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Income Tax Appellate Tribunal, DELHI BENCH “D” NEW DELHI
Before: SHRI G.S. PANNU, HON’BLE & SHRI SAKTIJIT DEY
आदेश /O R D E R PER SAKTIJIT DEY, J.M.
Captioned appeal by the assessee arises out of the order dated 20.07.2020 of learned Commissioner of Income Tax (Appeals)- 43, New Delhi pertaining to Assessment Year 2016-17.
Registry has notified delay of 177 days in filing the present appeal.
I.T.A.No.332/Del/2021
Before us, Learned Counsel appearing for the assessee submitted that, essentially, there is no delay as the period of limitation got extended by virtue of order of the Hon’ble Supreme Court of India, keeping in view the situation arising out of Covid-19 pandemic.
Learned Departmental Representative did not raise any objection qua the aforesaid submissions of the assessee.
In view of the aforesaid, we condone the delay and admit the appeal for adjudication on merits. In addition to the grounds raised in the memorandum of appeal, the assessee has raised the following additional grounds:
Ground No. 3 “Without prejudice to ground no. 1 & 2, on the facts and circumstances of the case, and in law, the learned assessing officer erred in passing a draft assessment order u/s 144C without appreciating that there was no variation in the income returned by the appellant company. Without prejudice to ground no. 1 & 2, on the facts and circumstances of the case, and in law, the Q impugned order passed by the learned Assessing Officer is barred by limitation and void ab initio and therefore, is liable to be quashed.”
5.1 As we find, the additional grounds are peri materia with ground no. 2 of main grounds.
I.T.A.No.332/Del/2021
Learned Departmental Representative objected to admission of additional grounds at this stage. Be that as it may, on perusal of the additional grounds, we are of the view that the issues raised in the additional grounds are purely legal and jurisdictional issues going to the root of the matter and will have a crucial bearing on the appeal. Further, the additional grounds do not require fresh investigation into facts and can be decided based on facts available on record. We have also noticed that similar additional grounds raised by the assessee in assessment years 2004-05 & 2007-08 to 2015-16 were not only admitted but adjudicated by the Tribunal.
7. In view of the aforesaid, we admit the additional grounds for adjudication.
8. Briefly the facts necessary for deciding these grounds are that assessee is a non-resident corporate entity incorporated under the laws United Kingdom (UK) and tax resident of UK. The assessee had entered into an agreement with Super-brands India Pvt. Ltd., where under, Super-brands India Pvt. Ltd. (SIPL) was given right to use the Super-brands logo. In the return of income filed for the impugned assessment year, the assessee treated the receipts from SIPL on account of right to use of Super-brands logo as royalty under Article 13 of India-UK Double Taxation Avoidance Act (DTAA) and computed 3
I.T.A.No.332/Del/2021 its tax liability at 15%. The Assessing Officer, however, did not accept assessee’s claim that the amount received from SIPL is in the nature of Royalty. He was of the view that the amount received is in the nature of business income and effectively connected to assessee’s Permanent Establishment (PE) in India. Having held so, he assessed the amount received from SIPL as business income and taxed it at the appropriate rate. The aforesaid decision of the Assessing Officer was upheld by learned Commissioner (Appeals) while deciding assessee’s appeal.
9. Before us, the primary contention of learned Counsel appearing for the assessee is, firstly, the assessment order passed under section 143(3) read with section 144C(3) of the Act is invalid as there is no variation in the income returned by the assessee. He submitted, the Assessing Officer has merely re-characterized the royalty income offered by the assessee as income from business.
Drawing our attention to Section 144C(1) of the Act he submitted, in case of an eligible assessee, if there is any variation in the income returned which is prejudicial to the interest of the assessee, then the Assessing Officer is empowered to frame a draft assessment order. He submitted, since in the present case there is no variation in the income offered by the assessee, the Assessing
I.T.A.No.332/Del/2021 Officer had no jurisdiction to pass the order under section 144C(1) read with section 144C(3) of the Act. Proceeding further, he submitted, the only provision under which the Assessing Officer could have framed the assessment is under section 143(3) of the Act. However, he submitted by the time the Assessing Officer passed the impugned assessment order, period of limitation provided under section 153 of the Act has expired. Therefore, the impugned assessment order is barred by limitation. He submitted, the issues are otherwise squarely covered by the decision of the Tribunal in assessee’s own case in Assessment Year 2007-08 & 2010- 11 to 2015-16. He placed on record a copy of the order dated 20.09.2022 passed in and others.
10. The learned Departmental Representative, though, agreed that the issues are covered by the decision of the Tribunal, however, he still insisted that the additional ground should not be admitted.
We have considered rival submissions and perused materials on record.
