TaxTMI 
TaxTMI 
2026 (3) TMI 560
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....petitioner is a public limited company engaged in the business of manufacture and sale of alcoholic beverages. The issue in the lis revolves around the return of income filed by the company for the assessment year 2013-14 declaring a total income of Rs.4,93,71,22,200/-. Since the petitioner enters into international transactions, the 2nd respondent/Deputy Commissioner of Income-Tax, Central Circle on 30-09-2015 makes a reference to the Deputy Commissioner of Income-Tax, Transfer Pricing, under Section 92CA(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short) for determining arm's length price of the transactions entered into by the petitioner. In furtherance of the aforesaid communication, an order is passed under Section 92CA(3) of the Act determining an aggregate transfer pricing adjustment of Rs.7,38,89,39,877/-. After determining the aggregate transfer pricing adjustment, a draft assessment order is passed under Section 143(3) r/w Section 144C(1) of the Act declaring the total income at Rs.15,60,38,20,756/-. The petitioner aggrieved by the said determination files its objections before the Dispute Resolution Panel and the Dispute Resolution Panel does....
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....d order is before this Court in the subject petition, to set aside the order impugned and for a direction to refund the tax paid over and above the return of income for the assessment year 2013-14 with applicable interest. WRIT PETITION NO.18439 of 2024: 3.2. The position of the petitioner in this petition remains the same as in the companion petition. The petitioner here files a return of income for the assessment year 2014-15 declaring its income as Rs.3,87,70,39,200/-. The petitioner then noticing certain defects filed a revised return of income declaring total income of Rs.4,64,40,44,920/- for the assessment year 2014-15. Again, since the petitioner had entered into international transactions for the assessment year 2014-15 the order comes to be passed under Section 92CA(1) of the Act determining the transfer pricing adjustment for the said assessment year in terms of an order dated 26-10-2017. This leads to passing of a draft assessment order on 26-12-2017 by incorporating the transfer pricing adjustment and disallowing the income declared in the return and determining a total income at Rs.18,26,72,09,820/-. The balance tax payable including interest was determined at Rs....
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....hen an order under Section 254 requires verification on any issue by submission of a document, the time that is specified would become 12 months from the end of the financial year in which the Tribunal's order is received. It is the case of the revenue that normal time limit for acquiring fresh assessment would not become applicable in the case at hand. Since reference is made under Section 92CA, time limit for completing fresh assessment is extended by additional 12 months beyond the normal time limit. Therefore, expiry of the time limit would be 31-03-2025 and not 31-03-2024 as is contended by the petitioners. He would further contend that the case at hand is a case of de novo assessment under Section 92CA, as the order of the Tribunal has set aside the Transfer Pricing Assessment in its entirety. The reference under Section 92CA continues, since the case sprang out of the said reference and the limitation is governed under Section 153(4) and not Section 153(5) of the Act. 6. I have given my anxious consideration to the submissions made by the respective leaned counsel and have perused the material on record. In furtherance whereof, the issues that call for consideration are:-....
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....wer the Assessing Officer either to assess or reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year, proceedings for which have been completed before the 1st day of July, 2012. (3) On the date specified in the notice under sub-section (2), or as soon thereafter as may be, after hearing such evidence as the assessee may produce, including any information or documents referred to in sub-section (3) of section 92D and after considering such evidence as the Transfer Pricing Officer may require on any specified points and after taking into account all relevant materials which he has gathered, the Transfer Pricing Officer shall, by order in writing, determine the arm's length price in relation to the international transaction or specified domestic transaction in accordance with sub-section (3) of section 92C and send a copy of his order to the Assessing Officer and to the assessee. (3A) Where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under sub-section (3) has not been made by the....
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....tion of assessment, reassessment and recomputation: (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable: ........ ....... ....... (3) Notwithstanding anything contained in sub-sections (1), (1A)and (2), an order of fresh assessment or fresh order under section 92CA, as the case may be, in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment, or an order under section 92CA, as the case may be, may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be : Provided that where the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner o....
