TaxTMI 
TaxTMI 
2019 (10) TMI 992
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....(3) of the Act on 30.01.2013 wherein, he recommended an awkward suggestion of international transaction of Rs. 86095422/-. The Assessee filed objections before the ld DRP against the draft order dated 11.03.2013. The ld DRP issued direction u/s 144C(5) on 20.12.2013. Pursuant to that direction the ld Assessing Officer passed order u/s 143(3) read with Section 144C of the Act on 30.01.2014. On the above facts in the appeal Assessee has raised an additional grounds as under 3. "That on the facts and circumstances of the case and in law, the impugned order passed by the Assessing Officer is barred by limitation and therefore, is liable to be quashed.' 4. The ld AR adverting to the additional ground pressed for its admission submitted as under:- "The aforesaid additional ground of appeal raises a purely legal issue which does not require any fresh investigation into facts; facts already being on records. The aforesaid additional ground of appeal calls for being admitted and adjudicated on merits in view of the discretion conferred on your Honours under Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963 and the Supreme Court decision in the case of Nation....
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....of return by the assessee. Where the assessing officer seeks to scrutinize the return, the assessing officer issues notice under section 143(2) within the stipulated time. After collating the necessary details that may be required from the assessee and after granting an assessee adequate opportunity of being heard, the assessing officer would pass the assessment under section 143(3) of the Act. Where the assessee had entered into international transactions within the meaning of section 92B of the Act, ("eligible assessee') the assessing officer is required to make a reference to the Transfer Pricing Officer ("TPO') to determine the arm's length price ("ALP') in respect of such international transactions. In case of such an eligible assessee, (as also defined in subsection 15(b) of section 144C of the Act), the assessing officer is mandatorily required to pass proposed order of assessment (hereinafter referred to as 'draft assessment order'). Once the draft assessment order is passed by the assessing officer and served on the eligible assessee, the eligible assessee may within 30 days of receipt thereof either (a) file his acceptance of the variations to t....
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....s under: "(2A) The Principal Commissioner or Commissioner may, if he objects to any direction issued by the Dispute Resolution Panel under subsection (5) of section 144C in respect of any objection filed on or after the 1st day of July, 2012, by the assessee under sub-section (2) of section 144C in pursuance of which the Assessing Officer has passed an order completing the assessment or reassessment, direct the Assessing Officer to appeal to the Appellate Tribunal against the order." The assessment order passed by the assessing officer pursuant to the directions of the DRP is under section 143(3) read with section 144C(13) of the Act only. Such an order cannot be construed as having been passed independently and on a stand-alone basis under section 144C(13) of the Act. To put it differently, the order passed pursuant to the directions of the DRP under section 144C(13) of the Act is regarded as the assessment order. The same is the only operative assessment in case of an eligible assessee. B. Scheme of the Act with respect to limitation: The relevant provisions of section153 of the Act as applicable at the relevant time read as under: ....
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....erride the former, notwithstanding the non-obstante clause in sub-sections (4) and (13) thereof. The provision of section 144C(1) of the Act mandating passing of draft assessment order in case of an eligible assessee, is an exception to the ordinary rule wherein the assessing officer has to pass only one order, i.e., assessment order under section 143(3) of the Act without making a draft assessment order. The non-obstante provision in section 144C(1) of the Act is to make it mandatory for the assessing officer to pass draft assessment order in the case of an eligible assessee, contrary to the scheme of the Act wherein the assessing officer is required to pass one and only assessment order in the case of all other assessees. Having regard to the aforesaid, the non-obstante clause in section 144C(1) of the Act requiring passing of a draft assessment order in case of an eligible assessee is, therefore, to be read limited to the context, i.e., exception to the ordinary rule that there will be only one assessment order passed by the assessing officer on culmination of the assessment proceedings. The time limit of passing the assessment order in the circumstances mentio....
