THE COMMISSIONER OF INCOME-TAX (TDS).PUNE vs. VODAFONE CELLULAR LTD,

2026:BHC-OS:5727-DB
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO.2438 OF 2018
The Commissioner of Income Tax (TDS), Pune .. Appellant
Vs.
Vodafone Cellular Ltd., Pune .. Respondent
Mr. A.K. Saxena, Advocate for the Appellant.
Mr. Jitendra Singh with Ms. Shivali Mhatre and Mr. Rajesh
Gaikwad, Advocates f or the Respondent.
CORAM : M.S. KARNIK & GAUTAM A. ANKHAD, JJ.
TH
CLOSED FOR ORDERS ON : 26 FEBRUARY 2026.
TH
PRONOUNCED ON : 5 MARCH 2026.
PER, GAUTAM A. ANKHAD, J.
th
1. The present Appeal is filed against the order dated 12 March
2018 passed by the Income Tax Appellate Tribunal, Pune, whereby
the Tribunal held that the proceedings initiated by the Assessing
Officer under Section 201(1) of the Income Tax Act, 1961 for the
first three quarters of Assessment Year 2009–10 are barred by
limitation.
2. The Assessee/Respondent filed its TDS Returns for Financial
Year 2008–09 as under:
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3. The order under Section 201(1) of the Act declaring the
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assessee to be in default was passed on 15 March 2012. Before the
Tribunal, it was contended that insofar as the first three quarters are
concerned, the limitation prescribed under Section 201(3) had
expired. In respect of the fourth quarter, since the TDS Return was
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filed on 15 June 2009, i.e. in the subsequent financial year, the
limitation would have to be computed from the end of that financial
year. The Tribunal accepted this contention and held that the
proceedings for the first three quarters was held to be time-barred,
while those relating to the fourth quarter was held to be within
limitation. This finding of limitation for the first three quarters is
assailed in the present Appeal.
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4. Mr. A.K. Saxena, the learned counsel for the Appellant sub-

mitted that the Tribunal committed an error of law. According to
him, though TDS Returns are filed quarterly, the liability is to be
considered on an annual and cumulative basis and limitation ought
not to be computed quarter-wise.
5. On the other hand, Mr. Jitendra Singh, the learned counsel for
the Respondent supported the impugned order and relied upon
Sections 201(3), 201(1A), 139 of the Act and Rule 31A of the
Income Tax Rules to submit that the TDS Returns for each quarter
are to be filed as per the due date mentioned in Rule 31A. The TDS
Return for the fourth quarter is to be filed in the following financial
year. Since the TDS Returns for the first three quarters were filed in
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financial year 2008–09, the order dated 15 March 2012 was
beyond two years from the end of that financial year. However, the
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Return for the fourth quarter was filed on 15 June 2009, i.e. in
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financial year 2009–10 and the order dated 15 March 2012 was
within two years from the end of that financial year.
6. We have heard the learned counsel for the parties and perused
the material on record. We find no infirmity in the impugned order.
Section 201(3), as it stood at the relevant time reads as under:
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“201(3) No order shall be made under sub-section (1)
deeming a person to be an assessee in default for failure to deduct
the whole or any part of the tax from a person resident in India at
any time after the expiry of -
(i) two years from the end of the financial year in
which the statement is filed in a case where the statement referred
to in Section 200 has been filed ;
(ii) …………...”

7. The said provision stipulates that no order under Section
201(1) shall be passed after the expiry of two years from the end of
the financial year in which the TDS statement is filed. The
commencement of limitation is thus linked to the filing of the TDS
Return. Since, under Rule 31A, TDS statements are mandatorily
filed on a quarterly basis, the computation of limitation must
necessarily operate quarter-wise. In the present case, the TDS
Returns for the first three quarters were filed in financial year
2008–09. The order under Section 201(3), having been passed on
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15 June 2012, was beyond two years from the end of that financial
year. The Tribunal was therefore justified in directing deletion of the
demand pertaining to those quarters. As regards the fourth quarter,
the TDS Return was filed in financial year 2009–10 and the order
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dated 15 March 2012 was within two years from the end of that
financial year; the demand for that quarter was rightly sustained.
The language of the statute does not prescribe of cumulative or
annual computation of limitation as is sought to be argued by the
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Appellant. The scheme of TDS compliance under the Act and the

Rules treats each quarter as a separate compliance period, with
distinct due dates and independent statements. Each filing
consequently furnishes a separate starting point for limitation under
Section 201(3). The Appellant’s contention that limitation must be
computed on an annual basis is contrary to both the text and
structure of the statutory framework. An assessee cannot be
prejudiced by the Assessing Officer’s failure to pass orders within
the prescribed period. It is well settled that limitation provisions in
taxing statutes must be strictly construed and cannot be extended by
implication.
8. We find no perversity in the impugned order. For all these
reasons, Appeal no.2438 of 2018 is dismissed.
[GAUTAM A. ANKHAD, J. ] [ M.S. KARNIK, J. ]
BHARAT
DASHARATH
PANDIT
Digitally signed by
BHARAT
DASHARATH
PANDIT
Date: 2026.03.05
20:39:07 +0530
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