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.... heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3). ........ ....... ......." (Emphasis supplied) Section 153 prescribes time limit for completion of assessment and reassessment and recomputation. 8. The issue now would be, whether the limitation operating under Section 153(3), 153(4) or 153(5) would become applicable. Section 153(3) speaks about setting aside or cancelling an order of assessment passed under Section 92CA. Section 153(3) further provides the timeline for passing a fresh order under Section 92CA or fresh assessment, as the case would be. Therefore, Section 153(3) does not solely apply to setting aside or cancelling an order of assessment only, it applies even to cancelling an order under Section 92CA. In both these cases at different assessment years scrutiny of assessment was taken for the assessment years 2013-14 and 2014-15. What orders are passed would not be relevant, but the order of the Tribunal assumes significance. The final assessment order comes to b....
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....urce Amount (Rs. In crore Remarks Overseas subsidiary 2.539 Offered to tax Mutual Funds/Dividend from domestic companies 2.299 Exempt by virtue of section 10(34) and 10 (35) of the Act. Total 4.838 10.1 During the course of assessment proceedings, the AO proposed to apply the provisions of section 14A read with rule 8D. The AO had proposed to make the subject disallowance of Rs.90,89,00,000. 10.2 Aggrieved, the assessee filed objection before the DRP. The DRP upheld the proposed disallowance, however, with specific directions to exclude overseas investments, the income from which was offered to tax in India (para 2.12 page 45 of the paper book). 10.3 Based on the DRP's direction, the AO excluded the investments in overseas subsidiaries and recomputed the disallowance at Rs.48,04,00,000 in the final assessment order. 10.4 Aggrieved by the final assessment order, the assessee has raised this issue before the ITAT. The learned AR submitted that the issue stands covered in favour of the assessee by the order of the Tribunal in assessee's own case for assessment year 2012-2013 (supra), wherein the Tribuna....
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....interest on security deposits, cash credits/overdrafts, working capital demand loan, bill discounting facilities. When the disallowance is worked out under rule 8D(2)(ii), this contention of the assessee would loose its significance. (c) The Ld A.R submitted that, for the purpose of computing average value of investments, the AO should consider only those investments which have actually yielded exempt dividend income. We notice that this argument of the assessee finds support from the decision rendered by the Special bench in the case of Vireet Investments P Ltd (165 ITD 27)(Delhi-SB). Accordingly, we direct the AO to exclude investments, which did not yield exempt income, while computing average value of investments. (d) The Ld A.R also contended that the disallowance should not exceed the amount of exempt income. In this regard, he placed his reliance on the decision rendered by jurisdictional High Court in the case of Pragathi Krishna Gramin Bank vs. JCIT (2018)(95 taxmann.com 41). We direct the AO to take into consideration above said binding decision while examining this issue. Accordingly, we restore this issue to the file of the AO for examining it....
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.... 11.4 The learned Departmental Representative relied on the findings of the AO and the DRP. 11.5 We have heard rival submissions and perused the material on record. The AO made a disallowance of Rs.138,05,93,276 under section 36(1)(iii) for the reason that the interest bearing funds have been given as interest free loans to various related parties including AEs. The DRP upheld the disallowance made by the AO with a direction that the disallowance of interest by the AO to the extent of TP adjustment in relation to this interest free loan should be only on protective basis. Following the directions, the AO in the final assessment order, made an addition of Rs.140,46,63,276 and a protective addition of Rs. 26,77,06,867 under section 36(1)(iii) of the I.T. Act. 11.5.1 The Tribunal in appellant's own case for the AY 2012-13 in IT(TP)A No. 489/B/2017 order dated 29.5.2020 considered similar issue and held as follows:- "42. We heard Ld D.R and perused the record. From the arguments of the ld A.R, we notice that the own funds available with the assessee is in excess of the aggregate amount of interest free advances and hence the decision rendered by Hon'....
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....ation is claimed, no depreciation can be allowed. 12.3 The final assessment order was passed by the AO in accordance with the directions of the DRP. 12.4 Aggrieved, the assessee has raised this issue before the ITAT. The learned AR submitted that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee's own case for A.Y. 2012-2013 wherein the Tribunal has held that payment of these expenses on sponsorship are revenue expenditure. The said issue has been discussed by the Tribunal in para 43 to para 49 on page 28 to page 38 of its order. (The findings of the Tribunal are recorded in para 45 to para 49 on page 30 to 38 of the order). In view of the foregoing, the AR submits that the brand promotional expenses be allowed as business expenditure u/s 37(1) of the Act. 12.5 The learned Departmental Representative supported the finding of the AO and the DRP. 12.6 We have heard rival submissions and perused the material on record. The AO disallowed the sales promotion and advertisement expenses totally amounting to Rs. 44,33,55,403 [36,91,12,995 + 7,42,42,408] for the reason that these expenses are brand promotion expend....
