TaxTMI 
TaxTMI 
2026 (10) TMI 519
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....stances of the case, the final assessment order dated 30 January 2020 (and received by the Appellant on 30 January 2020) passed by the Asst. Commissioner of Income-tax ('AO'), Circle 5(1), Hyderabad u/s 143(3) of the Income-tax Act, 1961 ('Act'), pursuant to the directions dated 13 December 2019 by Dispute Resolution Panel, Bangalore ('DRP') u/s 144C(5) of the Act and read with order dated 27 January 2020 issued by Transfer Pricing Officer (TPO') u/s 92CA of the Act, in so far as it is prejudicial to the Appellant, is contrary to law, facts and circumstances of the case. Transfer Pricing Adjustment 2. That on the facts and circumstances of the case and in law, the assessment order passed by the Learned AO under section 143(3) read with section 144C and read with the order passed by the Learned TPO, under section 92CA(3) of the Income Tax Act, 1961 (Act) is bad in law and void ab- initio. 3. That on the facts and circumstances of the case and in law, the Learned AO/TPO/DRP erred in making adjustment of Rs. 10,60,74,640 u/s 92CA. 4. That on the facts and circumstances of the case and in law, the learned AO/TPO/DRP erred ....
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....AO/DRP erred in rejecting the filters applied by the Appellant while searching for appropriate comparables from the databases. They further erred in applying their own filters in an inconsistent manner. 14. Without prejudice, that on the facts and circumstances of the case and in law, the Learned DRP erred in applying the inconsistent approach in computation of RPT filter as against the TPO filter of related party of 25% to the total revenues in the transfer pricing order dated 31 March 2010. Selection of Comparables 15. That on the facts and circumstances of the case, the TPO/AO/DRP erred in accepting following companies which are functionally different, having brand, carrying out research and development functions, failing filter applied by the learned TPO etc. a) Borosil Glass Works Ltd b) Haldyn Glass Gujarat Ltd. c) Gujarat Guardian Ltd. d) Piramal Glass Ltd. e) Sejal Architectural Glass Ltd. f) Tube Glass Containers Ltd. 16. That on the facts and circumstances of the case and in law, the TPO/AO/DRP erred by not accepting the following comparable companies as which are functionally compar....
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....08. 2. The entire proceedings conducted under section 144C of the Act is without authority of law and as such the entire proceedings conducted under section 144C for AY 2007-08 is void ab initio and liable to be set aside. 3. The AO erred in passing draft assessment order under section 143(3) r.w.s. 144C of the Act dated 21.12.2010. 4. The AO ought to have passed the final assessment order (without passing the draft order) within timeline as provided in section 153 of the Act i.e., on or before 31 December 2010 (i.e., 33 months from the end of AY). 5. The DRP ought to have appreciated that it lacks jurisdiction to adjudicate on objections filed against draft assessment order and as such DRP erred in issuing directions under section 144C dated 19.09.2011 and 13.12.2019. 6. The Directions issued by DRP is belated and as such it deserves to be annulled. 7. The DRP erred in not issuing the directions within reasonable period of time (i.e., 3 years) and as such the directions are barred by limitation. 8. The Appellant craves leave to file additional grounds at the time of hearing." 3. As the assessee company, by raising t....
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....ordingly, the DRP, vide its aforesaid order, observed that there was no valid reason to interfere with the draft proposed order of assessment under consideration and directed the AO to finalize the assessment order accordingly. 10. Thereafter, the AO passed the final assessment order on 24.10.2011, wherein he sustained both the aforementioned additions as were initially made in the draft assessment order. The said final assessment order was served upon the assessee Company on 31.10.2011. 11. Aggrieved with the final assessment order passed by the AO under Section 143(3) r.w Section 144C of the Act, dated 31.10.2011, the assessee company filed an appeal before the Tribunal, which, vide its order passed in ITA No. 196/HYD/2011, dated 08.07.2013, observed as regards the two additions made by the AO, as under: (A). Re: TP adjustment: Rs. 4,27,37,655/- "On considering the totality of the facts and circumstances of the case, we therefore remit the issue to the file of the DRP for considering afresh. The DRP shall pass a reasoned order after considering the submissions of the assessee and taking into account the documentary evidence produced before it by the assess....
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....e the Tribunal, warrants quashing on the ground of limitation itself. The assessee company has assailed the validity of the assessment order principally on two grounds. First, it is contended that the mechanism prescribed under Section 144C of the Act was not applicable to the assessment proceedings for A.Y. 2007-08. Secondly, it is contended that, pursuant to the order of the Tribunal dated 08.07.2013, the proceedings for fresh adjudication were governed by the limitation prescribed under Section 153(2A) of the Act and that the assessment order dated 30.01.2020 was passed beyond the period prescribed by law. 18. As the assessee appellant has assailed the validity of the jurisdiction assumed by the AO for framing the impugned assessment vide his order passed under Section 143(3) r.w. Section 92CA(3) r.w. Section 144C(13) of the Act, dated 30/01/2020, we shall first deal with the said double facet issues, as under: (A). RE: APPLICABILITY OF SECTION 144C TO A.Y. 2007-08 19. The first legal objection raised by the assessee company is that Section 144C of the Act was inserted by the Finance (No. 2) Act, 2009 with effect from 01.10.2009 and that the said provision, being a new ....
