Vedanta Limited Vs DCIT (Madras High Court)
Madras High Court held that time limit of six years is reasonable time for passing of order under section 201 of the Income Tax Act in respect of non-residents. Accordingly, order impugning assessment years beyond six years is set aside.
Facts- The appellant company is engaged in the business of mining and exploration of metals and oil and natural gas. During the relevant financial years, the appellant entered into a Consultancy Agreement and Representative Office Agreement with Vedanta Resources Public Limited Company (VRPLC) which is a non-resident entity. For the services rendered by VRPLC, remuneration was paid by the appellant without deducting tax at source. Treating the appellant as an assessee in default in terms of Section 201(1) of the Income Tax Act 1961, show cause notices were issued in respect of the assessment years commencing from 2010-2011 to 2015-16 on various dates. After receiving the appellant’s reply, final orders were also passed on various dates and demands were raised. Challenging the same, the appellant filed the aforementioned writ petitions. The prime ground of attack was that the orders passed u/s. 201 and 201(1A) are time-barred.
Conclusion- Held that the period of limitation has been varied from time to time. Section 201 had been amended yet again. This time, the distinction between residents and non-residents has been done away with. Both types of transactions have been placed on the same footing. Limitation period is now six years. This is the position w.e.f 01.04.2025. It is true that when the impugned orders were passed, the statute had prescribed seven years as limitation in respect of payments made to residents. For the reasons indicated in the previous paragraph, we cannot reckon seven years as the reasonable period for all the six assessment years. We are, therefore, of the view that taking six years which is now the statutorily mandated period can be taken as the reckoning yardstick.