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....enue expenditure. Referring to the case of Delhi Cloth and General Mills Co. Ltd.(115 ITR 659) of the honorable Delhi High Court, the FAA allowed the appeal filed by the assessee. 3.1.a. With regard to management fee, the FAA observed that there was no doubt about the genuineness of expenditure, that the expenditure was incurred for availing infrastructure facilities administrative support, like manpower recruitment, HR services, uses of computer, telephone, photo copiers, infrastructure set up etc. in order to carryout business operations smoothly, that the parent company had allocated a certain amount to the account of the assessee in the ratio of its turnover. He finally held that expenditure had to be allowed as revenue expenditure. 3.2. Before us, the DR supported the order of the AO and the AR relied upon the order of the FAA. We find that the assessee group had entered into an agreement with India Win, that it was a co-sponsor of Mumbai Indian IPL team, that it had incurred similar expenditure in the subsequent two years, that out of the total expenditure the assessee had claimed a very small proportion under the head sponsorship expenses. Such an expenditu....
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.... the assessee had filed objections before the DRP. The DRP vide directions dated 20.12.2013 upheld the action of the AO, on the ground, that the expenditure was benefitting all the entities across the globe and hence, it could not be said to have been incurred wholly and exclusively for the business of the assessee. 89. The learned counsel for the assessee submitted that the said disallowance was unwarranted since the said expense was incurred in view of the fact that major viewership of cricket is in the Indian subcontinent. He also referred to various newspapers reports which demonstrated the popularity of the sport in India to support the aforesaid contentions. It was also submitted that the assessee company has consistently promoted its range of products using cricket as an advertising platform. It was also to our notice that payment of sponsorship fees to ICC was remitted by the assessee after deduction of tax at source as instructed by the Income Tax Department. Further, the assessee had obtained the approval of the Ministry of Youth Affairs and Sports for sponsoring the events covered under the agreement. Copy of the order under section 195 of the Act and the approv....
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....of business or not. Here in this case, the commercial expediency has not been doubted but rather it has been held by the AO that in all the years transfer pricing adjustments has been made on this score and benefit is arising to the other AEs also. What is relevant for an expense to be allowable as revenue expense is that, whether it has been incurred during the course of business and is for the purpose of business. Benefit factor to other related parties is relevant under transfer pricing provision and not while allowability of business expense u/s 37(1). It is well known fact that companies use sports event as a platform to advertise their range of products as it has a very high viewership. Any such incurring of expenditure is ostensibly for promotion of business only and hence, no disallowance is called for. Accordingly, Grounds No. 7 to 7.3 in ITA No.1044/Del/2014 pertaining to A.Y. 2009-10 are allowed." 47. We notice that the co-ordinate benches are consistently holding the view that the expenditure incurred on sponsoring of sports events are intended to promote business only and hence the same is allowable as expenditure. The allowability of brand promotion ....
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....itate the carrying on of the business of the assessee" In Smith Kline & French (India) Ltd. v. CIT [1992] 193 ITR 582/[1991] 59 Taxman 357 (Kar.), it was held that in normal commercial sense and in common parlance sales promotion and publicity are activities aimed at gaining goodwill in the market. They need not be confined to media propaganda but can involve indirect approaches. The judgment of a Division Bench of this Court in CIT v. Adidas India Marketing (P.) Ltd. [2010] 195 Taxman 256 (Delhi) has recognized that brand promotion exercises undertaken through media campaigns, schemes, programmes etc are essential for propagation of the brand. The necessity (or lack of it) is not something which income tax authorities can go into; as long as it is voluntarily undertaken by the business enterprise for profit earning, it would be entitled to claim relief under section 37(1). 23. In the present case, the AO was conscious of the fact that brand promotion expenses are a necessary ingredient in marketing strategies. Therefore, he allowed about 50 per cent of those expenses. However, the reasoning for disallowance of the rest, i.e. that the assessee could claim only a p....
