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TMI Blog2025 (2) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 144C (13) cannot be construed mandatorily moreso looking at the object of insertion of Section 144C and the consequences and the effect of completion of the assessment proceedings. The law of limitation is intended to give certainty and finality of tax proceedings and to avoid exposure to risk of litigation for indefinite period on future unforeseen events. Application of Section 144C (13) to Present Case - Provisions of Sections 144C (6) and 144C (7) requires the DRP to carry out enquiry before any directions under Section 144C (5) are issued to the AO. This clearly shows post Section 144C (5) directions, no authority other than AO intervenes. Therefore, looked from any angle, in our view, the final assessment order made on 27 February 2015 is beyond the limitation period provided under Section 144C (13) of the Act. Period of Section 144C (13) cannot be counted from the end of the month in which the transfer pricing officer gives effect of the direction of the DRP under Section 144C (5) of the Act. This is so because Section 153 (5A) provides that the assessment pursuant to the TPO giving effect of the order or direction under Section 263 should be completed within tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Panel (DRP) in terms of Section 144C of the Act. On 19 December 2014, the DRP gave its direction and held that share application money was in the nature of interest-free loan and directed the TPO/Assessing Officer (AO) to consider the SBI PLR of FY 2009-10 for evaluating the interest that should be charged on the loan transaction. (iii) The directions of the DRP were received by the AO on 23 December 2014. The said directions were forwarded by the AO to the TPO on 5 January 2015. The TPO carried out the mandate of the DRP and redetermined the adjustments to be made to Rs. 49.39 crore. The said re-determination by the TPO was made on 27 January 2015. The final assessment order under Section 144C (13) of the Act was passed on 27 February 2015. 4. Being aggrieved by the final assessment order, the respondent-assessee filed an appeal to the Tribunal and the Tribunal vide impugned order dated 22 June 2016 held that as the assessment order is framed beyond the period of one month from the end of the month in which the DRP's directions were received by the AO, the assessment order was barred by limitation as per Section 144C (13) of the Act. 5. It is on the above backdr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. 9. We have heard Mr. Sharma, learned counsel for the appellantrevenue and Mr. Pardiwalla, learned Senior Counsel for the respondentassessee. Analysis and Conclusions :- 10. The issue which arises for our consideration is on the interpretation of Section 144C (13) of the Act as to whether the time limit provided under this sub-section for completing the assessment as per the directions of the DRP is mandatory or directory and consequences thereto. For deciding this issue, it is necessary to analyse the provisions of Section 144C of the Act. 11. Section 144C as it stood at the relevant time i.e. assessment year 2010-11 is transcribed hereinbelow:- "Reference to dispute resolution panel. Section 144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft 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. (2) On receipt of the draft order, the eligible ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. (14) The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. (15) For the purposes of this section,- (a) "Dispute Resolution Panel" means a collegium comprising of three Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sought determine the arm's length price in relation to the international transaction and a copy of such order determining the arm's length price is sent to the AO and to the assessee. Section 92CA (3A) provides that if a reference is made after 1 June 2007, an order determining the arm's length price by the TPO should be made before sixty days prior to the date on which the period of limitation referred to Section 153 or 153B for making the order of assessment expires. This takes us to Section 153 of the Act. 15. Section 153 (1), for completing the assessment, at the relevant time provided time limit of two years from the end of the assessment year in which the income was first assessable. However, if the reference is made to the TPO under Section 92CA, the limitation period of two years is substituted by thirty-three months. That means an order of assessment in case of the assessee where a reference is made under Section 92CA should be made before the expiry of thirty-three months from the end of the assessment year in which the income was first assessable. 16. The reason for providing sixty days time limit under Section 92CA before which the TPO has to pass an order is that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in Section 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. 23. Section 144C (13) of the Act overrides the time limit provided under Section 153 which means that on receipt of the directions from the DRP and by adding one month from the end of the month in which such directions are received, the Assessing Officer has to pass an order on or before expiry of end of the month in which directions are received. This is in consonance with the objective for which the dispute resolution mechanism was inserted by virtue of Section 144C of the Act. Interpretation of Section 144 C (13) : 24. On a reading of the Scheme of Section 144C of the Act, and more particularly on a conjoint and harmonious reading of Sections 144C (4), 144C (12) and 144C (13), we cannot accept the submission of the learned counsel for the appellant-revenue that the time limit provided in Section 144C (13) is only directory. In our view, Section 144C (13) provides that the assessing off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be collected immediately on the passing of the assessment order and raising demand notice. Making of the assessment order resulting in the demand notice is a condition precedent for the tax arrears to be recovered by various proceedings prescribed under the Act. In our view, if the time limit provided under Section 144C (13) is not strictly complied with, then it would not only be contrary to the intention of the legislature in inserting Section 144C but also it would result into delay in recovery of tax by the revenue. Therefore, it is by adopting the balancing approach that Section 144C provides for expeditious disposal of the dispute by adopting the dispute resolution mechanism of DRP. 28. Section 144C (13) uses the phrase 'upon receipt ...., the assessing officer shall ....'