TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 150
X X X X Extracts X X X X
X X X X Extracts X X X X
....tkarsa Kumar Gupta, Adv. For the Revenue : Shri Dharm Veer Singh, CIT DR ORDER PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1.The present adjudication involves eight assessee's as under: 1) MMTC-PAMP INDIA (P) LTD.- ITA No.5982/D/24 (AY 2021-22) 2) EVALUE SERVE.COM P. LTD.- ITA No. 422/D/21 (AY 2016-17) 3) VENDANTA LTD.- ITA No.1813/D/22 (AY 2018-19) 4) IKEA INDIA PVT. LTD.- ITA No.1186/D/22 (AY 2018-19) 5)YANMAR AGRICULTURAL MACHINERY INDIA PVT. LTD. (Formerly known as Claas India Pvt. Ltd.)- ITA No.6034/D/24 (AY 2021- 22) 6) ESCORTS KUBOTA LTD. (ESCORTS KUBOTA INDIA PVT. LTD.)- ITA No.5992/D/24 (AY 2021-22) 7) BERGEN ENGINES (INDIA) PVT. LTD.- ITA No.5991/D/24 (AY 2021-22) 8) GOOD YEAR NDIA LIMITED- ITA No.1994/D/22 (AY 2013-14) In all these appeals the assessee's have challenged the validity of the assessment order on the ground of limitation considering the provisions of section 144C(13) r.w.s. 153 of the Income Tax Act, 1961 (hereafter as "the Act").Since all these appeals involve the common issue of limitation, hence, they are being disposed of through this single order. 1.1 The challenge to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under consideration, for tabulating the relevant period of limitation within which the final assessment order was required to be passed. The Ld. ARs, in the individual cases being represented by them, demonstrated through the chart of dates that in all the assessment years the final assessment order was passed by the Ld. AOs beyond the stipulated dead-line as per section 153 of the Act. 3. The Ld. DR objected to the adjudication of these appeals and submitted that the issue was sub-judice before the Hon'ble Supreme Court. He also filed detailed written submissions. It was argued that the Hon'ble Apex Court in the case of Shelf Drilling Ron Tappmeyer Ltd. reported in 177 taxmann.com 262 (SC), has examined this issue but due to divergent opinions expressed by the Hon'ble Judges, the issue is now referred for constituting a larger Bench. It was pointed out that even otherwise the Hon'ble Supreme Court in the case of Shelf Drilling Ron Tappmeyer Ltd. has held, vide interim order dated 22.09.2023, that the operative portion of the judgment delivered by the Hon'ble Bombay High court [153 taxmann.com 162 (Bom)] would not be cited as a precedent. This interim order dated 22.09.2023 was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. reported in [2025] 177 taxmann.com 262 (SC), the Hon'ble Supreme Court delivered a split verdict on the interplay of sections 144C and 153 and referred the issue to a Larger Bench. 5. It is settled law that a split verdict declares no law under Article 141 of the Constitution, and the legal position remains open until authoritatively settled by a majority decision. (ii) Interim restraint on citing Bombay High Court judgment in case of Shelf Drilling 6. At the admission stage of the matter arising from the Bombay High Court judgment in case of Shelf Drilling Ron Tappmeyer Ltd. [2023] 153 taxmann.com 162 (Bombay), the Hon'ble Supreme Court passed an interim order dated 22.09.2023, directing that the High Court judgment shall not be cited as a precedent in any other subsequent matter until further orders. The relevant part of the said order is reproduced as under: "Having heard the respective senior counsel for the parties, we observe that the impugned judgment shall not be cited as a precedent in any other subsequent matter until further orders. We also clarify that the operative portion of the judgment shall apply only insofar ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....parties the liberty to apply in the event of rendering a final order by Hon'ble Supreme Court on the impugned issue. The said view was again reiterated in the case of same assessee i.e. Paypal Payments Private Limited for another year in Writ petition (I) no. 27849 of 2024 vide judgement dated September 9, 2024 reported at [2024] 166 taxmann.com 521 (Bombay). 9. The above decision supports the Revenue's submission that, pending Supreme Court adjudication, the justifiable course available for this Hon'ble Tribunal is to defer adjudication of present appeals respecting the higher wisdom of Hon'ble High Court and Hon'ble Supreme Court. (iv) Grant of leave in Roca Bathroom and pendency before Hon'ble S.C. - legal implications 10. The Hon'ble Supreme Court has granted leave in CIT v. Roca Bathroom Products (P.) Ltd., reported in [2023] 147 taxmann.com 224 (SC). The grant of leave signifies that the issue is admitted for final adjudication, and the correctness of the Madras High Court judgment stands squarely under scrutiny. The order granting leave neither affirm the High Court's view, nor does it declare law. Once leave is gran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e binding on this Hon'ble Bench as in present appeals too, the issue of time limitation agitated by the assessee is pending for consideration of Larger Bench of Hon'ble Supreme Court." 4. Opposing arguments were put forth by the Ld. ARs.The Ld. ARs stated that the assessee's were solely placing reliance on the decision rendered by the Hon'ble Madras High Court in the case of Roca Bathroom Products (supra). It was a matter of record that this particular case was not stayed by the Hon'ble Apex Court. It was the submission that even if there is a stay on any order of a High Court by the Hon'ble Supreme Court then also the "ratio decidendi" of the said judgment shall remain valid till such time that it is reversed or set aside by the higher court. The Ld. ARs again reiterated the point that the Roca Bathroom case (supra) was not stayed or reversed by the higher court and hence would constitute a significant judicial precedent. It was also pointed out that the Hyderabad Bench of the ITAT has already passed certain reported orders following the Roca Bathroom case (supra): i. Aveva Solutions India LLP vs. ITO, 180 taxmann.com 731 (Hyd-Trib.); ii. Western UP To....
