Bombay High Court Clarifies Limitation for TDS Default Orders

 

A recent decision of the Bombay High Court in CIT (TDS), Pune v. Vodafone Cellular Ltd. (ITA No. 2438 Of 2018) provides an important clarification on the limitation period for passing orders under Section 201(1) of the Income-tax Act.

Issue
Whether the limitation prescribed under Section 201(3) for treating a deductor as an assessee in default should be computed annually or separately for each quarterly TDS statement?

Hon Bombay HC held as below, rejecting the Revenue’s argument that limitation should be computed on a cumulative annual basis:
1. Section 201(3) links the limitation period to “the financial year in which the TDS statement is filed.”

2. Since Rule 31A mandates quarterly TDS statements, each quarter represents an independent compliance event.

3. Consequently, limitation must be computed quarter-wise, with each statement triggering a separate limitation period.

Conclusion:
For the purposes of Section 201(3), the limitation for passing an order under Section 201(1) runs separately from the financial year in which each quarterly TDS statement is filed, and not from the financial year as a whole.

The copy of the order is as under:

ordjud