2023 (3) TMI 220 - HC - Income Tax

Assessment u/s 153A - Time limit for completion of assessments and reassessments - Refund due to FSSL (which is now amalgamated with the petitioner company) claim to be refunded to the petitioner along with applicable interest - HELD THAT - Section 153 of the Act was amended by the Finance Act, 2017 with retrospective effect from 01.06.2016 and the provision regarding limitation for framing an assessment pursuant to any order passed inter alia under Section 254 of the Act was included under sub-section (3) of Section 153 of the Act. Pursuant to the order dated 07.01.2016 passed by the Tribunal, the Transfer Pricing Officer passed an order dated 24.01.2017. However, concededly, the Assessing Officer has not passed any final order. It is material to note that despite sufficient opportunities, the respondents have not filed the counter affidavit. Mr. Sanjay Kumar states that in view of his instructions that the assessment order has not been passed, there is no requirement to file any counter affidavit. The contention that passing fresh assessment order pursuant to the Tribunal s order dated 07.01.2016, is barred under the provisions to Section 153(3) and 153(4) of the Act, is merited. We also find merit in the contention that the income as returned by FSSL for the Assessment Year 2007-08 would stand accepted. Consequently, any adjustment made for the refund due to FSSL for the assessment year 2006-07 is not sustainable. It is, accordingly, directed that the said amount, which was due as a refund for the assessment year 2006-07 be refunded to the petitioner along with interest as applicable within a period of eight weeks from today. We also express our displeasure in the manner the present matter has been dealt with by the concerned officer.

Summary

Issues:
1. Refund of taxes paid by M/s Flextronics Software Systems Ltd. for the assessment year 2007-08.
2. Disallowance of project expenses and deduction under Section 10B of the Income Tax Act.
3. Failure of the Assessing Officer to pass an order pursuant to the Tribunal's direction.

Analysis:
1. The petitioner sought directions for a refund of taxes paid by M/s Flextronics Software Systems Ltd. (FSSL) for the assessment year 2007-08. The assessment process involved scrutiny, addition of corporate charges, disallowance of project expenses, and deduction under Section 10B of the Act. The Dispute Resolution Panel upheld the Draft Assessment Order, leading to a demand raised against FSSL, which was adjusted against a refund due for the assessment year 2006-07. The Tribunal partly allowed the appeal, remanding certain issues back to the Transfer Pricing Officer and Assessing Officer. The petitioner claimed the refund due to FSSL, now amalgamated with the petitioner company, was time-barred, seeking its refund along with applicable interest.

2. The Tribunal remanded the disallowance of deduction under Section 10B of the Act back to the Assessing Officer for fresh consideration. The petitioner relied on relevant judgments and decisions to support their claim for deduction under Section 10B. Despite opportunities, the Assessing Officer failed to pass an order following the Tribunal's direction. The court found merit in the contention that the income as returned by FSSL for the assessment year 2007-08 should stand accepted, directing the refund of the amount due for the assessment year 2006-07 to the petitioner along with applicable interest.

3. The Assessing Officer's failure to pass an order pursuant to the Tribunal's direction was noted with displeasure by the court. Despite clear instructions, the officer did not comply within the prescribed time. The court allowed the petition, directing the refund of the amount due for the assessment year 2006-07 to the petitioner within eight weeks. The judgment highlighted the importance of timely compliance with tribunal directions and the need for proper assessment procedures to be followed diligently.