Amendment in section 194H by insertion of provision 3 is not applicable retrospectively

Last updated: 23 November 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The present case is identical and similar to the issue decided by COD’s and the amendment made through the Finance Act, 2007 wherein it has been provided that tax shall not be deducted on payments of commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchises. As a matter of fact, the CBDT has taken a stand that the demands are not to be enforced on BSNL and MTNL offices expects in the cases where taxes have been deducted at sources but not paid over to the revenue. The order of the ld.CIT(A) is not acceptable as the amendment in section 194H by way of insertion of provision 3 is not applicable retrospectively and only applicable after 30th May, 2007. Further, the Hon’ble High Court, Chandigarh has also decided the appeal in favor of the assessee on the ground that the matter has been referred to the Committee on Disputes for awarding the decision. However, in the present order a liberty has been given to the department to file appropriate application for revival of the appeal if such a necessity arises on the basis of the decision taken by the committee on disputes. Only instant on the instruction of CBDT issued on 08-05-2009 vide instruction No.03/2009 about not for seen demand/penalty against BSNL/MTNL for non-deduction of TDS on STD/PCO commission is not sufficient parameters about raising of demand and passing of order u/s 201(1)/201(1A) of the I.T.Act. Further, the reliance of Delhi ITAT decision in order No.ITA/3946/D/2004 dated 20-10- 2005 is not justified as Hon’ble Chandigarh High Court has already decided this issue in the assessee’s own case

Citation :
Assistant Commissioner of Income Tax, TDS Circle, Gurgaon. (Appellant) Vs.M/s Bharat Sanchar Nigam Limited,Main Telecom Exchange, Old Delhi Road, Gurgaon. PAN: AABCB5576G. (Respondent)