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....ccurred on or after 01.10.2009. We find that in the present case, the TPO passed the order under Section 92CA(3) of the Act on 31.10.2010. Thereafter, the AO passed the draft assessment order on 21.12.2010. Thus, the proposal for variation in the returned income was made through the draft assessment order dated 21.12.2010, i.e., well after 01.10.2009. 19.3. We are conscious that the Hon'ble High Court of Madras in Vedanta Ltd. v. ACIT (supra) has taken a different view and has held that Section 144C could not be retrospectively applied to A.Y. 2007-08. However, the said decision is a decision of a non-jurisdictional High Court rendered by a "Single Judge". On the other hand, Zuari Cement Ltd. v. ACIT (supra), a decision of the jurisdictional High Court on the date the said judgment was delivered, is rendered by a "Division Bench", and the same directly considers the statutory expression contained in Section 144C(1) of the Act, namely, the proposal by the AO, on or after 01.10.2009, of a variation in the income or loss returned by the assessee. We are of the view that, as the judgment in Zuari Cement Ltd. v. ACIT (supra) was the judgment of the Hon'ble Jurisdictional High Court o....
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....ot merely direct the AO to give consequential effect to its order, but rather remitted the matter to the DRP for fresh adjudication. 20.3. At this stage, it will be relevant to cull out the distinction between a direction to give effect to an appellate order and a remand for fresh adjudication, as the same is material for the purpose of reckoning the limitation under Section 153 of the Act. 20.4. We find that the Hon'ble High Court of Delhi in Nokia India Pvt. Ltd. v. DCIT (2018) 407 ITR 20 (Delhi), considered the applicability of Section 153(2A) of the Act where certain issues had been set aside and remanded by the Tribunal for fresh determination. The Hon'ble Court held that even where only certain issues are remanded, and the entire assessment is not set aside, Section 153(2A) would apply where the remand results in a fresh assessment of the issue. It was further observed that it makes no difference whether the remand is to the TPO or the DRP, so long as the result of the remand is a fresh assessment of the issue. Also, we find that the principle laid down in Nokia India Pvt. Ltd. vs. DCIT (supra) squarely applies to the present case before us. We say so because the Tribun....
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.... that the DRP came to know of the Tribunal's order dated 08.07.2013 in ITA No. 196/HYD/2011 only on 03.04.2017, when the assessee company furnished a copy of the said order before the DRP, we are unable to accept this contention as the basis for postponing the commencement of limitation. We say so because Section 254(3) of the Act specifically provides that the Tribunal shall send a copy of its order to the assessee and the Principal Commissioner or Commissioner. Rule 35 of the Income-tax (Appellate Tribunal) Rules, 1963 also provides for communication of the order to the assessee and the Commissioner. The statutory scheme, therefore, does not contemplate that the period of limitation can be indefinitely postponed merely because the particular authority before which the remanded proceedings were ultimately dealt with did not have the order on file. In our view, the expression "received" occurring in the limitation provisions cannot be interpreted in a manner which permits the Department to postpone the commencement of limitation until the order reaches the particular officer who subsequently happens to deal with the matter. Our aforesaid view is fortified by the judgment of the Hon....
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....ted by the Tribunal in its order dated 08.07.2013 on another issue arising from the same Tribunal order. We are thus of the firm conviction that the aforesaid reference by the AO is not a statement made by the assessee or a subsequent inference, but rather an act and record of the Department itself. Accordingly, the Department, therefore, cannot simultaneously rely upon the Tribunal's order while passing the reassessment order dated 30.06.2014 and thereafter contend that the said order remained unknown to the Department until 03.04.2017. 20.14. In terms of our aforesaid observations, we are thus unable to accept 03.04.2017 as the date of commencement of limitation. In our view, that date merely represents the date on which the assessee company is stated to have furnished a copy of the Tribunal's order to the particular DRP dealing with the remanded proceedings. It cannot be treated as the date of receipt of the Tribunal's order by the Department for purposes of enlarging the statutory period of limitation. 20.15. Accordingly, in the backdrop of the aforesaid circumstances, the limitation for framing the assessment has to be examined with reference to the receipt/communication....
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....t pass the final assessment order upon receipt of the DRP's directions. It does not, in our considered view, confer upon the DRP an unlimited period to adjudicate an issue which had been remanded by the Tribunal and which was subject to the limitation prescribed under Section 153(2A) of the Act. Also, the fact that the TPO order dated 27.01.2020 and the final assessment order dated 30.01.2020 followed the DRP's order dated 13.12.2019 does not cure the fundamental defect of limitation. Resting our observations, we may herein observe that the crucial question before us, which goes to the root of the matter, is whether, in view of the limitation prescribed under Section 153(2A) of the Act, the fresh proceedings remained alive on 13.12.2019; we are afraid that the answer is in the negative. 22. We may also clarify that our conclusion on limitation does not rest upon the date 03.04.2017. We have expressly rejected the Ld. CIT, DR's proposition that limitation can be postponed to that date merely because the particular DRP subsequently dealing with the matter claims to have received the Tribunal's order on that date. In fact, the Department's own reassessment order dated 30.06.201....