THE COMMISSIONER OF INCOME-TAX (TDS).PUNE v. VODAFONE CELLULAR LTD,
Limitation for TDS Default Orders Under Section 201(3) Must Be Computed Quarter-Wise Based on Filing Dates of Individual Quarterly Statements Rather Than Annually.
Court: Bombay High Court
Citation: 2026:BHC-OS:5727-DB
Decision Date: 05-03-2026
List of Laws
Income Tax Act, 1961; Income Tax Rules, 1962; Section 201(3) - Limitation for TDS Default Orders; Rule 31A - Quarterly Statement of Deduction of Tax
- Facts: The Respondent, Vodafone Cellular Ltd., filed its Tax Deducted at Source (TDS) returns for the Financial Year 2008–09 on a quarterly basis. Returns for the first three quarters were filed within the same financial year (July 2008, September 2008, and January 2009), while the return for the fourth quarter was filed on 15th June 2009, which fell in the subsequent Financial Year 2009–10. The Assessing Officer passed an order under Section 201(1) of the Income Tax Act, 1961, on 15th March 2012, declaring the assessee to be in default for all four quarters.
- Procedural Posture: The Revenue appealed to the High Court against the order of the Income Tax Appellate Tribunal (ITAT), Pune. The ITAT had held that the proceedings for the first three quarters were barred by limitation under Section 201(3), while the proceedings for the fourth quarter were within time.
- Issue: Whether the limitation period for passing an order under Section 201(1) should be computed quarter-wise based on the filing of each TDS statement, or cumulatively on an annual basis from the end of the relevant financial year.
- Holding: The Court held that the limitation must be computed quarter-wise. The orders for the first three quarters were time-barred, while the order for the fourth quarter was valid.
- Reasoning: The Court relied on the literal interpretation of Section 201(3)(i) of the Act, which stipulates that no order shall be made after two years from the end of the financial year in which the TDS statement is filed. Since Rule 31A of the Income Tax Rules mandates filing TDS statements on a quarterly basis, each filing constitutes a distinct starting point for limitation. The Court rejected the Revenue's argument for a cumulative annual computation, noting that the statutory framework treats each quarter as a separate compliance period with independent due dates. The Court emphasized that limitation provisions in taxing statutes must be strictly construed and an assessee cannot be prejudiced by the Assessing Officer's delay beyond the prescribed statutory period.
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