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....this case on the basis of factual matrix involved therein. As against this, learned counsel appearing for the respondent/assessee placed reliance upon the principle laid down by the Supreme Court in the said judgment. 8. We have perused the judgment. We find ourselves in agreement with the learned counsel appearing for the respondent/assessee. It would be relevant to reproduce the relevant observation made by the Supreme Court, in the said judgment, which, in our opinion, support the case of the respondent/assessee to contend that the expenditure of Rs. 10 lakhs would be on revenue account. The relevant observation in the case of Empire Jute Co. Ltd. (supra) reads thus: 'The decided cases have, from time to time, evolved various tests for distinguishing between capital and revenue expenditure but no test is paramount or conclusive. There is no all embracing formula which can provide a ready solution to the problem; no touchstone has been devised. Every case has to be decided on its own facts, keeping in mind the broad picture of the whole operation in respect of which the expenditure has been incurred. But a few tests formulated by the Courts may be referred to as....
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....be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. In the present case, except the right to use the court yard, no other rights were created in favour of assessee. In other words, the amount paid to the Trust was for the use of the court yard under the MOU for an indefinite future, and therefore, it would be on revenue account. In other words merely because the advantage may endure for an indefinite future would not mean that the expenditure would be on capital account and not revenue. The advance of Rs. 10,00,000/-, in the present case, consists merely in facilitating the assessee's business operations, enabling the management to conduct their Hotel business more efficiently and profitably. We are, therefore, satisfied that the view taken by the Tribunal in answering this question in favour of Assessee and against the Revenue is correct and deserve no interference by this Court." 49. Respectfully following the above cited decisions, we set aside the order passed by AO on this issue and direct him to allow the impugned sponso....
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.... to Rs.21.58 crore disallowed pursuant to the Project Spirit Report. The above fact was highlighted to the lower authorities in the submissions furnished by the assessee (page 128 to 130 of the paper book). Given that the expenses were not claimed by the assessee, the disallowance of the expenses is unwarranted and bad in law. * With respect to the remaining transactions, the assessee submitted that the disallowance based on the Project Spirit Report has been made without providing the reasons for making such disallowance and on an arbitrary basis without adjudicating on the objections filed by the assessee. In this connection, it was submitted that various Courts have repeatedly held that there must be something more than bare suspicion to support an addition or disallowance in an assessment. No disallowance can be made which are based on mere conjectures and surmises. In this context, it was submitted that the assessee being a victim of such fraud would in fact be eligible to claim such sums a deductible bona fide business loss as highlighted in the following judicial pronouncements:- (i) Baridas Daga v. CIT (34 ITR 10 (SC) (ii) Sassoon J David & Co. P.....
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....claims in the DRP objections [Page 128 to 134 of the appeal memo] regarding deduction under section 28 on account of fraud committed on the company has also not been considered by the AO/DRP. It appears that the AO has made the addition only on the basis of 'Project Spirit Report' without properly examining the claim of the assessee that certain transactions and the addition made thereto does not relate to the assessee. Considering the material on record and for the aforesaid reasoning, we set aside the impugned addition and restore this issue to the file of the AO for proper examination of all the facts relating to the said issue. The assessee shall provide all documentary evidence relating to its claim and the AO also shall make a proper enquiry in this regard. All contentions are left open to be considered by the AO in accordance with the law. 13.4.1 Hence grounds 8.1 to 8.8 are allowed for statistical purposes. Interest u/s 234B of the I.T.Act (ground 9) 14. The above ground is only consequential and the same is dismissed. Interest u/s 234C of the I.T.Act (ground 10) 15. The limited submission of the assessee is that interest u/s 234....