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....ng and finality in high demand cases is attained only after a long drawn litigation till Supreme Court. Flow of foreign investment is extremely sensitive to prolonged uncertainity in tax related matter. Therefore, it is proposed to amend the Income-tax Act to provide for an alternate dispute resolution mechanism which will facilitate expeditious resolution of disputes in a fast track basis' It is submitted that if the non-obstante clause in sections144C(4)/ 144C(13) of the Act is interpreted as allowing the assessing officer additional time over and above the limit provided under section 153of the Act, the same would defeat the entire purpose of expediting the dispute resolution process, by enlarging the time available for completion of assessment to almost five years from the end of the relevant previous year (four years from the end of the relevant assessment year) as explained hereinafter. C. Import of non obstante clause: It is settled law that the non- obstante provisions have to be read in context and for the purpose for which the same have been enacted, i.e., a non obstante clause is to be interpreted consistent with the specific purpose a....
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....he Hon'ble apex Court in the cases of R.S. Raghunath vs. State of Karnataka (1992) 1 SCC 335, ICICI Bank Ltd. vs. SIDCO Ltd. (2006) 10 SCC 452,Ramdev Food Products (P.) Ltd. vs. ArvindbhaiRambhai Patel (2006) 8 SCC 726and Central Bank of India vs. State of Kerala (2009) 4 SCC 94, reiterating that, while interpreting a nonobstante provision, the Court is required to keep in mind the intent of the Legislature and any statutory construction of such a provision is to be limited to the context/ purpose for which the same was intended. It may be useful to the refer to the observations in the case of Geeta vs. State of U.P. (2010) 13 SCC 686, whereinafter exhaustively citing the earlier legal precedents and interpretative guidelines on the subject, the Hon'ble Court held as under: "38. Interpretation of non obstante clauses has come up for consideration before this Court in a large number of decisions. In Aswini Kumar Ghose v. Arabinda Bose [AIR 1952 SC 369], a Constitution Bench of this Court speaking through Patanjali Sastri, C.J. observed that: (AIR p. 377, para 27) "27. ... the non obstante clause can reasonably be read as overriding 'anything contained' in ....
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....ne provision overriding effect over another provision.' 42. The Bench in A.G. Varadarajulu case [(1998) 4 SCC 231] referred to the principle in the Constitution Bench decision in Madhav Rao Jivaji Rao Scindia v. Union of India [(1971) 1 SCC 85] wherein this Court held that: (A.G. Varadarajulu case [(1998) 4 SCC 231] , SCC p. 236, para 16) "16. ... the non obstante clause [was] a very potent clause intended to exclude every consideration arising from other provisions of the same statute or other statute but 'for that reason alone we must determine the scope' of that provision strictly. When the section containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions of the statute generally, it is not permissible to hold that it excludes the whole Act and stands alone by itself.' 43. This Court also held in ICICI Bank Ltd. v. SIDCO Leathers Ltd. [(2006) 10 SCC 452] that the wide amplitude of a non obstante clause must be kept confined to the legislative policy and it can be given effect to, to the extent Parliament intended and not beyond the same and that in construing the provisions of a non....
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....e assessees, then, in that situation, the said section would have read as under: "No order of assessment ........... other than an assessment completed in pursuance of directions of the DRP ... .... (words inserted) shall be made under section 143 or section 144 at any time after the expiry of............' In such a situation, exception to the applicability of section 153 of the Act would be done by doing violence to the language of the said section and reading words into the statute which are conspicuous by their absence. It is settled rule of interpretation of statutes to interpret the statute as it is; further, it is contrary to all rules of construction to read words into a statute which the Legislature in its wisdom has deliberately not incorporated. [Refer CIT vs. Tara Agencies: 292 ITR 444 (SC) reproduced infra] Explaining the same, Justice (Retd.) G.P. Singh in his celebrated treatise on the 'Principles of Statutory Interpretation' [Twelfth Edition, 2010] @ 85-86, noted that: "The words of a statute are first understood in their natural, ordinary or popular sense and phrases and sentences are construes according to their grammatical meani....
