TaxTMI 
TaxTMI 
2026 (1) TMI 14
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....020 of the Dispute Resolution Panel ("DRP") under section 144C(5) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and consequently, not granting the refund claimed by the Petitioner. 3. We were informed during the hearing that during the pendency of this Writ petition, Respondent No. 1 has passed an order dated 15th September 2025 disposing off the rectification application dated 14th June 2016 which resulted into a refund of Rs. 4,17,04,918/-, which has been credited to the bank account of the Petitioner on 18th December 2025. The Petitioner claims that it was not able to verify the correctness or accuracy of the 1st Respondent's computation of the refund amount of Rs. 4,17,04,918/- or the correctness / accuracy of interest due to it, as in the computation, a sum of Rs. 4,92,05,568/- is claimed to have been refunded. Respondent no. 1 has shared a screenshot as per which Rs. 1,92,12,268/- is claimed to have been refunded on 25 February 2011 and Rs. 2,99,93,300/- on 29 February 2016. The Petitioner also submits that the refund computed as per the order dated 15th September 2025 is credited on 18th December 2025. The Petitioner claims that in any event it is al....
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.... Manufacturing segment'. (iv) On 13th March 2013, the Petitioner filed a submission before the 1st Respondent, by which the Petitioner claimed depreciation on intangibles i.e. material supply contract and distribution networks. (v) Thereafter, on 22nd March 2013, the 1st Respondent issued a draft assessment order under Section 144C (1) of the Act. By the draft assessment order, the 1st Respondent computed the total income at Rs. 70,60,86,194.00 as against the Returned income of Rs. 53,97,90,433.00. (vi) The Petitioner, being aggrieved by the draft assessment order dated 22nd March 2013, filed its objections before the DRP under Section 144C (2) of the Act. (vii) On 24th December 2013, the DRP provided its directions in accordance with the provisions of Section 144C (5) of the Act. (viii) Thereafter, the 1st Respondent, on 13th January 2014, passed the final assessment order, under Sections 143(3) read with 144C(13) of the Act and determined the Petitioner's income at Rs.72,51,75,838.00 against the returned Income of Rs. 53,97,90,433.00. (ix) Aggrieved by the final order, the Petitioner filed an Appeal before the Mumbai Bench of ....
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....ent towards 'Adjustment in Manufacturing segment", the DRP inter-alia directed the TPO to verify the record (of subsequent years) and same treatment was to be accorded for the present year as well. The operative part of the DRP directions dated 19th March, 2020, reads as follows: "2.8 Since, the facts of the case are similar in nature, the A.O./T.P.O. is directed to re-examine the corporate service charges (Rs4,62,99,732/-) segment-wise on the same lines as above, and allow that part of the same which is found acceptable based on the applicability of arms's length principle. The objections are disposed off accordingly. ... 3.5 The A.O./T.P.O. is accordingly directed to verify the record, and in case it is found that on similar facts, he had accepted the benchmarking of the segment "PU System House", same treatment may be accorded for the present year as well. ... 4. The Assessing officer shall give effect to the above directions as per provisions of section 144C(13) of the Income-tax Act,1961." (emphasis supplied) 7. In this background, Mr. Mistri, the Learned Senior Counsel appearing on behalf of the Petitioner, submitted th....
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..... Mr. Mistri, the Learned Senior Counsel, submitted that Section 144C(13) of the Act has a strict timeline and the timeline stipulated in Section 144C(13) of the Act is mandatory. The 1st Respondent does not have discretion to deviate from the strict timeline provided by the Section. The 1st Respondent ought to complete the assessment, that too in conformity with the directions of the DRP, within one month from the end of the month in which such directions are received. He submitted that as per the scheme of the Act, the only step which remains after the DRP gives the directions under Section 144C (5) of the Act, is to give effect to the same within the time limit as provided by Section 144C(13) of the Act. Mr. Mistri further submitted that if this timeline, as provided by the Section, is not adhered to by the 1st Respondent, and if the directions of the DRP are not given effect to by the 1st Respondent, then the proceedings ought to be treated as barred by limitation and the legal consequences must follow. He submitted that in the present case, as a consequence, the Petitioner is entitled to a refund of the excess taxes paid by the Petitioner. 10. Mr. Mistri, Learned Senior Cou....
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....e Revenue, submitted that the timelines under Section 144C(13) of the Act would not be applicable in the facts and circumstances of the present case. According to the Revenue, if the DRP passes directions in a matter that was the subject of remand, and if the directions are passed in the second round, then the timelines provided under Section 144C(13) of the Act are not applicable. Therefore, according to the revenue, the 1st Respondent is not bound to complete the assessment within one month from the end of the month in which such directions are received. She further submitted that the 1st Respondent has already passed a rectification order on 15th September 2025 disposing off the rectification application dated 14th June 2016. According to the revenue, not passing the final assessment order within the time frame provided by the Section, does not vitiate the proceedings, and the same cannot be treated as time barred. Ms. Nagaraj further submitted that the larger issue of interpretation of Section 144C and that of Section 153 of the Act relating to the timelines, is pending before the Hon'ble supreme Court in Asst. Commissioner of Income Tax Vs. Shelf Drilling Ron Tappmeyer Ltd. [S....
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........ 26. Therefore, by the clear language of Section 144C(13) of the Act, the 1st Respondent ought to have passed the assessment order within a period of one month from the end of the month in which such direction of the DRP was received. We agree with the submissions of Mr. Mistri that the Assessing Officer does not have any discretion after the DRP issues directions under Section 144C(5), and he cannot deviate from the procedure envisaged under the Section. In the present case, despite repeated reminders, the 1st Respondent has not completed the assessment in conformity with the directions of the DRP, as passed on 19th March 2020. .... 30. The scheme of the Section clearly provides that the Assessing Officer is bound by the directions and he has to complete the assessment within the timelines provided by the Section. The reason for imposing a strict timeline in the Section is that the Assessing Officer must follow the directions issued by the DRP, which are provided for his guidance in completing the assessment. It is a settled principle of law that where a statute requires something to be done in a particular manner, it has to be done in that manner. T....