TaxTMI 
TaxTMI 
2021 (11) TMI 1223
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....grounds raised in all the appeals read as under: "Each of the grounds given below is independent and without prejudice to the other grounds of appeal preferred by the Appellant. On the facts and in the circumstances of the case, the Assessing officer (AO) in pursuance of the directions of the Hon'ble Dispute Resolution Panel ('Hon'ble DRP') 1. Erred in applying the provisions of section 9(l)(vi)(c) of the Income-tax Act, 1961 ('the Act') and Article 12(7)(b) of India-US tax treaty ('tax treaty') for bringing to tax, the royalty income received by the Assessee from the non-resident Original Equipment Manufacturers ('OEMs') under the Subscriber Unit License A gree men f a nd Infra structure Equipment License Agreement. 2. Failed to appreciate that the proceedings pursuant to remand are time barred in terms of the provisions of section 153(2A) of the Act by 31 March 2016 i.e. one year from the end of the year in which the AO passed the consequential orders on March 12, 2015 accepting the order of the Hon'ble ITAT dated February 20, 2015. 3. Failed to bring anything new on record and not furnished ....
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.... for the use of intellectual property of the Assessee through chispet/ ASIC embedded in the CDMA products sold in India. 7. Has deviated from the matters under remand by relying on the following irrelevant data: 7.1 Press Reports gathered from the internet regarding business and commercial negotiations between Assessee and network operators in India even after the Hon'ble ITAT had noted that reliance cannot be placed on external articles/ press reports. 7.2 Concepts of Transfer of Technology, difference between CDMA and GSM and TDMA technologies 8. Erred in law on initiation of penalty proceedings under section 271(l)(c) of the Act. 9. Erred in levying interest under section 234B the Act without following the binding decision of the jurisdictional High Court in favour of the Assessee 10. Erred in levying interest under section 234C of the Act on assessed income instead of on returned income." 4. Vide application dated 29.12.2020, the assessee has raised additional grounds which reads as under: "Each of the grounds given below are independent and without prejudice to the other grounds of appeal preferred by the Ap....
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....been received by the revenue authorities as provided under section 153(2A) of the Act. 10. The draft assessment order in connection with the captioned appeals is passed on 27.12.2016 which is nine months after expiry of time limitation prescribed under section 153(2A) of the Act and the final assessment order is dated 30.10.2017, which is also framed after expiry of time limit prescribed under section 153(2A) of the Act. 11. The ld. DR strongly stated that the assessment is well within the period of limitation as the order of the Tribunal was received by the Office of the Commissioner, Income Tax - 3, New Delhi on 29.04.2015, hence the one-year period for passing orders under section 152(2A) of the Act expired only on 31.032017 and, therefore, the draft assessment order dated 27.12.2016 is well within the period of limitation. 12. The entire quarrel boils down to two issues - (i) when it can be said that the order has been received by the appellant/respondent ? (ii) when would the period of limitation start? 13. Before proceeding further, let us first examine the provisions of section 153(2A) of the Act as it stood then: "[(2A) Notwithstanding....
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....hief Commissioner or Chief Commissioner or Principal Commissioner" in Section 260A (2) (a) of the Income Tax Act, 1961 ('Act') mean only the 'jurisdictional' Principal or Chief Commissioner of Income-tax (CIT) or could it include any CIT including the CIT (Judicial)? 2. The question assumes significance in light of the stand of the Revenue that unless the 'jurisdictional' CIT receives a certified copy of the order of the Income Tax Appellate Tribunal (ITAT), the limitation of 120 days within which an appeal has to be filed does not commence. It requires to be clarified at the outset that the expressions 'Revenue' and 'Department' are used interchangeably throughout the judgment. Both expressions refer to the Income Tax Department." 18. Facts were explained by the Hon'ble High Court as under: 5. This appeal by the Revenue through the CIT-7 is against an order dated 16th May 2014 of the ITAT. At the hearing of the appeal on 1st September 2015, counsel for the Assessee raised a preliminary objection as regards limitation. It was pointed out by him that the photocopy of the certified copy of the impugned order of the ITAT bor....
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....sdiction concerning the case of the Respondent Assessee to another CIT subsequent to the order of the ITAT have the effect of postponing the time, from which limitation would begin to run in terms of Section 260 A (2) (a) of the Act, to when such CIT receives the order of the ITAT? (iv) After the decision of this Court in CIT v. Sudhir Choudhrie (2005) 278 ITR 490, do the decisions in CIT v. Arvind Construction Co. (P.) Ltd. (1992) 193 ITR 330 and CIT v. ITAT (2000) 245 ITR 659 (Del) require to be reconsidered, explained or reconciled? (v) After the change of procedure where orders of the ITAT are pronounced in the open, is it incumbent on the Department through its DR or CIT (Judicial) to apply for a certified copy of the order of the ITAT and should limitation for the purposes of Section 260A (2) (a) be computed from the date on which such certified copy is made ready for delivery by the ITAT? (vi) Whether the receipt of a certified copy of the order of the ITAT by the CIT (Judicial) is sufficient to trigger the commencement of the limitation period under Section 260 A (2) (a) of the Act? (vii) In the context of a common order of the ITAT cover....
