Case Law Details
Atlas Copco (India) Limited Vs DCIT (ITAT Pune)
Conclusion: Where payments in the nature of royalty/fee for technical services (FTS) were made to non -residents, an order u/s. 201 passed after one year from the end of the financial year in which the proceedings were initiated was void ab initio and liable to be quashed.
Held: During the relevant financial years, assessee made payments to various foreign companies and the same were made towards procurement of software license, software maintenance charges, testing charges, website maintenance charges, personal management charges, software expenses, reimbursement of internet charges, etc. Assessee did not deduct tax at source on the above payments. AO had passed u/s. 201(1) and 201(1A) holding that the aforesaid payments were in the nature of royalty/fee for technical services (FTS) under the provisions of section 9(1)(vi) and 9(1)(vii) and it was mandatory for assessee to deduct tax at source on such payments. AO raised total demand of TDS + Interest for non compliance of the provisions of Chapter XVII-B. It was held where the payments were made to non -residents/overseas entities, the limitation period of one year from the end of financial year in which the proceedings u/s. 201 were initiated would apply. In the instant case, since, the order u/s. 201 had been passed much after the elapse of one year period from the end of financial year in which proceedings u/s. 201 were initiated, the order u/s. 201 was void-ab-initio and hence, was liable to be quashed.
FULL TEXT OF THE ITAT JUDGEMENT
These cross appeals by the assessee and the Revenue are directed against the consolidated order of Commissioner of Income Tax (Appeals)-IT/TP, Pune dated 30-06-2014 for the assessment years 2008-09 to 2011-12 passed u/s. 201(1) and 201(1A) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
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