TaxTMI 
TaxTMI 
2025 (12) TMI 1345
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal: "1. That on facts and in law, the Hon'ble Dispute Resolution Panel ("DRP") has erred in partially confirming the action of Learned Assessing Officer ("AO")/ Transfer Pricing Officer ("TPO") and upholding the addition of INR 6,81,42,306/- as the circumstances necessitating the determination of arm's length price by the Ld. TP0 as mentioned in section 92C(3) did not exist in the instant case. 2. That on facts and in law, the Hon'ble DRP has erred in confirming the action of Learned AO/ TPO and not accepting the economic analysis conducted by the appellant in accordance with the provisions of the Act read with the Rules, and modifying the economic analysis for the determination of the ALP in connection with the transaction pertaining to "Interest paid on Non-Convertible Debentures ("NCDs")" by the appellant and holding that the international transaction is not at arm's length. 3. That on facts, the Hon'ble DRP has erred in confirming the action of Ld. AO/ TPO and rejecting the claim of the appellant that the search filters applied by the appellant were appropriate considering the facts and circumstances of the case and there was no n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ections of the DRP liable to be quashed. 10. erred in not adhering to the DRP Directions vide order dated 21 December 2021 under section 144C(5) of the Act, and hence the final assessment order under section 143(3) r.w.s. 144C(13) and 144B of the Act dated 12 January 2022 is bad in law and liable to be quashed. Assessment order is barred by limitation 11. Erred in not appreciating that the time limit under section 153 of the Act is the outer time limit for passing the final assessment order and hence the final assessment order under section 143(3) r.w.s. 144C(13) and 144B of the Act dated 12 January 2022 is time barred and liable to be quashed. The appellant craves leave to added to, alter, delete, or modify the above grounds of appeal". 4. The Learned Authorized Representative ("Ld. AR") submitted that the grounds raised in the additional ground are purely legal in nature and do not require investigation of any fresh facts. It was accordingly submitted that, in terms of Rule 11 of the Income Tax Appellate Rules, 1963 ("the ITAT Rules") and in view of the ratio laid down by the Hon'ble Supreme Court in the case of National Thermal Power Co. Lt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment proceedings although not raised earlier. 6. In the case of Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688, this Court, while dealing with the powers of the AAC, observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The AAC must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The AAC should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to restrict the scope of additional grounds only to cases where a non-taxable item is taxed or a permissible deduction is denied. On the contrary, para no. 5 expressly elaborates that the Tribunal's powers under section 254 of the Income Tax Act, 1961 ("the Act") are expressed in the widest possible terms, enabling it to examine any legal issue arising from facts already on record. Applying this settled legal position, we hold that any question of law arising from facts available on record and having a bearing on the tax liability of the assessee is admissible as an additional ground. The additional ground raised by the assessee in the present case satisfies these conditions in entirety. Further, as regards the objection of the Ld. DR concerning Rule 11 of the ITAT Rules, it is crucial to pursue Rule 11 of the ITAT Rules, which is to the following effect: "11. The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pmeyer Ltd. vs. ACIT (International Taxation) (457 ITR 161) to contend that the limitation under section 153 of the Act prevails over section 144C of the Act. He further submitted that the overall limitation for passing the final assessment order cannot exceed the limit prescribed under section 153(1) read with section 153(4) of the Act. He further argued that the limitation under section 144C(13) of the Act is only a restriction on the Ld. AO to pass the final assessment order within one month of receipt of directions of the Ld. DRP but does not enlarge the statutory limitation prescribed under section 153 of the Act. The Ld. AR emphasized that both the Hon'ble Madras High Court and the Hon'ble Bombay High Court have held that section 144C and section 153 of the Act are not mutually exclusive, and that the overriding effect of section 153 of the Act prevails in determining limitation. The Ld. AR further submitted that this Tribunal in the case of Aveva Solutions India LLP, Hyderabad vs. ITO, Ward-8(1), Hyderabad in ITA.No.1170/ Hyd/2024 vide Order dated 19.11.2025 after considering the decision of the Hon'ble Madras High Court in the case of CIT vs. Roca Bathroom Products Pvt. Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at once the final assessment order is passed within 30 days from the receipt of directions of Ld. DRP, it is well within limitation. Accordingly, she submitted that the date of direction of the Ld. DRP is 21.12.2021 and the Ld. AO has passed the final assessment order on 12.01.2022, which is within the limitation period as prescribed under section 144C(13) of the Act. Hence, the Ld. AO has passed the final assessment order well within the limitation. In alternate submission, the Ld. DR also submitted that the issue is pending adjudication before the Hon'ble Supreme Court, and therefore the issue may be kept open until decided by the Supreme Court. 9. We have heard the rival submissions and perused the material available on record. One of the objection of the Ld. DR is that, if the period extended by the Hon'ble Supreme Court in M.A No.21/2022 in M.A. No.665/2021 in suo motu writ petition (C) No.3/2020 period is taken into account for computing the limitation for passing the assessment order by the Ld. AO, the order passed would fall within the period of limitation. In this regard, we note that an identical issue has been considered by this Tribunal in the case of Repeal Green Po....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'ble Supreme Court order applies only to quasi-judicial and judicial matters relating to petitions/ applications/suits/appeals/all other proceedings. All other proceedings should be understood in the nature of the earlier used expressions but can only with reference to judicial and quasi-judicial proceedings. Hon'ble Supreme Court has stepped into to grant extensions only with reference to judicial and quasi-judicial proceedings in the nature of appeals/suits/petitions etc. and has not extended it to every action or proceeding under the CGST Act. (ii) For the purpose of counting the period(s) of limitation for filing of appeals before any appellate authority under the GST Law, the limitation stands extended till further orders as ordered by the Hon'ble Supreme Court in Suo Motu Writ Petition (Civil) 3 of 2020 vide order dated 27th April 2021. Thus, as on date, the Orders of the Hon'ble Supreme Court apply to appeals, reviews, revisions etc., and not to original adjudication. (iii) Various Orders and extensions passed by the Hon'ble Supreme Court would apply only to acts and actions which are in nature of judicial, including quasi-judicial exerc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sioner (Appeals), Appellate Authority for Advance Ruling. Tribunal and various courts against any quasijudicial order or where a proceeding for revision or rectification of any order is required to be undertaken, the timeline for the same would stand extended as per the Hon'ble Supreme Court's order. 5. In other words, the extension of timelines granted by Hon'ble Supreme Court vide its Order dated 27.04.2021 is applicable in respect of any appeal which is required to be filed before Joint Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal and various courts against any quasi-judicial order or where proceeding for revision or rectification of any order is required to be undertaken, and is not applicable to any other proceedings under GST Laws." 11. Accordingly, we do not find any merits in the arguments of the learned DR that the limitation for passing the assessment order was extended by the Hon'ble Supreme Court. " 10. On a perusal of the above, we find that this Tribunal has dealt with the issue at length and held that the period extended by the Hon'ble Supreme Court is not applicable t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n which the income was first assessable. Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April 2018, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted: Provided further that in respect of an order of assessment relating to the assessment year commencing on - (i) the 1st day of April 2019, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted. (ii) the 1st day of April 2020, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted. Provided also that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April 2021, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "nine months" had been substituted: Provided also that in respect of an order of assessment relating to the assessment year commencing on the 1s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3)." 8. A co-joined reading of sub-sec.(1) with third proviso of this sub-section of sec.153 makes it clear that in normal course, no order of assessment shall be made after the expiry of 9 months from the end of the assessment year in which the income was first assessable. The third proviso is relevant for the case in hand because the assessment year under consideration is 2021-2022 and, therefore, the period of 21 months from the end of the assessment year is reduced to 9 months. Sub-sec.(4) contemplates the cases where a reference u/sec.92CA(1) is made during the course of assessment proceedings, then, the period available for completion of the assessment shall be extended by 12 months. It is an undisputed fact that the present case is falling in the category of an "eligible assessee" where reference u/sec.92CA(1) was made by the Assessing Officer to the TPO and, therefore, the time limit for completing the assessment was extended by 12 months whereby the Assessing Officer was required to complete the assessment by 31.12.2023. The Assessing Officer has passed the Fin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se, the proceedings have not been concluded within a reasonable time. 20. As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further, it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original assessment proceedings are to be completed within 21 months, and the additional time of 12 months is granted when proceedings before TPO is pending. The TPO has to pass orders before 60 days prior to the last date. Then 30 days' time is given to the assessee to file their objection before the DRP and the DRP is given 9 months' time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the appellants/ revenue that the time period of 33 months, provided ini....