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....Section 254 of the Act which deals with "Orders of Appellate Tribunal". The provision envisaged that once the ITAT passed an order then under Section 254(3), it was to "send a copy of any orders passed under this section to the assessee and to the Chief Commissioner or Principal Commissioner or Commissioner". The Court emphasised that Section 254 on a plain reading (or by necessary implication) nowhere indicated that ITAT "could decline to pronounce the orders which are obviously to be dated and signed on a given date to make such orders effective and binding". 22.5 The Court in CIT v. Sudhir Choudhrie (supra) proceeded to hold: "Known precepts of procedural law would necessarily impose an obligation upon any forum or Tribunal, judicially determining the rights of the parties to declare its order on the date it is signed and declared". It further observed: "The requirement of letting the parties to know the contents of the order upon its declaration (when its dated and signed by the Bench of the Tribunal) would be the minimum requirement to the principles of natural justice. This requirement transcends all technical rules of procedure". The rational explanation was that th....
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....ion would commence". The Court noted that after filing of an application under Section 256 of the Act, "the jurisdiction of the Commissioner may change. But, we are not, in the present case, dealing with such a controversy". 27. The above decision was reiterated in Commissioner of Income Tax v. Income Tax Appellate Tribunal (supra). In that case, the controversy was whether the period of limitation would commence from the service of the certified copy of the ITAT's order on the concerned Commissioner or on the Commissioner (Central-I) who had no jurisdiction. The Court followed the decision in CIT v. Arvind Construction Co. (P) Ltd. (supra). It was reiterated: "It is the Commissioner concerned who alone has the jurisdiction to file application and it is imperative that it is he who should be served with a copy of order either under Section 254 or 256 (1)". 28. The above decisions under Section 256 (3) are clearly distinguishable. The limitation for the purpose of Section 256 begins to run the moment the order is communicated to the parties. Another distinction to be drawn is that the word used in Section 256 of the Act 'served' whereas under Section 260A it is....
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....ore. It is not to be read as meaning "that particular CIT" or the "concerned CIT". 39. The interpretation of the prefix "the" has to be both purposive and contextual. The object of the provision is to enable the filing of appeals within a period of limitation. As it is, the period of limitation (120 days) is considerably longer than in routine cases (30, 60 or a maximum of 90 days). The interpretation has to serve the purpose of not lengthening the period of limitation further, but to ensure that the time limit is strictly adhered to. Relaxation of the period of limitation in such cases has to be an exception and not the rule. The decisions in Consolidated Coffee v. Coffee Board (supra) and Shree Ishar Alloys Steels Ltd. v. Jayaswal Neco (supra) were rendered in the context of different statutes where the wording of the provisions in question dictated the result of the interpretative exercise. They are not useful in the interpretation of the word "the" which precedes the words CIT or Pr CIT in Section 260 A (2)(a) of the Act. 40. The context in which the interpretive exercise is to be undertaken is that of the statute of limitation. Usually, the commencement of li....
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....act that, legislatively, a larger period of limitation has been granted for filing appeals, there is no warrant for any flexibility in the interpretation thereby giving a discretion to officers of the Department to extend the period of limitation beyond what is envisaged by the statute. In these very cases, the impugned order was received by a particular CIT (Judicial) and then sent to the 'concerned' CIT, who was shifted out by the time a copy reached him. Meanwhile, the period of 120 days lapsed. The period of 120 days cannot be sought to be stretched indefinitely till the 'concerned' CIT receives the order. That would then defeat the legislative purpose. 43. Viewed differently, the contextual interpretation of the expression 'receive' would be when the parties notified of the pronouncement are represented at that time in the open court. When pronounced, both parties are said to receive it. The agency which they choose for transmission to the official or executive component to authorise an appeal is not the concern of the judicial system. 23. Finally, the Hon'ble High Court answered the question as under: "51. The answers to the questions referred to ....
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....Respondent Assessee to another CIT subsequent to the order of the ITAT have the effect of postponing the time, from which limitation would begin to run in terms of Section 260 A (2) (a) of the Act, to when such CIT receives the order of the ITAT? Ans: As far as the obligation of the ITAT under Section 254 (3) of the Act is concerned, the said obligation is satisfied once the ITAT sends a copy of an order passed by it to the Assessee as well as to the Pr CIT or the CIT or even the CIT (Judicial). The ITAT has to be simply go by the details as provided to it in the memo of parties. If there is a change concerning the jurisdiction of the CIT and it is some other CIT who has jurisdiction, it will not have the effect of postponing the commencement of the period of limitation in terms of Section 260A (2) (a) of the Act. The statute is not concerned with the internal arrangements that the Department may make by changing the jurisdiction of its officers. It is for the officer of the Department who first receives a copy of the ITAT's order to reach it in time to the officer who has to take a decision regarding the filing of an appeal. Q: (iv) After the decision of this Cou....
