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Tax Publishers HCL Technologies Ltd. v. ACIT [ITA No. 1723/Del/2017, dt. 20-7-2020] : 2020 TaxPub(DT) 2894 (Del.-Trib.) Time limits amended in section 201(3) vide Finance Act 2 of 2014 with effect from 1-10-2014 are these retrospective or prospective? *Facts:* Assessee was served a notice under section 201(1)/(1A) read with 201(3) holding them in default for non-deduction of TDS under various sections for assessment year 2009-10 on 11-1-2016 in respect of years prior to amendment of section 201(3) vide Finance Act 2 of 2014 (whereby the time limit for notice under section 201(3) was enhanced from 2 to 7 years). The ground of revenue being that the extended time limit would apply to assessee retrospectively. This was upheld by lower authorities. Aggrieved assessee sought higher appeal with ITAT- Held in favour of the assessee that the enhanced time limit will not be applicable for the assessee and the notice under section 201(3) was held to be time barred. The amendment in section 201(3) cannot be read retrospective. Actual time limit if one reckons the pre-amended law of two years in section 201(3) for assessment year 2009-10 would be 31-3-2012. The notice was dated 11-1-2016 much later to thus date. Meanwhile section 201(3) went thru a slew of amendments first one being vide Finance Act, 2012 with retrospective effect from 1-4-2010. The next one being vide Finance Act 2 of 2014 with effect from 1-10-2014 where the time limit was extended from 2 to 7 years. There was no explicit retrospective mention of this amendment so it could only be read prospective is what ITAT decided in this case. Departmental plea was the since being a procedural provision the extended time limit ought to apply for all notices issued under section 201(3) after 1-10-2014. Assessee's ground was if it was a retrospective amendment it would have been confirmed by law as it had done earlier on the same section. In the absence of an explicit mention retrospective reading is not possible. Though a procedural provision the scope was to fasten assessee in default thus an indirectly taxing provision. A taxing provision thus cannot be read retrospectively unless law intended it thus. This appealed to the ITAT holding it in their favour. *Applied:* Tata Teleservices v. Union of India (2016) 385 ITR 497 (Guj-HC) : 2016 TaxPub(DT) 1126 (Guj-HC). *Editorial Note:* The entire discussion of the decision is from the above cited case of Tata Teleservices supra but it needs to be borne in mind that section 201(3) has had an amendment as well vide Finance Act 2 of 2019 with effect from 1-9-2019 where the time limit is 7 year or a 2 year period from the end of the financial year in which the correction statement is delivered under the proviso to sub-section (3) of 200 whichever is later. Will this amendment be read retrospective or prospective whereby only correction statements issued after 1-9-2019 be subjected to this 2/7 year later limitation or even existing notices issued where department may claim 7 year window instead of 2 year period? This decision might benefit those certainly.

Tax Publishers

HCL Technologies Ltd. v. ACIT [ITA No. 1723/Del/2017, dt. 20-7-2020] : 2020 TaxPub(DT) 2894 (Del.-Trib.)

Time limits amended in section 201(3) vide Finance Act 2 of 2014 with effect from 1-10-2014 are these retrospective or prospective?

Facts:

Assessee was served a notice under section 201(1)/(1A) read with 201(3) holding them in default for non-deduction of TDS under various sections for assessment year 2009-10 on 11-1-2016 in respect of years prior to amendment of section 201(3) vide Finance Act 2 of 2014 (whereby the time limit for notice under section 201(3) was enhanced from 2 to 7 years). The ground of revenue being that the extended time limit would apply to assessee retrospectively. This was upheld by lower authorities. Aggrieved assessee sought higher appeal with ITAT-

Held in favour of the assessee that the enhanced time limit will not be applicable for the assessee and the notice under section 201(3) was held to be time barred. The amendment in section 201(3) cannot be read retrospective.

Actual time limit if one reckons the pre-amended law of two years in section 201(3) for assessment year 2009-10 would be 31-3-2012. The notice was dated 11-1-2016 much later to thus date. Meanwhile section 201(3) went thru a slew of amendments first one being vide Finance Act, 2012 with retrospective effect from 1-4-2010. The next one being vide Finance Act 2 of 2014 with effect from 1-10-2014 where the time limit was extended from 2 to 7 years. There was no explicit retrospective mention of this amendment so it could only be read prospective is what ITAT decided in this case.

Departmental plea was the since being a procedural provision the extended time limit ought to apply for all notices issued under section 201(3) after 1-10-2014.

Assessee's ground was if it was a retrospective amendment it would have been confirmed by law as it had done earlier on the same section. In the absence of an explicit mention retrospective reading is not possible. Though a procedural provision the scope was to fasten assessee in default thus an indirectly taxing provision. A taxing provision thus cannot be read retrospectively unless law intended it thus. This appealed to the ITAT holding it in their favour.

Applied: Tata Teleservices v. Union of India (2016) 385 ITR 497 (Guj-HC) : 2016 TaxPub(DT) 1126 (Guj-HC).

Editorial Note: The entire discussion of the decision is from the above cited case of Tata Teleservices supra but it needs to be borne in mind that section 201(3) has had an amendment as well vide Finance Act 2 of 2019 with effect from 1-9-2019 where the time limit is 7 year or a 2 year period from the end of the financial year in which the correction statement is delivered under the proviso to sub-section (3) of 200 whichever is later. Will this amendment be read retrospective or prospective whereby only correction statements issued after 1-9-2019 be subjected to this 2/7 year later limitation or even existing notices issued where department may claim 7 year window instead of 2 year period? This decision might benefit those certainly.