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....ice of the above said Hon'ble High Courts. Accordingly, the Tribunal has expressed the view that the decision rendered by Hon'ble Supreme Court in the case of K. Srinivasan (supra) shall prevail on this issue and accordingly held that the education cess is not allowable as deduction. 18.1 Following the above said decision of Kolkata bench of Tribunal in the case of Kanoria Chemicals & Industries Ltd (supra), we hold that payment of education cess including secondary and higher education cess is not allowable as deduction. Accordingly, we reject this ground of the assessee. 19. In the result, the appeal filed by the assessee is partly allowed." (Emphasis added) The Tribunal partly allowed the interest imputed on interest advanced for statistical purposes and on other grounds as found in the order itself. The issue is not with regard to merit of the grounds in the appeal. What happened in the aftermath of the order forms the contention in the case at hand. 9. The issue would be, whether there has been a reference under Section 92CA(1) to the Transfer Pricing Officer or the matter being remitted to the Transfer Pricing Officer by the Tribunal to decide the i....
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.... a direction framed by the Dispute Resolution Panel and which may have come to be translated into an actual order of assessment. Consequently, once such an appeal were to be laid before the Income Tax Appellate Tribunal, it would stand empowered to not only examine the correctness of the directions framed by the Dispute Resolution Panel with respect to international transactions but also to such other and additional aspects and which may not necessarily be confined to only international transactions as decided by the assessing officer. We thus find ourselves unconvinced to hold that the Income Tax Appellate Tribunal under the statutory scheme of the Act should not be recognised to have the power to remit the matter directly to the desk of the Transfer Pricing Officer. 66. Our conclusion in this respect stands fortified from a reading of Section 153(3) which speaks of an order of the Income Tax Appellate Tribunal requiring a "fresh assessment" or a "fresh order under Section 92-CA". It is pertinent to note that the word "order" in the context of Section 92-CA is undoubtedly a reference to the adjudication undertaken by the Transfer Pricing Officer. This in the light of Sect....
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.... of the Act. This since Section 153 of the Act speaks not merely of assessments but also orders that are liable to be framed under Section 92-CA. The order which is spoken of in Section 92-CA of the Act, as explained above, is the one which the Transfer Pricing Officer may come to make in accordance with sub-section (3) thereof. It is thus manifest that the assessment exercise was liable to be concluded within a period of nine months when computed from 14-7-2017. ... ... ... 80. It becomes pertinent to observe that the Section 92-CA(1) reference rests solely upon the assessing officer being of the opinion that a reference is required to be made to the Transfer Pricing Officer for computation of arm's length price. That power stands conferred upon the assessing officer and is available to be exercised in the course of assessment. However, and as is plainly evident from Section 153(3) of the Act, the statute does not deprive the Income Tax Appellate Tribunal of the authority and jurisdiction to require a fresh order under Section 92-CA being made. As we had observed hereinabove, Section 153(3) of the Act speaks of assessments as well as orders under Section 92-CA th....
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....s and having perused the Petition Papers, this Court is inclined to grant indulgence in the matter as under and for the following reasons: I. Some legal principles & morals which are to animate levy of tax and refund of un-taxable: (i) A great Indian poet Kalidasa (500 CE) in his epic poem "Raghuvamsham" (1-18) states: "The King Dilip collects from his subjects only 1/6th of their income as tax for the welfare of State, indeed like the sun taking earthly water drops, only to indemnify her with multiples of rain-drops..." Chanakya in his acclaimed work "Arthashastr" advises the Rulers: "Collect taxes from the citizens as honeybees collect nectar from the flowers, gently and without inflicting pain..."; (ii) A renowned jurist of yester-decades late Mr. Nani Palkhivala, in the concluding paragraph of Preface to the Eighth Edition of "The Law and Practice of Income Tax" said "Every Government has a right to levy taxes. But no Government has the right, in the process of extracting tax, to cause misery and harassment to the taxpayer and the gnawing feeling that he is made the victim of palpable injustice."; the function of the Assessing Officer is to administer....
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....ved that a good government involves not only diligent collection of taxes, but also ready refunds of excess levies. II. As to meaning of "assessment"; difference between "assessment" & "assessment order" (i) The DCIT has stated in the impugned order "... As this is the case of fresh assessment/re-assessment, an additional interest u/s. 244A(1A) will not be applicable ... "; much has been argued on behalf of the assessee that his is not a case of fresh assessment/re-assessment, and therefore the impugned order is liable to be voided, whereas the Revenue has contended to the contrary; therefore, it becomes necessary to discuss these concepts. While juxtaposing contextual construction qua literal interpretation of statutes, Justice Krishna Iyer in CIT vs. ARAVIND REDDY, AIR 1980 SC 96 observed: "The significance of a word of a plural semantic shades may, in a given text depend on the pressure of the context or other indicia. Absent such compelling mutation of sense, the speech of the lay is also the language of the law ..."; Keeping inter alia the above observation in mind, one has to ascertain the meaning of the above terms. (ii) The 1961 ....