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....260 A (2) (a) of the Act? Ans: The receipt of a certified copy of the order of the ITAT by CIT (Judicial) would trigger the commencement of the limitation period under Section 260 A (2) (a) of the Act. Q: (vii) In the context of a common order of the ITAT covering several appeals, whether limitation for all the appeals would begin to run when the certified copy is received first by either the CIT (Judicial) or any one of the officers of the Department mentioned in Section 260 A (2) (a) or only when the CIT 'concerned' receives it? Where the same CIT has jurisdiction over more than one Assessee in the batch, will limitation begin to run for all such appeals when such CIT receives the order in either of the Assessee's cases? Ans: Where there, is a common order of the ITAT covering the several appeals, limitation would begin to run when a certified copy is received first by either the CIT (Judicial) or one of the officers of the Department and not only when the CIT 'concerned' receives it. When the same CIT has jurisdiction for more than one Assessee, the limitation begin to run for all from the earliest of the dates when the DR of CIT (Judicial)....
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....he counter-affidavit as well as in the written submissions filed on behalf of the respondents, it is stated that the order of the Appellate Authority, dated 8th June, 2000, was received by the Assessing Authority on 13th July, 2000 and, therefore, fresh assessment, pursuant to the said order, could be completed by 12th July, 2002 (ignoring further period of six months, which could be extended by the Commissioner). That being so, even if it is assumed that the assessment order, for the assessment year 1995-96, had, in fact, been passed on 29th June, 2002, as alleged by the appellant, it was still very much within the time limit prescribed under the aforenoted provision i.e. 12th July, 2002. We are, therefore, unable to accept the stand of the appellant that the assessment having been made after the expiry of the time limit, it was null and void and should have been annulled." 28. And therefore, at para 15 made the following observations: "15. All irregular or erroneous or even illegal orders cannot be held to be null and void as there is a fine distinction between the orders which are null and void and orders which are irregular, wrong or illegal. Where an authority maki....
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....of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever period expires later : Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Principal Ch....
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....ttracted. It is the say of the land DR that since no fresh assessment has been framed by the AO, section 153(2A) would not apply. 33. The issue raised by the ld. DR has been answered by the Hon'ble High Court of Delhi in the case of Nokia India Private Limited 251 taxman 285. The relevant findings of the Hon'ble High Court read as under: "5. Aggrieved by the above assessment order, the Assessee filed an appeal being ITA No. 4559/Del/2011 before the Income Tax Appellate Tribunal ('ITAT'). The decision of the ITAT rendered in the aforementioned appeal on 18th May 2012 was as under: a. As regards disallowance of expenditure incurred on issue of mobile handsets on 'free of cost' basis, the ITAT noted that on an identical issue for AY 2000-01 and 2001-02, as well as for AY 2006-07, the ITAT had set aside the assessment order and remanded the matter to the file of the AO. Accordingly, the impugned assessment order was set aside "to the file of the AO with the directions to decide the issue afresh after affording the assessee a reasonable opportunity of being heard." b. As regards the applicable rate of depreciation on computer peripherals, th....
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....onal transactions not referred to him by the AO, the ITAT held that, in view of the amended provisions of Section 92CA of the Act with retrospective effect from 1st April 2002, this ground urged by the Assessee had become academic. It was accordingly rejected. 34. Thereafter, at para 10, the Hon'ble High Court observed as under: "10. By the impugned order dated 2nd December 2015, the AO disposed of the above objections by holding that the case was not covered under Section 153 (2A) of the Act which, according to the AO, was applicable only when a fresh order of assessment has to be made pursuant to an order in appeal or revision. Since the assessment had not been totally set aside or cancelled by the ITAT and, in fact, had been partly upheld on certain issues, the objection regarding limitation was not valid. It was further pointed out that the Revenue was also in appeal before the High Court against the relief allowed by the ITAT as well as to some of the issues restored by the ITAT to the AO/TPO and even to the DRP." 35. And at para 14 referred to the same question as raised by the ld. DR before us: "14. On the other hand, Mr. Sanjay Jain, learned Addition....
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....a direction that the issue has to be determined afresh, Section 153 (2A) of the Act would get attracted. 24. What is important to note is that, along with the insertion of subsection (2A), sub-section (3) underwent a simultaneous change. It was expressly made "subject to the provisions of sub-section (2A)." This meant that Section 153 (3) would thereafter apply only to such cases where Section 153 (2A) did not apply. In other words, in all instances of an AO having to pass a fresh assessment order upon remand where Section 153 (2A) would apply, the AO would be bound to follow the time- limit imposed by sub-section (2A). Where the AO was only giving effect to an appellate order, then Section 153 (3) (ii) of the Act would apply. 25. In the present case, of the seven issues, the assessment in respect of five was set aside and the issues remanded for a fresh determination. Whether the remand was to the TPO or the DRP would not make a difference as long as what results from the remand is a fresh assessment of the issue. Clearly, therefore, the time limit for completing that exercise was governed by Sec. 153 (2A) of the Act." 37. And finally held as under: "....