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earned Judge. The exclusion of applicability of Section 153 or Section 153 B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. The section and the sub-section have to be read as a whole with connected provisions to decipher the meaning and intentions. At this juncture it would be useful to refer to the following decisions: (i) Sultana Begum v. Prem Chand Jain [1997] 1 SCC 373 at page 381: "11. The statute has to be read as a whole to find out the real intention of the legislature. 12. In Canada Sugar Refining Co. v. R. [1898 AC 735 : 67 LJPC 126], Lord Davy observed: "Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter." .......... 14. This rule of construction which is also spoken of as "ex visceribus actus" helps in avoiding any inconsistency either within a section or between two different sections ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the same statute. It is the duty of the court to avoid a headon clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC 1006])." (iii) Franklin Templeton Trustee Services (P.) Ltd. v. Amruta Garg [2021] 124 taxmann.com 326/164 SCL 720: "17. The concept of "absurdity" in the context of interpretation of statutes is construed to include any result which is unworkable, impracticable, illogical, futile, or pointless, artificial, or productive of a disproportionate counter-mischief [See Bennion on Statutory Interpretation, 5th Edn., p. 969.]. Logic referred to herein is not formal or syllogistic logic, but acceptance that enacted law would not set a standard which is palpably unjust, unfair, unreasonable or does not make any sense. [Bennion on Statutory Interpretation, 5th Edn., p. 986.] When an interpretation is beset with practical difficulties, the courts have not shied from turning sides to accept an interpretation that offers a pragmatic solution that will serve the needs of society [Id, p. 971, quoting Griffiths, L.J.]. Therefore, when there is choice between two interpretations, we would avoid a "constr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 25. As regards the relief sought in other appeals viz., W.A.No.1517/2021 etc. batch, the findings rendered above are equally applicable. In these cases, for the assessment year 2009-10, the order of remand to the Assessing officer was passed on 18-12-2015 and insofar as the assessment year 2010-11 is concerned, for one issue, it was passed on 18-12- 2015 and for other two issues, it was passed on 23-9-2016 after the amendment, by which time, the time limit was brought down to 9 months. As such, fresh orders ought to have been passed before 31-3-2017 for the assessment year 2009- 10 and for one issue relating to the assessment year 2010-11 reckoning the 12 months from the financial year 2015-16 and on or before 31-12-2017 reckoning 9 months from the financial year 2016-17. Therefore, the Assessing officer ought to have passed a draft assessment order immediately and asked the assessee to file their objections with the DRP. For the mistake and the lapse of the Assessing officer, the vested right of the Assessee cannot be taken away. 26. We are not oblivious of the fact that any finding on the aspect of reasonableness in time in passing orders when no time is provided would ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty. He urged that in the absence of any prescribed period for recovery of the duty as contemplated by Rule 12, the officer may act arbitrarily in recovering the amount after lapse of long period of time. We find no substance in the submission. While it is true that Rule 12 does not prescribe any period within which recovery of any duty as contemplated by the rule is to be made, but that by itself does not render the rule unreasonable or violative of Article 14 of the Constitution. In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case." (iii) State....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a reasonable time, however, will depend upon the facts of each case." 23. The question as to what would be the reasonable period did not fall for consideration therein. The binding precedent of this Court, some of which had been referred to us hereto before, had not been considered. The counsel appearing for the parties were remiss in bringing the same to the notice of this Court. Furthermore, from a perusal of the impugned notice dated 4-9-2006, it is apparent that the revisional authority did not assign any reason as to why such a notice was being issued after a period of 5½ years.' Generally, no hard and fast rule can be laid down to indicate what is a reasonable time. It though depends upon the facts of the each case, drawing a clue from Article 113 of the Limitation Act, the residual entry, it would be reasonable to conclude that in such cases, action is to be concluded within 3 years. Needless to say, if the statute prescribes shorter period, the doctrine of reasonable time will not be applicable and the timeline under the statute is to be strictly followed. 