12. The issues arising for consideration is whether the Assessing Officer could have proceeded under section 144C(1) read with I.T.A.No.332/Del/2021 section 144C(3) of the Act in a case where there is no variation in the income returned which is prejudicial to the assessee. In the facts of the present appeal, undisputedly, there is no variation in the income returned by the assessee. The Assessing Officer has simply re-characterized the income earned by the assessee from royalty to business income. On a perusal of Section 144C(1) of the Act, it is very much clear that by way of an amendment by Finance Act, 2020 effective from 01.04.2020, the expression “variation in the income or loss returned which is prejudicial to the interest of such assessee” has been substituted with the words “variation which is prejudicial to the interest of such assessee”. Thus, prior to the aforesaid amendment, the Assessing Officer was empowered to propose a draft assessment order in case of an eligible assessee only where there is variation in the income or loss returned, which is prejudicial to the interest of the assessee.
In the facts of the present appeal, admittedly, there is no variation in the income or loss returned which is prejudicial to the interest of the assessee. Therefore, in our considered opinion, the provisions of Section 144C(1) of the Act is not applicable to assessee’s case. While considering identical issue in assessee’s own
I.T.A.No.332/Del/2021 case in Assessment Year 2007-08 and 2010-11 to 2015-16 the Tribunal has held as under:
“16. We will first address to the additional ground which reads as under:
That on the facts and circumstances of the case and in law, the Assessing Officer erred in passing a draft assessment order without appreciating that there was no variation in income returned by the appellant and, therefore the impugned order passed by the Assessing Officer is void ab initio and, therefore, is liable to be quashed.
17. The representatives of both the sides were heard at length, the case records carefully perused and relevant provisions of the Act have been duly considered.
Briefly stated, the facts of the case are that the Assessing Officer assumed jurisdiction over the assessee on filing of return by the assessee and accordingly, statutory notices were issued and served upon the assessee.
19. As per provisions of section 144C and 92B of the Act where the assessee had entered into international transactions or it is a foreign company being an eligible assessee as defined in Section 144C of the Act in respect of his income/loss, the Assessing Officer has made variation which is prejudicial to the interest of such assessee, the Assessing Officer is mandatorily required to pass proposed order of assessment, which is termed as ‘Draft Assessment order’. 20. Provisions of section 144C as they stood at the relevant point of time of the captioned Assessment Years read as under: "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.
(15) For the purposes of this section —
I.T.A.No.332/Del/2021 (a) "Dispute Resolution Panel" means a collegium comprising of three Commissioners of Income-tax constituted by the Board— for this purpose; (b) "eligible assessee" means— (i) any person in whose case the variation referred to in sub- section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any foreign company."
A perusal of the aforementioned section shows that it is applicable only in case the assessee is an eligible assessee as defined in Clause (b) of sub-section (15) and the Assessing Officer proposed to make any variation in income or loss returned by such assessee which is prejudicial to the interest of the assessee.
22. In Assessment Years 2007-08, 2010-11 to 2015-16 where this challenge is common, we find that the Assessing Officer has only re-characterized the income which was shown as royalty income by the assessee and was taxed as ‘business income’ by the Assessing Officer without there being any variation in income returned by the assessee.
In our understanding of the provisions of section 144C of the Act mentioned hereinabove, we are of the considered view that the Assessing Officer wrongly assumed jurisdiction u/s 144C of the Act when there is no variation in the income returned by the assessee.
23. Our view is supported by the decision of the co-ordinate Mumbai Bench in the case of Mousmi SA Investment LLC in ITA No. 7076/MUM/2018. Pertinent findings of the co-ordinate bench are given as under: "11. In the instant case, the assessee herein is an eligible assessee. However, there is no variation in the income or loss returned, which is prejudicial to the interests of the assessee. Hence the second condition prescribed in sec.l44C(l) was not satisfied. Hence the approach of the AO in adopting the procedure prescribed in sec,144C of the Act is not in accordance with the mandate of law.