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....s of Rowlatt J. in Cape Brandy Syndicate vs. IRC [1921] 1 KB 64, observed as under: "The rule of construction of a taxing statute has been pithily stated by Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 K.B. 64, 71 thus : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used". To put it in other words, the subject is not to be taxed unless the charging provision clearly imposes the obligations. Equally important is the rule of construction that if the words of a statute are precise and unambiguous, they must be-accepted as declaring the express intentions of the legislature.' Reference may also be made to the judgment in the case of Smt. Tarulata Shyam vs. CIT [1971] 108 ITR 345 (SC), wherein the Hon'ble apex Court cautioned against the judicial deployment of casus omissus, in the following terms: "We have given anxious thought to the persuasive arguments of Mr. Sharma. His argu....
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....eoki Nandan Aggarwal 1992 Suppl. (1) SCC 323, a three-Judge Bench of this court held that it is not the duty of the court either to enlarge the scope of legislation or the intention of the Legislature, when the language of the provision is plain. The court cannot rewrite the legislation for the reason that it had no power to legislate. The power to legislate has not been conferred on the courts. The court cannot add words to a statute or read words into it which are not there. 64. In State of Kerala v. Mathai Verghese [1986] 4 SCC 746, this court has reiterated the well settled position that the court can merely interpret the section; it cannot re-write, recast or redesign the section. In interpreting the provision the exercise undertaken by the court is to make explicit the intention of the Legislature which enacted the legislation. It is not for the court to reframe the legislation for the very good reason that the powers to 'legislate' have not been conferred on the court. 65. In Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests 1990 (Suppl) SCC 785, the court rightly observed that in seeking legislative intention Judges not only l....
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.... be found in the statute. (Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector 6B ETIO37: (2007) 5 SCC 447; Union of India v. Mohindra Supply Co.: AIR 1962 SC 256; Bank of England v. Vagliano Bros 39 LR (1891) AC 107; CIT v. Anjum M.H. Ghaswala 40: (2002) 1 SCC 633; J. Srinivasa Rao v. Govt. of A.P.: (2006) 12 SCC 607. Statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances, (Chertsey Urban District Council v. Mixnam's Properties Ltd. (1964) 2 All ER 627, and must be construed according to the rules of grammer. When the language is plain and unambiguous, and admits of only one meaning, no question of construction of a statute arises for the Act speaks for itself. The meaning must be collected from the expressed intention of the legislature. (State of U.P. v. Dr Vijay Anand Maharaj (1963) 1 SCR 1. In construing a statutory provision, the first and foremost rule of construction is the literal construction. All that the court has to see at the very outset is what does that provision say. If the provision is unambiguous and if, from that provision, the legislative intent is clear, the cour....
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....lika das v. Hulisa Shaw.: (2002) 4 SCC 539. Unless there is any ambiguity it would not be open to the Court to depart from the normal rule of construction which is that the intention of the Legislature should be primarily gathered from the words which are used. It is only when the words used are ambiguous that they would stand to be examined and construed in the light of surrounding circumstances. (CIT v. Sodra Devi: AIR 1957 SC 832. A provision is not ambiguous merely because it contains a word which in different contexts is capable of different meanings. It would be hard to find anywhere a sentence of any length which does not contain such a word. A provision is ambiguous only if it contains a word or phrase which, in that particular context, is capable of having more than one meaning. (Kirkness (Inspector of Taxes) v. John Hudson & Co., Ltd. (1955) AC 696 (HL). It is only when the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, would Courts prefer to adopt the latter construction.' In view of the aforesaid, it would be a....