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.... of assessment and therefore, the word 'assessment' cannot be confined to the act of making an order of assessment; there is a certain legal difference between the terms 'assessment' & 'assessment order'; it can be stated that the use of the word 'assessment' would mean the whole process of determination of income and the same should not be restricted to a mere passing of an assessment order. III. As to meaning of the term 'setting aside or cancelling an assessment' (i) Ordinarily, when an assessment is set aside or cancelled, a fresh assessment follows; a perusal of the following sections reveals that making of a fresh assessment invariably precedes setting aside or cancelling an assessment: * Section 153(2A) prior to substitution by Finance Act, 2016 with effect from 01.06.2016. * Section 153(3) post substitution by Finance Act, 2016 with effect from 01.06.2016. * Proviso (a) to Section 240; * Explanation 1(iii) to section 245A(b) * Section 251(1)(a) - words as omitted by Finance Act, 2001 with effect from 01.06.2001. It may be noted that Section 153 which is the subject matter of interpretation herein, is en....
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....y higher authorities other than those orders which require fresh assessment or reassessment and such order requires verification of any issue by way of submission of any document by the assessee or an opportunity is required to be provided to the assessee. Effect to the order to be given within 3 months from the end of the month in which order is received. PCIT or CIT may allow an additional period of six months. [subject to certain conditions] If the order which has to be given effect to requires verification of any issue then the time limit of 9 months is applicable. 153(6) subject to provision of section [153(3) and (5)] Exceptions to clause (1) and (2) above. Assessment, reassessment or recomputation made on assessee or any person. In consequence of or to give effect to any findings or directions contained in order's otherwise than in appeal. 12 months from the end of the month in which order is received. Assessment of partner order in consequence of an assessment made on the firm under section 147 12 months from the end of the month in which order in case of firm is passed 153(7) Applica....
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....ction contained in an order under section 250, Section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Act. The said sub section is subject to sub-section (3) and (5). * Sub-sections 7 and 9 deal with transition provisions as section 153 is substituted. * Sub-section 8 deals with time-limit in case of search based assessments. A second proviso is added to sub-section (5) of section 153 by the Finance Act, 2017. The said proviso states that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the Order Giving Effect to the said order u/s.250 or sec.254 or sec.260 or sec.262 or sec.263 or sec.264 shall be made within the time specified in sub-section (3). The dates specified in the Table above shown as B would be relevant for this purpose. IV. As to Order Giving Effect (OGE): (i) The following gener....
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....resh assessment' (i) The words 'assessment, 'reassessment' or 'recomputation' have been used in the following sections of the 1961 Act: • Section 147 (prior to substitution vide Finance Act, 2021 with effect from 01.04.2021) and section 147 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Explanation to section 147 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Section 148 (prior to substitution vide Finance Act, 2021 with effect from 01.04.2021) and section 148 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Section 150 Section 153(3)(ii) [prior to substitution vide Finance Act, 2016 with effect from 01.06.2016] Section 153(6)(i) [post substitution vide Finance Act, 2016 with effect from 01.06.2016] From the above, it can be safely assumed that the word 'reassessment' has been used in cases where income has escaped assessment. (ii) On the other hand, the phrase 'fresh assessment' has been used in the following sections: * Proviso (a) to Section 240; * Section 251(1)(a) -words omitted by Finance Act, 2001 with effect from 01.06.2001. ....
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....se there would have been little point in using the latter as well as the former." (iv) It is pertinent to note that section 153(3) [post substitution vide Finance Act, 2016 w.e.f. 01.06.2016] does not use the word 'reassessment' alongside 'fresh assessment'; however, the said word has been used alongside 'fresh assessment' in section 153(5) [post substitution vide Finance Act, 2016; accordingly, reassessment is not envisaged u/s 153(3); such reassessment can only come u/s 153(2) or Section 153(6) which deals with assessment, reassessment or recomputation to give effect to any finding or direction contained in the order of superior authority or court; thus if an order of assessment is set aside in appeal with a direction that a fresh reassessment be made, the same would be covered by section 153(3); One may also note that section 2(40) of the Income Tax Act, 1961, Act defines the term "regular assessment" to mean assessment under sub section 3 of section 143 or section 144; therefore these terminologies have different import in different sections. In the light of this discussion, it is clear that the term "assessment" is used in section 153(1) to mean the entire process of ....
