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TMI Blog2020 (1) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... n 144C by the Assessing Authority in the present case is proper. As far as Chapter VIA deductions are concerned, learned Senior Counsel for the petitioner points out that the issue relating to deduction under Section 80IA stands covered by a decision of the learned Single Judge of this Court in the case of this very assessee that has attained finality. Thus the question of deduction under Section 80IA has been decided in favour of the assessee. Going by the purport of Section 80 IB, on the admitted facts as to the date of commercial production, there could be no denial of the relief. The procedure inserted is substantive, in that it offers a new scheme of assessment to a distinct class of assessees, that is, those assessee whose assessments involve the issues of Transfer Pricing and determination of Arms Length Price. The provisions of Section 144C do not, thus merely prescribe procedure but a substantive exercise in assessment. Where there is a change in the form of assessment itself, such change is not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured to the parties by virtue of the introduction of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, as contemplated in terms of Section 80IA. (ii) As far as the claim under Section 80IB was concerned, the Assessing Authority took the view that the claim related to the 10th year of the relevant unit, i.e., Chinchpada Unit, and hence was liable to be disallowed. (iii) The claim under Section 10B was partly allowed. The disallowance related to the export of copper cathode, which according to the Assessing Authority, did not qualify for deduction under Section 10B, as no new product had emerged from the process undertaken by the petitioner. The Officer opined that copper Anode and copper Cathode being inputs and outputs respectively were one and the same thing and thus the petitioner would thus not be eligible for deduction under Section 10B. The deduction as claimed, was granted only to the extent of production of copper rod. 4. Before going into the matter on merits, I proceed to deal with the preliminary submission in regard to the assumption of jurisdiction by the Assessing Authority. 5. This point has been raised by way of a supplementary affidavit filed on 27.01.2011. The point raised is that the impugned draft assessment order dated 30.12.2010 (in short 'DAO'), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the judgments of the Supreme Court in J.K.Synthetics Ltd. and others V. Central Board of Direct Taxes and others (83 ITR 335) and Commissioner of Income Tax, Bangalore V. R.Sharadamma ((1996) 8 SCC 388) as well as a decision of the Division Bench of the Madras High Court in the case of Commmissioner of Income Tax V. Prasad Productions (P) Ltd. (179 ITR 147) to bring home the point that, by insertion of Section 144C a new procedure is sought to be inserted in the Income Tax Act and the scheme of assesssment itself stands changed as it vests authority to carry out the assessment, in a completely different forum. Thus, the new provision, according to him, does not merely bring about a procedural change, but also a substantive change that cannot, under any circumstances, be retrospective, but only prospective, as a vested right of the assessee stands amended by virtue of the provision inserted. 11. According to him, the impugned draft assessment order is wholly barred by limitation, since the provisions of Section 153 provide for a limitation of 21 months only for completion of assessment. The assessment in the present case (relating to A.Y.2007-08) would have to be completed on or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nior Counsel for the petitioner points out that the issue relating to deduction under Section 80IA stands covered by a decision of the learned Single Judge of this Court in the case of this very assessee in W.P.No.7400 of 2008 (decision dated 30.09.2010), that has attained finality. Thus the question of deduction under Section 80IA has been decided in favour of the assessee. 16. The second aspect of deduction under Section 80IA is also covered by a decision of the learned Single Judge in the assessees' own case in W.P.Nos.24476 to 24478 of 2009 (dated 19.12.2011), wherein, at paragraph nos.21 to 27 the learned Single Judge holds as follows: '22. It is an admitted fact that the assessee herein has eligible industrial undertakings, one at Chinchpada Unit (CCR Refinery) at Silvassa in the Union Territory of Dadra and Nahar, Haveli and the other at Rakholi. The first respondent does not deny, as a matter of fact, that the licensing Authority granted the licence for the Chinchipada Unit to start the business operations on 7th June 1996 and for the Rakholi Unit, on 18th March 1998. It is not disputed by the respondents that the commencement of the operation, as by way of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in the contention of the Revenue that the relief has to be worked out from the date of the licence. It may be noted that getting a licence to set up an industrial undertaking is a stage anterior to the commencement of production and hence, the date of licence and the date of commercial production cannot be a simultaneous happening. In the circumstances, I hold that the very basis for initiating the reassessment proceedings suffers from legal infirmity arising from the wrong understanding of a clear provision under Section 80 IB of the Act. On the admitted fact as regards the date of the licence and the date of commercial production, the relief granted from the initial assessment year taken from the date of commercial manufacture must enure for a period of five years thereafter. 