. Sub-section 13 is to be read alongwith sub-section 12 and if read together, we have no doubt in our mind that Section 144C (13) has to be read as mandatory. It is settled position and more particularly in any fiscal statutes that if an authority under the Act is required to complete the assessment within certain time frame, then the same has to be done within the prescribed time limit. If any order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation. In construing the limitation provisions, equitable considerations are out of place and the limitation provision is to be construed as per the plain language of the statute. The Court should not be concerned with the result, however injurious it may be in giving effect to the plain language used nor is it the duty of the Court, not to give effect to it merely because it would lead to hardship. The Court cannot on equitable grounds extend the time allowed by the law of limitation or postpone its operation or introduce an exception not recognised by the statute of limitation. Therefore, the contentions of the appellant-revenue on consequences of assessment order being held to be void is to be rejected. 32. In our view, therefore, Section 144C (13) which overrides Section 153 is to be construed as mandatory and not directory. Under the scheme of Section 144C, at the stage of sub-section (13), the assessing officer has to merely carry out the directions of the DRP without giving any opportunity of hearing to the assessee. It is, therefore, the time limit of only one month from the end of the month in which the direction is received that the section mandates the assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the end of the month in which the TPO's order dated 27 January 2015 were received. We say so for more than one reason. Firstly, since the TPO's order is pursuant to the DRP's direction which was received much before 31 January 2015 and there is no justification for the AO not to have passed the assessment order before 31 January 2015. Secondly, the date of TPO's order pursuant to the DRP's directions cannot be counted as a starting date since sub-section (13) of Section 144C provides for the starting period to commence for the purpose of completion of the assessment as the end of the month in which the directions of the DRP were received by the AO. If the TPO's order dated 27 January 2015 is considered to be the starting point for the purpose of Section 144C (13), then we would be reading into the said section something which is not there and it is settled position that the Court cannot re-draft the provisions of the law. The provision of Section 144C (13) has to be read as it stands in the statute book. Provisions of Sections 144C (6) and 144C (7) requires the DRP to carry out enquiry before any directions under Section 144C (5) are issued to the AO. This clearly shows post Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bench in the case of Vodafone Idea Limited (Supra) squarely applies to the interpretation of whether the provision of Section 144C (13) is mandatory or directory and, therefore, it is to be held that Section 144C (13) of the Act time limit is mandatory. 40. Mr. Pardiwalla, learned senior counsel for the respondent-assessee is justified in placing reliance on the decision of the Delhi High Court in the case of Louis Dreyfus Company India (P.) Ltd. (supra). The facts of the present case before us are very close and similar to the facts before the Delhi High Court. Before the Delhi High Court, the TPO proposed adjustments of Rs. 25.82 crore which found its place in the draft assessment order. The assessee filed objections before the DRP and the DRP ultimately passed an order on 20 June 2022 affirming the transfer pricing adjustments made to the income of the assessee. The said directions were uploaded on the Income Tax Business Application portal on 24 June 2022. Pursuant to the directions framed by the DRP, the TPO by an order dated 25 July 2022 revised the transfer pricing adjustments to Rs.20.24 crore and the assessment order came to be passed on 24 August 2022. On these facts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an what we are called upon to adjudicate. Therefore, reliance placed on the decision in the case of APM Terminals India Private Limited (supra) by the appellant-revenue is misconceived. 43. Similarly, on very similar facts as that in the case of APM Terminals India Private Limited (supra), the decision relied upon by the appellant-revenue in the case of Sulzer Pumps India Private Limited (supra) is also not applicable to the facts before us. 44. Learned counsel for the appellant-revenue has placed for our consideration the decision of the Bangalore Bench of the Tribunal in the case of M/s. Himalaya Drug Company Vs. Dy. Commissioner of Income Tax, Circle (1), Bangalore I. T. (T.P.) A. No.807/Bang/2016 for the proposition that non-compliance of Section 144C (13) would not vitiate the assessment order and it is only a procedural irregularity. We are informed that the appeal against the said order is pending before the Karnataka High Court. Therefore, it would not be appropriate for this Court to comment on the same since it would amount to giving our views on matter which is not before us. Further Decisions relied by the Court : 45. Very recently, the Telangana High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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