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....) or a reassessment in terms of Section 153(2); it would simply mean that the orders of the higher forum are to be applied & followed by the assessing officer; . it may be borne in mind that longer time limits are provided in Section 153(3) & second proviso to Section 153(5) because it may entail doing the entire process once over or where detailed evidences may be required for accomplishing the task; however where a shorter time limit is prescribed u/s. 153(5), the legislative mandate is to subserve the objectives of ensuring timely compliance with the orders of the superior authorities. (v) One more aspect needs to be stated here: instructions were issued by the CBTD long before Sec.244A(1A) was loaded to the statute book making the right to interest on delayed refund a substantive right; the relevant portion of instruction 7 of F.No.279/MISC/M-42/2011-ITJ dated 24.05.2011 reads as under: "iv. Appeal effect should be particularly monitored by the CIT in the cases in which the ITAT has decided certain issues in favour of the assessee and set aside-remanded back other issues to the Assessing Officer. The set-aside issues must be decided on priority". The ....
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....while giving appeal effect in the present kind of situation, the Assessing Officer was performing two functions, namely, carrying out the directions of the appellate authority in respect of the issues which had become final and secondly, re-examining the issues which had been set aside to him. Each of these functions seemed to be independent and there is no bar in the Act to carry out these functions separately. There was no infirmity in the practice being followed by the revenue authority in passing the separate appeal effect order by firstly giving appeal effect order in respect of issues which had become final and passing the second order in respect of those issues which had to be examined afresh. Such kind of practice was more practical and convenient to both the parties and there was no legal bar against such a practice. [vide Para 10]" VI. As to limitation period under the 1961 Act: (i) The provisions of 1961 Act prescribe periods of limitation for various acts & procedures of assessees and assessing authorities; limitation is prescribed, inter alia, for the issue of scrutiny notice u/s 143(2), issue of notice u/s 147, for completing assessment u/s 153, etc;....
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....ot depend on the application of the assessee, but follows as a natural corollary to the right to receive refund vide NATIONAL HORTICULTURE vs. UNION OF INDIA, 253 ITR 12; this can be likened to centuries-old-principle that the debtor should find the creditor and pay the debt. VII. Payment of interest on delayed refunds u/s. 244A(1A): (i) This provision has been brought on the statute book vide Finance Act, 2016 w.e.f. 01.06.2016; entitlement of an assessee to the interest on delayed refund as envisaged under this provision to some extent brings a sort of parity in the converse situation where he is liable to pay interest for delayed payment of taxes in terms of section 234B; it may be pertinent to note that it was inserted and brought into effect from the same time as section 153 was substituted by Finance Act, 2016; similarly, section 153(5) was substituted by Finance Act, 2016 prescribing the time limit to give effect to the orders passed under the sections mentioned therein, wholly or partly, otherwise than by making a fresh assessment or reassessment; prior to such amendment, no time limit was prescribed for passing of OGE; it may be noted that the requirement....
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....t of identical language in section 153(5) and section 244(1A) too supports this analogy; it is clear that section 244A(1A) would apply to cases covered u/s 153(5); thus where, in respect of certain issues, order giving effect to be passed u/s 153(5), otherwise than by making a fresh assessment or reassessment is passed beyond the prescribed time-limit, interest u/s 244A(1A) has to be granted in respect of refund arising on such issues that are concluded and that the pendency of consideration on remitted issues does not interdict the statutory accrual of interest; an argument to the contrary cannot be countenanced without straining the text & context of the provision. VIII. Application of the above principles to facts of the case: (i) In the instant case, the following "title facts" are not in dispute; a) Assessment Year is 2008-09 b) ITAT order is dated 04.01.2017 c) TPO's OGE is dated 31.10.2017 d) AO's OGE is dated 28.12.2017 e) Assessee filed Rectification u/s 154 against OGEs of TPO and AO on 18.01.2018 f) TPO passed the Rectification Order on 26.03.2018 g) Assessee follows up his application dated....