27. Thus with Section 80 IB laying stress on the date of commercial production as the year from which the relief should be worked out, I agree with the learned senior counsel appearing for the petitioner that the decisions reported in [1977] 110 ITR 164 (Additional Commissioner of Income Tax Vs. Southern Structurals Limited), [2006] 286 ITR 674 (Commissioner of Income Tax Vs. Elgi Finance Limited), [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained after long drawn litigation till Supreme Court. In order to address the concern of the multinational companies and to provide mechanism for speedy disposal of their cases so as to attain finality, a new section 144C is inserted in the Incometax Act to facilitate expeditious resolution of disputes. 45.2 The salient features of the alternate dispute resolution mechanism are as under:- ..... 45.5 Applicability - These amendments have been made applicable with effect from 1st October, 2009, and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958(E) dated 20th November, 2009.' 20. The Dispute Resolution Panel (DRP) was constituted as an alternate dispute resolution mechanism, to provide a specialized forum for expeditious disposal of disputes. An assessment involving transfer pricing disputes, is thus taken out of regular track and a fast track dispute mechanism evolved before a panel of three Senior Commissioners. The Explanatory Circular makes it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer. Sub-section (13) thereafter states that upon receipt of the directions of the DRP, the Assessing Authority shall pass an order of assessment in conformity with the directions issued. Thus by virtue of insertion of Section 144C, the legislature has put in place a distinct, new scheme of assessment in regard to a specified class of assessees. 24. The question as to whether the amendment or change brought about by Section 144C is merely procedural or substantive would stand answered by the narration of the Scheme of assessment, as I have noticed above. No doubt, Section 144C prescribes a new procedure for assessment. But can it be called a mere shift in procedure? I believe not as that would be an oversimplification of the matter. The procedure inserted is substantive, in that it offers a new scheme of assessment to a distinct class of assessees, that is, those assessee whose assessments involve the issues of Transfer Pricing and determination of Arms Length Price. The provisions of Section 144C do not, thus merely prescribe procedure but a substantive exercise in assessment. 25. The Supreme Court in the case of R.Sharadamma (supra) after considering an earlier judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l order if the amount of income in respect of which the particulars have been concealed did not exceed Rupees twenty five thousand. The said circumstance, it held, supported the inference drawn by the Court that the Inspecting Assistant Commissioner continued to have jurisdiction to impose penalty. The Court observed : It is also true that no litigant has any vested right in the matter of procedural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue inspite of the change of jurisdiction of the different Tribunals or forums.' 26. Thus, where there is a change in the form of assessment itself, such change is not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured to the parties by virtue of the introduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply in relation to the assessment year 2010- 11 and subsequent assessment years. Accordingly, para 45.5 is replaced with the following: "45.5. Applicability: Section 144C has been inserted with effect from 1st April, 2009. Accordingly, the Assessing Officer is required to forward a draft assessment order to the eligible assessee, if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. In other words section 144C is applicable to any order which proposes to make variation in income or loss returned by an eligible assessee, on or after 1st October, 2009 irrespective of the assessment year to which it pertains. Amendments to other sections of the Income-tax Act referred to in para 45.3 of the circular 5/2010 dated 3rd June, 2010 shall also apply from 1st October, 2009" ' The right that has enured to the parties in 2009 cannot be modified by a Clarification issued by the Board, three years thereafter. It appears to me quite possible that the long silence of the Board followed by the sudden Clarification issued in 2013 might itself be inspired by challenges similar to t ..... 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