Case Law Details
CIT Vs Mphasis Ltd (Karnataka High Court)
In the recent judgment of CIT Vs Mphasis Ltd, the Karnataka High Court addressed the issue of the time limits applicable to proceedings under Section 201 of the Income Tax Act, particularly in cases involving non-residents. The appeal was filed by the revenue challenging an order from the Income Tax Appellate Tribunal (ITAT) which had ruled that the proceedings were barred by limitation due to the application of a “reasonable time limit,” even though Parliament had not specified a time limit for such cases.
The core issue was whether the ITAT correctly applied a “reasonable time limit” based on judicial interpretations, including the Delhi High Court’s ruling in Bharti Airtel Ltd. Vs. UOI, and not strictly on legislative provisions. The revenue argued that the Finance Bill 2009 memorandum indicated no time limits for non-resident deductees, and thus the Tribunal’s decision was incorrect. The Karnataka High Court upheld the ITAT’s ruling, affirming that a “reasonable time limit” is applicable in the absence of a specific legislative timeframe for Section 201 orders. Consequently, the appeal was dismissed, with the court’s decision aligning with previous judgments and interpretations regarding time limits for non-resident cases.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
1. Heard Sri Y.V.Ravi Raj, learned Counsel appearing for the appellants and Sri Manish Kanth, learned Counsel for Ms. Tanmayee Rajkumar, learned counsel for the respondent.
2. This appeal is by the revenue challenging the order dated 17.01.2022 in IT(IT)A No.17/Ban g/2014 of the Income Tax Appellate Tribunal, Bengaluru, relating to the assessment year 2008-2009.
3. The following substantial questions of law have been raised by the appellants in the above appeal:
Reasoanable time limit applies if no specific time for section 201 order prescribed: Karnataka HC
“1. Whether the Tribunal was right in concluding that the orders passed u/s.201 were barred by limitation on the basis of “reasonable time limit” when no time limit has been prescribed by the Parliament in case of non-residents?
2. Whether Tribunal was correct in considering the “reasonable time limit” on the basis of judgment of Hon’ble High Court of Delhi vide [2016] Bharti Airtel Ltd. Vs. UOI (taxmann.com 256) and not on the basis of legislation as it exists?
3. Whether Tribunal is justified in ignoring the memorandum to Finance Bill 2009 clearly states that no time limits are prescribed in case where deductee is a non-resident?
4. Whether Tribunal’s order can be said as perverse in nature in holding that no proceedings under section 201 of the Act were pending before the Assessing Officer as on 01.04.2010 and by the time the proceedings under section 201 of the Act were initiated by issuing notice under section 201 of the Act on 05.02.2013, it was already become barred by limitation, therefore orders passed under section 201(1) and 201(1A) are invalid when the orders were passed in accordance with parameters set out in said sections and when no time limit has been prescribed by the Parliament in case of non-residents?”
4. It is brought to our notice that the above substantial questions of law are answered by the High Court of Delhi in the case of Bharti Airtel Ltd. and Another vs. Union of India and Another [2016 SCC OnLine Del 6338]. Subsequently, this Court by following the above cited order of the High Court of Delhi has disposed of several appeals and one such appeal is ITA No.5/2023 disposed of on 06.02.2023.
5. In view of the above, this appeal is dismissed. The substantial questions of law are answered in favour of the Assessee and against the Revenue.
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