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....m the total turnover as well. 11. Issue of denial of section 10A relief in respect of amount of export turnover not remitted into India within six months was held in favour of the assessee. 12. Issue of denial of section 10A relief in respect of undertaking established prior to 1993 was held in favour of the assessee but to the extent of extended capacity. The matter was remitted to AO to verify the same if necessary. 13. Issue of allocation of corporate overhead to section 80IB unit beyond what was already allocated by the assessee was held in favour of the assessee. 14. Issue of denial of deduction u/s. 80IB in respect of trading of monitory and printer was held in favour of the assessee. 15. Issue of allocation of corporate overhead to section 80IC unit beyond what was already allocated by the assessee was held in favour of the assessee. 16. Issue of eligibility of other income for deduction u/s. 80IC was held against the assessee. 17. Issue of allocation of corporate overhead to section 80IAB beyond what was already allocated by the assessee was held in favour of the assessee. 18. Issue of eligibility of ot....
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....arisen, as rightly argued by the assessee; the actual refund having been made only on 04.05.2019, even when the assessment in respect of one issue of TPA as early as 28.12.2017, delay has been brooked in granting refund. (ii) The above apart, case of the assessee becomes stronger since his book profit is far greater than its profit as per the normal provisions and that the refund arises only because tax paid by the assessee was more than the tax payable on the book profit; therefore, it can be safely stated that no part of the refund payable arose because of the reduction in the TPA; added to this, the demand attributable to the TPA as finally made is miniscule ie. Rs.25 lakh or so, as compared to the total refund including interest of over Rs.1,380/- crore admittedly made over to the assessee; the contention of the Revenue militates against the rule of proportionality and the fairness standards which the Tax Authorities are expected to adhere. (iii) The vehement contention of the Revenue essentially structured on the text of section 4 of the 1961 Act that any order giving effect to the order of the ITAT will result in re-determination of the assessee's total inco....
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....he High Court of Delhi in NEW DELHI TELEVISION supra, what would unmistakably emerge is that, the limitation to pass an order after remand from the Tribunal is 31-03-2024 and not 31-03-2025. The order is received from the Tribunal by respondents 1, 2 or 3, as the case would be, on 05-04-2022 and 22-11-2022 respectively. Therefore, if 12 months is computed from the end of the financial year of 2022-23 which would be 12 months from 31-03-2023 and limitation of which would expire on 31-03-2024. There is no extension of one year as contended by the revenue, merely because documents are sought by the revenue or reply is filed by the petitioner to the documents so sought. In that light the petitions deserve to succeed on the sole score of limitation. 11. The judgment of the coordinate Bench in WIPRO was challenged before the Division Bench of this Court in W.A.No.1322 of 2021. The Division Bench on 23-12-2021 passed the following interim order: "We have heard Sri. K.V. Aravind, learned counsel for the Revenue and learned Senior Counsel Sri. S. Ganesh for the respondent - assessee. Prima facie, we are of the considered view that the matter requires consideration. Hence, we dee....
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.... of the Act. 13. In the light of the limitation getting expired on 31-03-2024, any action beyond the said date is de hors jurisdiction, as the question of limitation is always a question of jurisdiction. If a claim is barred by limitation either by the act of the revenue or the assessee, it would touch upon the jurisdiction of such claim. Respondents 1 and 3 having passed no order pursuant to remittance by the Tribunal on or before 31-03-2024, they are precluded from passing any order now beyond the said date. In that light, as observed hereinabove, the petitions deserve to succeed, not only by obliteration of proceedings but a direction for refund of the tax. 14. For the aforesaid reasons, the following: ORDER (i) Writ Petitions are allowed. (ii) The communication dated 18-06-2024 issued by the 3rd respondent for the assessment years 2013-14 and 2014-15 concerning in these petitions stand quashed. (iii) The respondents shall initiate action for refund of tax paid over and above the return of income filed for the assessment years 2013-14 and 2014-15 concerning Writ Petition No.18474 of 2024 and Writ Petition No.18439 of 2024 respectively. The refund shall be proce....