It is sad that there is no specific period of limitation prescribed for ini tiating action in consequence of any failure to deduct or pay tax w.r.t. transactions with non residents. This has lead to difference of opinion among appellate forums as to what is a reasonable period for reopening TDS matters. In the recent case of ( 2024] 470 ITR 479 (Telangana) the Court held 7 years as applicable in case of payments to residents as a reasonable period relying on previous decision from the division benches of delhi and Telangana court. Even Madras High Court later held likewise. No matter what is finally decided in the above cases this Court as well as the Delhi High Court have uniformly also held that the term “reasonable period” in the absence of any statutory limitation cannot be accepted as a strait jacket answer and further what is a reasonable period would depend on the facts and circumstances of each case. It is better that the government provide such reasonable period by an amendment in the Act even w.r.t. non-residents payment cases. This was a case involving the question, “whether the payments made to the international telecom operators be held to be in the nature of fees for technical services or not” when the two appellate forums held that the show- cause notice in the case is barred by limitation. With the result the case had to be sent back for the period of limitation fight even when to its core there is no withholding required in this nature of transactions as these are purely business transactions.
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