An interesting decision (observation) in respect of Provisions of section 201 in respect of TDS on payments to Non-Residents-

 Atlas Copco (India) Limited Vs.  The Deputy Commissioner of Income Tax, Circle – 8, Pune –  ITA Nos.1669, 1670 & 1671/PUN/2014 – Date of Pronouncement – 05-04-2019

“……..13. A bare perusal of sub-section (3) as it was inserted by the Finance Act, 2009 and subsequently amended by the Finance Act, 2014 would show that reference is to the payments made without deduction of tax at source to „person resident in India‟. The sub-section (3) is silent about the limitation period for passing the order u/s. 201 where the payments are made without deduction of tax at source to non-resident/overseas entities. In the present case as is evident from the impugned order, during the assessment years under appeal the payments have been made to the entities based in Canada, USA, UK, Belgium, Sweden, UAE and Hongkong. Thus, the provisions of sub-section (3) to section 201 does not get attracted as it relates only to the payments made without deduction of tax to person resident in India.

14. In our considered opinion, where the payments are made to the entities/persons other than the persons specified in sub-section (3), the limitation period of one year from the end of financial year in which the proceedings u/s. 201 were initiated, as laid down by the Special Bench of Tribunal and affirmed by the Hon’ble Jurisdictional High Court would apply.

In the instant case, since, the order u/s. 201 has been passed much after the elapse of one year period from the end of financial year in which proceedings u/s. 201 were initiated, the order u/s. 201 in the impugned assessment years is void-ab-initio and hence, is liable to be quashed.

We hold and direct accordingly……”