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....e aforesaid, it is respectfully submitted that the order dated 30.01.2014passed under sections 143(3) / 144C(13) of the Act is clearly barred by limitation and, therefore, is unlawful and is liable to be quashed. 8. On the merits he submitted that the issue is squarely covered in favour of the revenue by the order of the coordinate bench in ITA No. 1132/Del/2015 for the AY 2010-11. It was further contended that proceedings before the DRP are substitution of the appellate proceedings and the order passed by the DRP is akin to the appellate order; the final assessment order passed by the assessing officer under section 144C(13) of the Act is akin to the appeal effect order. It was further contended that as in the case of appellate proceedings, if provisions of section 144C are invoked applicability of section 153 of the Act is ousted. 9. In rebuttal ld AR submitted as under :- Rebuttal to submissions of the Revenue I. It was contended by the Ld CIT DR that proceedings before the DRP are substitution of the appellate proceedings and the order passed by the DRP is akin to the appellate order; the final assessment order passed by the assessing officer under secti....
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....ether and each word, phrase or sentence is to be considered in the light of the general purpose and object of the Act itself. .... ....' As elaborately submitted infra, thenon-obstante clause in section 144C(13) has to be read in context of the overall scheme of the Act, including section 153 and the legislative intent behind enacting the speedy dispute resolution process in section 144C of the Act. In support of the aforesaid proposition, viz, the non-obstante clause has to be read keeping in mind the Legislative intent and limited to the context / purpose for which the same was intended, the appellant has placed reliance on several decisions of the apex Court which, in turn, rely upon the decision in the case of Aswini Kumar Ghosh (supra) referred to by the Revenue. III. The Revenue placed reliance upon the decision of the Delhi bench of the Tribunal in the case of Honda Trading Corporation vs. CIT : (2015) 61- taxmann.com-233, wherein the Hon'ble bench was pleased to hold that the provisions of section 144C override the provisions of section 153 of the Act. While rejecting the assessee's contention that the limitation in section 153 referred t....
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....nct time limit for the passing of the order by the TPO, being a period of sixty days prior to the date of completion of assessment as per section 153. Simultaneously, the time limit for passing of order u/s 153 in cases where reference is made to the TPO, was also enhanced to thirty three months. ... ... ... The provisions of section 144C about 'Reference to the dispute resolution panel', were inserted by the Finance (No. 2) Act, 2009 w.e.f. 1.4.2009. This led to the ushering in the era of passing the draft order. It means that up to the A.Y. 2008-09, when the mechanism ofDRP and the passing of draft order was not in place, the final assessment order pursuant to the order of the TPO was required to be passed within the time limit given in section 153. However, when the institution of the DRP and the concept of passing a draft order came into being w.e.f. the A.Y. 2009-10, the time limit for the completion of assessment came to be governed by sub-section (4) or (13) of section 144C. This shows that upon the introduction of section 144C, there emerged two simultaneous time limits for completion of assessments, viz., the one which already existed as per section 153 an....
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....ng the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires'. Since the time limit for passing of the order by the TPO is not direct but is linked with the time limit as per section 153, the legislature did not insert any sunset clause in section 153, which would have otherwise made the provision of sub-section (3A) of section92CA unworkable without the insertion of a separate corresponding provision giving time limit for the passing of the order by the TPO. This is the answer to the ld. AR's poser that when the time limit for completion of assessment is contained in section 144C, then the provisions of section 153 cannot be read as meaningless except for linking it with draft order. In our considered opinion, it is overt that the time limit u/s153 is not meaningless as the same has been retained for keeping alive the time limit given to the TPO for passing his order. 5.24 We have noticed above that the term 'draft order' has been statutorily coined u/s 144C(1). It means that the term 'draft order' has been recognized as and is actually different in ambit from the term 'assessment order'. With....
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....orporation (supra) does not lay down the correct position in law. While the Tribunal has rightly come to the conclusion that the words "draft order of assessment' can be read into section 153, the Hon'ble Tribunal erred in holding that section 144C gives a go bye to section 153 of the Act and provides independent time limit for completion of assessment in pursuance of directions of the DRP. In taking the aforesaid view, the following conclusions arrived at by the Tribunal are erroneous in law: 1. The Tribunal has held that the term draft order has been recognized as and is actually different in ambit from the term 'assessment order'. The Tribunal has not appreciated that the draft assessment order is proposed order of assessment (refer section 144C(1)) and does not have any independent existence / locus in law. The same is not accompanied by notice of demand and is not enforceable; the same is not appealable and cannot form the basis for initiation of penalty proceedings. In that view of the matter, the draft order of assessment can be equated with the assessment completed in pursuance of the directions of the DRP under section 143(3) read with section 144C(13) of the Act.....
