Foreign-tax-information reference cannot extend limitation unless the treaty covers the relevant fiscal year or taxable event.

A foreign-tax-information reference can extend limitation under Section 153B only if the treaty mechanism authorises disclosure for the relevant fiscal year or taxable event. Reading the India-Hong Kong exchange-of-information protocol against the earlier India-Swiss protocol, the Delhi HC held that the Hong Kong protocol permitted disclosure only of information preceding its effective date and only where foreseeably relevant to a later fiscal year or taxable event. Because the reference to the FT&TR Division did not validly cover the assessment year in question, the Revenue could not invoke clause (ix) of the Explanation to Section 153B to extend limitation. The assessment orders were therefore time-barred and the assessee's position was sustained.

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Issues: Whether the Revenue could invoke clause (ix) of the explanation to Section 153B of the Income-tax Act, 1961 to claim extension of limitation on the basis of a reference made to the FT&TR Division under the India-Hong Kong exchange-of-information protocol.

Analysis: The relevant treaty provisions were compared with the earlier India-Swiss protocol and it was found that the Hong Kong protocol permitted disclosure only of information preceding the effective date, provided the information was foreseeably relevant for a fiscal year or taxable event following that date. On that construction, the request could not cover the assessment year in question, which fell outside the permissible temporal scope of the treaty mechanism. Since the reference itself was not valid for the relevant assessment year, the Revenue could not derive the benefit of the extended limitation period under clause (ix) of the explanation to Section 153B.

Conclusion: The reference to FT&TR was impermissible for the relevant assessment year and the limitation period was not extended; the finding in favour of the assessee was sustained.

Final Conclusion: The appeals failed and the Tribunal's view that the assessment orders were time-barred was upheld.

Ratio Decidendi: A foreign-tax-information reference can extend limitation under Section 153B only when the treaty provision relied upon authorises disclosure for the relevant fiscal year or taxable event; if the request falls outside that temporal reach, the Revenue cannot claim extension of time.

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