I.T.A.No.332/Del/2021
We get support for our view from the decisions rendered by Chennai bench and Pune bench of Tribunal in the cases referred above. Hence the assessment order passed by the AO gets vitiated and the same is liable to be quashed. We order accordingly." 24. Similar view was taken by the Tribunal Mumbai Bench in IPF India Property Cyprus [No. 1] in ITA No. 6077/MUM/2018. Relevant observations of the Co-ordinate bench in this case read as under:
"5. So far as the first issue is concerned, we find that, in the present case, there are no variations in the returned income and the assessee income. The controversy is thus confined to the question as to what will be the rate on which income returned by the assessee is to be taxed. While the assessee has claimed taxation @ 10% under article 11(2) of the India Cyprus DTAA, the Assessing Officer has declined the said treaty protection on the ground that the assessee was not beneficial owner of the said interest, and, accordingly, brought the income is to tax0 40% thereof. There is, quite clearly, no variation in the quantum of income. The question whether it was a case in which the Assessing Officer could have issued the draft assessment order, on the facts of this case, needs to be examined in the light of provisions of Section 144C(1) which provides that, "The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forwards 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 [Emphasis, by underlining, supplied by us]. The assessee before us is a non-resident company incorporated, and fiscally domiciled, in Cyprus. Accordingly, in terms of Section 144C(15)(b)(ii). the assessee is an eligible assessee but then there is no change in the figure of income returned by the assessee vis-a-vis the income assessed by the Assessing Officer. Clearly, there is no variation in the income returned by the assessee. There is, therefore, no question of a draft assessment order being issued in this case. It is also important to note that the Finance Bill proposes to make the issuance of draft assessment orders in the case of eligible assessees mandatory even when there is no variation in the income or loss returned by the assessee 9
I.T.A.No.332/Del/2021 but then this amendment seeks to amend the law with effect from 1st April 2020. Explaining this amendment, Memorandum Explaining Amendments in the Finance Bill 2020 states as follows: 6. Once this amendment is being introduced with effect from 1st April 2020, it is beyond any doubt of controversy that so far as the period prior to 1st April 2020 is concerned, the cases in which no variations in the returned income or loss were proposed, the draft assessment orders were not required to be issued. We, therefore, uphold the plea of the assessee on this point.
Coming to the second point, we find that there is no dispute that if no draft assessment order was to be issued in this case, the assessment would have been time barred on 31stDecember 2017 but the present assessment order is passed on 17th August 2018. Once we hold that no draft assessment order could have been issued in this case, as the provisions of Section 144C(1) could not have been invoked in this case, the time limit of completion of assessment was available only upto 31st December 2017. The mere issuance of draft assessment order, when it was legally not required to be issued, cannot end up enhancing the time limit for completing the assessment under section 143(3). We, therefore, uphold the plea of the assessee on this point as well. The impugned assessment order is indeed, in our considered view, time barred. We, accordingly, hold so.
As the impugned assessment order itself is held to be time barred, all other grievances raised in appeal, which deal with the merits of stand taken by the Assessing Officer in the assessment order, are rendered academic and infructuous. No adjudication, therefore, is required on these grievances at this stage."
This view also finds support from the Delhi Bench in the case of Silver Bells 189 ITD 678. The relevant findings read as under: "8. Provision of section 144C( 1) read as under:- "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 I.T.A.No.332/Del/2021
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 [84a Words " in the income or loss returned" omitted by the Finance Act, 2020, w.e.f. 1-4-2020] which is prejudicial to the interest of such assessee."
A perusal of the aforesaid provisions shows that the Assessing Officer shall forward the draft of the proposed order if he proposes to make any variation in the income or loss returned. The afore stated proposal in the draft assessment order clearly show that the Assessing Officer did not intend to make any variation in the income of the assessee, therefore, the assessment order should have been framed as per the provisions of section 153 r.w.s. 143(3) of the Act meaning thereby that the assessment order dated 7- 9-2018 is barred by limitation.
In the light of the facts mentioned elsewhere when considered within the provisions of section 144C(1) supra, we have no hesitation to hold that the assessment order is barred by limitation." 26. In light of the above discussion, we hold that the Assessing Officer wrongly assumed jurisdiction u/s 144C of the Act, and therefore, the final assessment order framed in Assessment Years 2007-08 and 2010-11 to 2015-16 are barred by limitation and accordingly, the impugned assessment orders are liable to be quashed as void ab initio. This additional ground is, accordingly, allowed.” 14. As regards the second issue raised by the assessee regarding the assessment order being barred by limitation. The Tribunal has accepted assessee’s claim holding as under:
“27. We will now address to the other additional ground raised by the assessee which reads as under: “That on the facts and circumstances of the case and in law, the impugned order passed by the Assessing Officer is barred by limitation and void ab initio and, therefore, is liable to be quashed."