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.... by the assessing officer, as provided in sub-section (13) of section 144C of the Act. The Hon'ble Tribunal in the aforesaid case was only concerned with the issue relating to determination of the date on which the directions passed by the DRP were received by the assessing officer so as to examine whether the final assessment order was passed within 30 days of receipt of directions issued by the DRP as per section 144C(13) of the Act. While allowing the appeal of the assessee, the Hon'ble Tribunal made a passing observation that "............ even though the period of limitation provided in 3rd proviso to section 153(1) expired on 31.3.2013, Section 144C(13) gives extension of further period of one month from the date of receipt of direction from the DRP. .... ....'. It is respectfully submitted therefore that the aforesaid observation cannot be construed as the ratio of the said decision and therefore, cannot be considered to be a binding precedent. In the aforesaid case, the controversy related to determination of the date on which direction passed by the DRP was received by the AO so as to determine whether the assessment order was passed by the AO within 30 d....
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....hallenge before us. We do not have any hesitation in holding that the issues argued by the ld AR are squarely covered against the assessee by the decision of coordinate bench in ITA No. 1132/Del/2015 . The above order of the coordinate bench has clearly covers from para No. 5.22 onwards that in such cases the passing of the final assessment order pursuant to the order of the ld TPO as contained in section 144C(4) and (13), the time limit given u/s 153 has no relation whatsoever with the passing of the draft order, which should be passed within a reasonable time and the time limit given u/s 153 of the Act is relevant for the determination of time available with the TPO for passing order u/s 92CA(3). The facts before the coordinate bench was that the assessment order u/s 143(3) was passed on 29.01.2015 which is well within the period of one month in which the direction was received from the ld DRP on 24.12.2014, thus, the final order passed by the ld AO is within the time prescribed u/s 144C(13). As the draft order was also passed within a reasonable time same is also not barred by limitation. Against this decision no further appeal is filed by the Assessee. However, the ld AR has gi....
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.... receipt of the draft order either to accept the draft order and intimate the assessing officer accordingly or to file objections to the proposed variations with the dispute resolution panel and the assessing officer. If the assessee exercised an option to accept the draft order nothing else is required to be done except to complete the assessment on the basis of the draft order. Such order i.e. the draft order becomes the final order when acceptances received or the period for filing of the objection expires. If the objections are filed by the assessee the dispute resolution panel issue directions as it thinks fit and enabling the assessing officer to complete and issue the order of final assessment. Provisions of subsection 6, 7, 8 and 9 of section 144C sets out the procedure to be followed by the dispute resolution panel in issue of the direction. The section further provides that every direction issued by the dispute resolution panel shall be binding on the assessing officer. Thus it seen that AO cannot tinker or apply anything further than what was mentioned in the draft assessment order except what is directed by the learned dispute resolution panel. The provisions of princip....
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....147 of section 153A or section 153C in pursuance of the directions of the dispute resolution panel. Further, it may also be possible that in certain circumstances the provisions of section 263 of the income tax act also do not apply to orders passed under directions of the dispute resolution panel. Thus law has seen the assessment passed in pursuance of direction u/s 144C of the act different from the regular assessment as envisaged u/s 153 of the act. 14. The further argument of the learned authorized representative is that there is no time limit for passing of the draft assessment order under the scheme of section 144C and then same can be passed within a reasonable time is flawed. The argument advanced is that legislative intent is to progressively reduce the limitations for passing the assessment order to expedite the dispute resolution process and impart certainty & finality to assessment proceedings. As we have already held that it is a complete code in itself therefore it in fact it supports the intention of the legislature in providing expeditious resolution of the dispute between the taxpayer and tax gatherer. Thus this argument deserves to be rejected. 15. No dou....