27. For the reasons set out herein before, we conclude as under: (a) Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble for completing the assessment and sec.144C(13) is only in the nature of restricting the time period, within which, the Assessing Officer is required to pass the Final Assessment Order after the Directions of the DRP and not enlarging the limitation provided u/sec.153 of the Act. 10. Similar view has been taken by the Hon'ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Ltd., vs., ACIT, International Taxation (supra) in Paras-23 to 34 as under : "23. No doubt, section 144C of the Act is a self-contained code of assessment and time limits are inbuilt at each stage of the procedure contemplated. Section 144C envisions a special assessment, one which includes the determination of Arm's Length Price (ALP) of international transactions engaged in by the assessee. The DRP was constituted bearing in mind the necessity for an expert body to look into intricate matters concerning valuation and transfer pricing and it is for this reason that specific timelines have been drawn within the framework of section 144C to ensure prompt and expeditious finalisation of this special assessment. The purpose is to fast-track a special type of assessment. That cannot....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... before the Settlement Commission and ending with the date on which the order is received by the Principal Commissioner or Commissioner or where the period commencing from the date on which an application is made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section 1 of section 245Q of the Act and ending with the date on which the Advance Ruling pronounced by it is received by the Commissioner or where reference for exchange for information is made by an authority competent under an agreement referred to in section 90 or section 90-A of the Act or where a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner etc., shall be excluded. There is no mention anywhere about section 144C of the Act. 26. If we accept the submissions of Shri Suresh Kumar that when there is a remand as in this case, the AO is unfettered by limitation, it would run counter to the avowed object of provisions that were considered while framing the provisions of section 144C of the Act. Having set time limits every step of the way, it does not stand to reason that proceedings on rema....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 254 from the ITAT. The assessing officer should have taken steps to pass the final order under sub-section (13) of section 144C within 12 months period. 30. The exclusion of applicability of section 153, in so far as non-obstante clause in sub-section (13) of section 144C is concerned, it is for limited purpose to ensure that dehors larger time available, an order based on the directions of the DRP has to be passed within 30 days from the end of the receipt of such directions. The section and sub-section have to be read as a whole with connected provisions to decipher the meaning and intentions. 31. We would also observe that a similar non-obstante clause is also used in section 144C(4) of the Act with the same limited purpose to imply, even though there might be a larger time limit under section 153, once the matter is remanded to AO by the ITAT under section 254, the process to pass final order under section 144C has to be taken immediately. 32. The object is to conclude the proceedings as expeditiously as possible. There is a limit prescribed under the statute for the AO and therefore, it is his duty to pass an order in time. After 30th September 2021....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to 18 of the said judgement is as under : "15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the Finance Act, 2020 and Finance Act, 21021. Now in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kanakala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court. 16. In the given facts and circumstances, this bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other High Cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (1 supra). This, in other words, would mean that either of the parties, if they so Want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue." 14. Accordingly, we dispose of this appeal on this legal issue and keep open the other issues raised by the assessee on the merits if the Hon'ble Supreme Court decides this issue otherwise." 12. On perusal of above, we find that this Tribunal, relying on the decisions of the Hon'ble Madras High Court and the Hon'ble Bombay High Court, has held that the statutory limitation is to be calculated in accordance with the provisions of section 153(1) read with section 153(4) of the Act. Therefore, as a matter of consistency, following the order of this Tribunal, we hold that the limitation period for passing the final assessment order by the Ld. AO is to be calculate....