X X X X Extracts X X X X
X X X X Extracts X X X X
....but the ratio decidendi of such order/judgment is not nullified unless explicitly set aside. The Hon'ble Supreme Court of India in the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust (supra) has held that an order of interim stay does not result in quashing of the impugned order. It only means that the order will not be operative from the date that it is stayed. In the case of Govt of AP vs. N. Rami Reddy& Others 2011 AIRAP 226, one of the issue for consideration before the Hon'ble High Court was; Whether the interim stay of a High Court order by the Hon'ble Supreme Court of India has the effect of wiping out the ratio of the High Court's order or otherwise nullifying the precedent relied upon by the petitioner? The Hon'ble High Court held that the ratio of judgment represents the reasons assigned in support of the conclusion. An order of interim stay actually stays the operative part of the decision, but does not wipe out its ratio decidendi. 6. Be that as it may, the assessee has not placed reliance on the judgment rendered in the case of Shelf Drilling (supra) but has pleaded its case following the decision rendered in the case of Roca Bathroom Product....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he non obstante language in section 144C dealing with passing of the final order makes it evident that Parliament intended postdraft finalization under section 144C to operate notwithstanding the general limitation in section 153. 17. A further significant facet is that it is the eligible assessee, which has option to activate or not to activate the DRP route. If objections before DRP are not filed, the statute permits expedited finalization. If objections are filed, the statutory mechanism consumes time by design. Still it remains expeditious way of finalization of dispute as stage of appeal before CIT(A) is done away with if option to file objection before DRP is chosen by the Assessee. Further, demand crystallizes only after DRP direction is given effect to by the Assessing officer. Hence, this is the way objective of expeditious disposal of disputes and ease of doing business is sought to be achieved by section 144C. The assessee cannot, after choosing the statutory route of DRP and availing benefit of expeditious and easier disposal of disputes provided by the code, contend that the assessment becomes void due to the time consumed in the process statutorily created fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for completing the assessment is being achieved by the Legislature over the years by way of shortening time lines given in section 153 of the Act. Section 144C is not meant for that as it has already very shortened and stiff timelines prescribed. Section 144C is meant for providing the alternate dispute resolution mechanism to eligible assessee and for doing away with one appellate level i.e. CIT(A) from entire chain of tax litigation. This objective requires to be appreciated for interpretation of section 144C of the Act. 19. Reliance is placed on principle of 'ut res magis valeat quampereat' which has been upheld by Hon'ble S.C. In multiple cases (such as N B Sanjana Vs Elphinstone Spinning & Weaving Mills, AIR 1971 SC 2039, Cit Vs. Sun Engineering Works, AIR 1993 SC 43, P 57), it has been held by Hon'ble Supreme Court that one important consideration in construing a machinery section is that it should be so construed as to effectuate the liability imposed by the charging section and to make the machinery workable. Further, in case of W TRamsey Ltd v Inland Revenue Commissioners (1981) 1 All ER 865, it has been held that the context, scheme of the releva....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e final assessment order has been passed within the time limit prescribed under section 144C of the Act. Further the case of Roca Bathroom is distinguishable on facts and hence, no applicable to present appeals. Hence, the assessee's contention is required to be rejected on merit on this count." 8. We have considered the submissions made by rival sides on merits of the issue before us for adjudication. The crux of submissions on merits by the department is, that limitation for passing the final assessment order under section 144C(13) of the Act is to be seen only with reference to the timeline specified u/s. 144C of the Act only without referring to provisions of section 153 of the Act. We find that identical submissions were made by the Department before the Hon'ble Madras High Court in the case of Roca Bathroom Products P. Ltd. (supra). The Hon'ble High Court rejected the arguments of the Department and held that provisions of section 144C and 153 of the Act are mutually inclusive as both contain provisions relating to section 92CA of the Act and are inter-dependent and are overlapping. Hence, the period of limitation for passing the final assessment order u/s. 144C(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. 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 initially is for the draft order and not for the final order. A careful p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....spute Resolution Panel (DRP) and in sub section (1) to section 144C of the Act there is "non obstante" clause which mandates exclusion of all other provisions contained in the Act. The Hon'ble Single Judge of the Madras High Court in the case of Roca Bathroom Products (P.) Ltd. vs. Dispute Resolution Panel-2, 127 taxman.com 332 (Madras) while dealing with aforesaid arguments made on behalf of the Department in a lucid manner explained the reason for reading section 144C & 153 of the Act together for determining limitation for passing the final assessment order, and held:- "15. No doubt, section 144C is a self contained code of assessment and time limits are inbuilt each stage of the procedure contemplated. Section 144C envisions a special assessment, one which includes the determination of Arms 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 speci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are received from DRP or not. As held by us above, the DRP will have no authority to issue directions after nine months and a further period of one month as per section 144C (13) and three months under section 153 (2A) is available, within which period no orders have been passed in the present cases. The reference made by the learned senior counsels on the judgments in Nokia India (P.) Ltd. (supra) and Vedanta Ltd. (Supra) is well founded. The timeline given under the Act is to be strictly followed." [Emphasized by us] Thus, the Hon'ble High Court negatived the arguments made by the Department on 'non obstante' clause used in section 144C of the Act. The Hon'ble High Court thus, concluded:- "27. For the reasons set out herein before, we conclude as under: (a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO....