TITLE: Section 201 TDS: Even if the statute does not lay down a time limit, proceedings must be completed within a limited period CASE: DIT (IT) vs. Mahindra & Mahindra Limited (Bombay High Court)

TITLE: Section 201 TDS: Even if the statute does not lay down a time limit, proceedings must be completed within a limited period

CASE: DIT (IT) vs. Mahindra & Mahindra Limited (Bombay High Court) 

In the context of a GDR/ Euro issue by the assessee, the department claimed that the assessee ought to have deducted TDS u/s 195 on payment of fees to the fund managers etc. The Special Bench (122 TTJ 577) allowed the assessee’s appeal inter alia on the ground that a time limit for initiation and completion of proceedings u/s 201 (1) & (1A) had to be read into the statute.

On appeal by the department to the High Court HELD dismissing the appeal:

S. 201 of the Act does not prescribe any limitation period for the assessee being declared as an assessee in default. If no period of limitation is prescribed, a statutory authority must exercise its jurisdiction within a reasonable period. What should be the reasonable period depends upon the nature of the statute, rights and liabilities thereunder and other relevant factors.

Insofar as the IncomeTax Act is concerned, s. 153(1)(a) prescribes the time limit for completing the assessment, which is two years from the end of the assessment year in which the income was first assessable. It is well known that the assessment year follows the previous year and, therefore, the time limit would be three years from the end of the financial year. This seems to be a reasonable period as accepted u/s 153 of the Act, though for completion of assessment proceedings. Even though the period of three years would be a reasonable period as prescribed by s. 153 of the Act for completion of proceedings, the Income Tax Appellate Tribunal has taken the view that four years would be a reasonable period of time for initiating action, in a case where no limitation is prescribed.

The rationale for this seems to be quite clear if there is a time limit for completing the assessment, then the time limit for initiating the proceedings must be the same, if not less.

Nevertheless, the Tribunal has given a greater period for commencement or initiation of proceedings (NHK Japan Broadcasting Corp 305 ITR 137 (Del) & Hutchison Essar Telecom 323 ITR 230 (Del) followed; Bhura Exports (Cal HC) dissented from)

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TITLE: Two flats, even though acquired under different agreements & from different sellers, are one residential unit if there is a common kitchen CASE: CIT vs. Devdas Naik (Bombay High Court)

TITLE: Two flats, even though acquired under different agreements & from different sellers, are one residential unit if there is a common kitchen

CASE: CIT vs. Devdas Naik (Bombay High Court)

  

The department’s argument that the law laid down by the Tribunal in ITO v/s Sushila M. Jhaveri 107 ITD 327 (Mum)(SB) and confirmed by this Court in CIT v/s Raman Kumar Suri (Income Tax Appeal No.6962 of 2010, decided on 27.11. 2012) on the availability of exemption u/s 54 is applicable only when the house purchased is a single unit and not where two flats, one acquired in the assessee’s name and another jointly in the names of the assessee and his wife but under two distinct agreements and from different sellers have been taken into consideration is not acceptable.

Though these flats were acquired under two distinct agreements and from different sellers, the map of the general layout plan as well as internal layout plan in regard to flat Nos.103 and 104 indicate that there is only one common kitchen for both the flats.

The flats were constructed in such a way that adjacent units or flats can be combined into one. The admitted fact is that the flats were converted into one unit and for the purpose of residence of the assessee.

Thus, though the acquisition of the flats may have been done independently but eventually they are a single unit and house for the purpose of residence.

RELATED JUDGEMENT

·         Hill Properties Ltd vs. Union Bank (Supreme Court) – “Occupancy rights in flat conferred by Articles of Association confer ownership rights in flat.”

·         CIT vs. Syed Ali Adil (Andhra Pradesh High Court) – “The building should be of residential nature and “a” should not be understood to indicate a singular number.”

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TITLE: S. 234E: High Court grants ad-interim stay against operation of notices levying fee for failure to file TDS statement CASE: Rashmikant Kundalia vs. UOI (Bombay High Court)

TITLE: S. 234E: High Court grants ad-interim stay against operation of notices levying fee for failure to file TDS statement

CASE: Rashmikant Kundalia vs. UOI (Bombay High Court)

S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day’s delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). A Writ Petition to challenge the validity of s. 234E has been filed in the Bombay High Court.

The Petition claims that assessees who are deducting tax at source are discharging an administrative function of the department and that they are a “honorary agent” of the department. It is stated that this obligation is onerous in nature and that there are already numerous penalties prescribed for a default. It is stated that the fee now levied by s. 234E is “exponentially harsh and burdensome” and also “deceitful, atrocious and obnoxious“. It is also claimed that Parliament does not have the jurisdiction or competence to impose such a levy on tax-payers.

The Bombay High Court has, vide order dated 28.04.2014, granted ad-interim stay in terms of prayer clause (d) i.e. stayed the operation of the impugned notices levying the fee.

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