TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 1223
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....r: "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 any additional evidence in response to the matters remanded by the Hon'bl....
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....ed 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 Appellant. 11. that the Draft Assessment Order passed u/s 144C(1) of the Income Tax Act, 1961 (Act), the Directions issued by the Dispute Resolution Panel u/ s 144C(5) of the Act an....
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.... 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 anything contained in sub-sections (1) 17[, (1A), (1B)]and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order u....
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....ial)? 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 bore a date stamp which showed that a copy had been received in the office of the CIT (Judicial) on 23rd July 2014. There were two other date stamps on the first page. One dated 25th July 2014 was in Hindi and was of the CIT, Central, New Delhi. The other was the stamp of the Office of CIT, Del....
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....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 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 Ass....
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....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 the "pronouncement of an order would certainly put the parties at notice and they would be able to take recourse to the remedies available to them under law with some urgency, if required". 22.6 The Court in CIT v. Sudhir Choudhrie (supra) then proceeded to direct the ITAT to pronounce its judgment and orders "in open hearing and upon enlisting them for a given date." 21. The....
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....mmence 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 'received'. The word 'received' has to be seen in the context of the decision in CIT v. Sudhir Choudhrie (supra), which made it mandatory for pronouncement of the orders of the ITAT. At the time of such pronouncement, apart from the AR of the Assessee, the DR is expected to remain present. Through him the Department becomes immediately aware of the said judgment of the ITAT. 29. The main thrust of the submissions ....
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....hening 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 limitation is that point when there is 'knowledge' of an order or judgment. In the context of Section 260A(2)(a), the question that should be asked is: "when was the Department/Revenue aware of the order" and not "when was that particular CIT or Pr CIT having jurisdiction have knowledge of the order". Once a responsible officer or representative of the Department such as its DR or the CIT (Judicial) is aware of the order, then from that point it i....
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....e, 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 this Court are answered thus: Q: (i) What is the correct interpretation to be placed on the expression "received by the Assessee or the Principal Chief Commissioner or the Chief Commissioner or Principal Commissioner" in Section 260A (2) (a) of the Act? Does it mean 'received' by any of the named officers including the CIT (Judicial)? Ans: The word 'received' occurring in Section 260A (2) (a) would mean received by any of the named officers of the Department, includ....
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....as 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 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? Ans: The decisions in CIT v. Arvind Construction Co. (supra) and CIT v. ITAT (supra) were rendered in the context of Section 256 of the Act (and not Section 260 A (2) (a) of the Act) and also prior to the decision in CIT v. Sudhir Choudhrie (supra). While the former decisions may not require recons....
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.... 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) or any CIT first receives the order in any of the cases forming part of the batch disposed of by the common order. If there are four separate orders passed, then the limitation begins to run when such separate orders are received first by any officer of the Department. Q: (viii) Whether administrative instructions issued by the Department for its own administrative convenience can have the effect of altering the time from which limitation will begin to run for the purposes of Section 260 A (2) (a) of the Act? Ans: Instructions issued by the Department for....
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....ll 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 making order lacks inherent jurisdiction, such order would be without jurisdiction, null, non est and void ab initio as defect of jurisdiction of an authority goes to the root of the matter and strikes at its very authority to pass any order and such a defect cannot be cured even by consent of the parties. (See: Kiran Singh & Ors. Vs. Chaman Paswan & Ors. 1). However, exercise of jurisdiction in a wrongful manner cannot result in a nullity - it is an illegality, AIR 1954 SC 340 capable of being cured in a duly constituted legal proceedings." 29. The Hon'ble High Court of Delhi once again in the case of ....
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....er 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 Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever is later; (b) in a case where the relevant assessment or other order is the subject-matter of revision under section 263 or section 264, after the expiry of six months from the end of the month in which such order of revision is passed; (c) in any other case, 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 action for imposition of penalty is initiated, whichever period expires later." 26....
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....;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, the ITAT allowed the Assessee's appeal and directed the AO to allow depreciation on computer peripherals at the rate of 60% instead of 15% as allowed in the original assessment order. c. As regards disallowance of expenditure on account of price protection expenses, the ITAT observed that "Since we have admitted additional evidence in respect of other distributors to whom trade price protection has been allowed, we set aside this issue to the file of the AO with the directions to examine the case of the assessee in the light of additional evidence filed before this Tribunal and decide the issue on merits. Needless to say the AO will provide the assessee a reasonable opportunity of being heard."....
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....een 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 Additional Solicitor General of India ('ASG'), submitted that Section 153 (2A) of the Act would apply only where the entire assessment was set aside or cancelled. However, as in the present case, where the AO was required to follow certain specific directions issued to him by the ITAT he was 'chained' as far as exercise of discretion was concerned. In such circumstances, Section 153 (2A) of the Act would not apply. According to the learned ASG, it was only Section 153 (3) (ii) of the Act which would apply to the present case." 36. Analysis and reasoning given by the Hon'ble High Court read as under: "22. Having perused the impugned order of the ITAT carefully and the operative portions qua which the assessment order was set aside an....
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....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: "32. In the considered view of the Court, the aforesaid decision of the Gujarat High Court fully supports the case of the Assessee here. The decisions of the Madhya Pradesh High Court in Gulabchand Motilal v. Commissioner of Income-tax [1988] 174 ITR 117 (MP), the High Court of Punjab and Haryana in Bharti Engineering Corporation v. Union of India [2008] 298 ITR 400 (P&H) and Deep Chand Jain v. ITO [1984] 145 ITR 676 (P&H), and the Karnataka High Court in CIT v. Paul Noel Rodrigues [2015] 231 Taxman 811 (Kar), all hold likewise. The Kerala High Court in Patel R.P. v. ACIT 2015 (5) KHC 370 held that Section 153 (2A) of the Act would apply even where more than one issue is involved i.e. even where one of the issues has been remanded to the AO for a fresh determination." 38. It w....