified by the authority.]”
6.2 Thus, a correction statement is also a part of section 200(3) which provides that the person can file the correction statement for any year for rectification of any mistake or to add, delete, or update the information furnished in the statement delivered under this subsection in such form and verified in such manner as may be specified by the authority To explain with an example, suppose in the first instance, the deductor has deducted only on rental payments made and has filed the statement u/s 200(3). Later on it transpires that they were also supposed to deduct tax on professional services paid u/s 194J. In that event, they can file a correction statement by virtue of proviso to section 200(3). The department will treat this statement for processing u/s 2.00A and further scrutiny if required All the operational sections as per legal provisions will be applied de novo on this correction statement Hence, for all purposes, the correction statement fled is as good as and equivalent to a statement filed u/s 200(3) of the Act.
6.3 The appellant’s contention is that this proviso is effective from 01/10/2014 and thus does not apply to the return of the Assessment Year under consideration. It is the appellant’s case, since it is effective from 01/10/2014, no correction returns can be filed for the prior year’s However, it is seen that the appellant himself has filed not one but multiple correction returns for this year which was accepted by the CPC TDS and was also processed. The details of all such statements tiled u/s 200{3) are as follows .