28. The above challenge in the respective Assessment Years can be understood from the following chart:
I.T.A.No.332/Del/2021 Assessme Date of Date of Date of Date of Due date Date of nt Year filing passing issuance of filing for passing final return of Draft DRP acceptance Final assessment Income Assessment Directions before Assessment order Order Assessing Order under Officer section 2004-05 30-Mar-06 31-Dec-10 01-Sep-11 - 31-Mar-11 15-Sep-11 2007-08 24-Oct-07 24-Dec-09 21-Sep-10 - 31-Dec-09 04-Oct-10 2008-09 25-Sept-08 31-Dec-10 01-Sep-11 - 31-Dec-10 15-Sep-11 2009-10 30-Sep-09 23-Dec-11 25-Jul-12 31-Dec-11 31-Aug-12 2010-11 12-May-11 07-Mar-13 14-Aug-13 31-Mar-13 30-Oct-13 2011-12 30-Sep-11 28-Jan-14 15-Oct-14 - 31-Mar-14 25-Nov-14 2012-13 12-Sep-12 19-Feb-15 - 29-Apr-15 31-Mar-15 30-Apr-15 2013-14 04-Sep-13 28-Mar-16 08-Apr-16 31-Mar-16 08-Apr-16 2014-15 15-Sep-14 07-Dec-16 27-Dec-16 31-Dec-16 06-Jan-17 2015-16 26-Aug-15 03-Nov-17 - 13-Dec-17 31-Dec-17 18-Dec-17
The Hon'ble High Court of Madras in the case of Roca Bathroom Products Pvt. Ltd in Writ Appeal Nos. 1517, 1519, 1609, 1610 and 1854 of 2021 and CMP Nos. 9656, 9658, 10022, 10023 and 11720 of 2021 had the occasion to address an identical issue. It would be pertinent to refer to the relevant part of the judgment, which is directly on the challenge before us, which is as under:
"After an international transaction is noticed subject to satisfaction of section 92B. a reference is made to the TPO under sub-Section (1) of Section 92CA of the Act. Though the provision does not state as to when a reference is to be made, a reading of section 153 would explicit that the reference is to be made during the course of the assessment proceedings before the expiry of the period to pass an assessment order. The TPO after considering the documents submitted by the assessee is to pass an order under Section 92CA(3) of the Act. As per Section 92CA (3A). the order has to be passed before the expiry of 60 days prior to the date on which the period of limitation under Section 153 expires. As per Section 153 no order of assessment can be passed at any time after the expiry of 21 months. As per 92CA (4), the assessing officer has to pass an order in conformity with the order of the TPO. After the receipt of the order from the TPO determining ALP, the assessing officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer.
I.T.A.No.332/Del/2021
Sub-Section (5) of Section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel consisting of top and expert functionaries of the department, is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. As per sub-section (12), the DRP has no authority to issue any directions under sub- section (5) from the end of the month in which the draft order is forwarded to the eligible assessee and not from the date when the assessee submits the objections. Sub-section (13) of section 144C of the Act provides that upon receipt of directions issued under sub-section (5) of section 144C of the Act, the Assessing Officer shall in conformity with the directions complete the assessment proceedings within one month from the end of the month in which the directions are received. It goes without saying that if no objections are filed by the Assessee to the draft order, the assessing officer has to pass the final assessment order based on the draft order within one month from the end of the month in which the period for filing the objection had expired as per section 144C(4). As per the proviso to Section 92CA (3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining period shall be extended to 60 days. This implies that not only the time frame is mandatory but also the TPO has to pass an order within 60 days. Further, the extension in the proviso referred above also automatically extends the period of assessment to 60 days as per the second proviso to Section 153. That apart, but for the reference to the TPO, the time limit for completing the assessment would only be 21 months from the end of the assessment year. It is only if a reference has been made during the course of assessment and is pending, the department gets another 12 months as per second proviso to Section 153 (1) and under Section 153(4) after amendment. In Section 153(2A). a time limit is prescribed to the Assessing officer to complete the fresh assessment within one year prior to amendment and after amendment, as per section 153 (3), the time limit has been reduced to 9 months. As per the proviso to section 153 (3) if the order is received after 1st April 2019, the time limit is one year. From the above provisions, it is very clear that various time limits have been prescribed to various mechanisms which form part of assessment proceedings, either original or on remand to expedite and bring a finality to the assessment proceedings, which can be taken to a logical end. 13
I.T.A.No.332/Del/2021 Discussion and Findings.
18. The main contentions of the Department, through their counsel are that Section 144C is a code in itself and hence on remand by the ITAT, the power of DRP to take up the dispute on additions by TPO, is not circumscribed by Section 153 and that in the absence of any express time limits contemplated under the Act, the time limits under Section 153 for reassessment cannot be read into Section 144C more particularly when the provisions of Section 153 are excluded by the non-obstante clause in section 144C(13) and hence the proceedings are not barred by limitation. Per contra, it has been contended by the learned senior counsels appearing for the respondent(s)/assessees that the outer time limit under Section 153 is applicable to every proceedings on remand and the department having slept over the issue for several years, cannot now redo the proceedings afresh, after certain rights have vested with the assessees. Even if specific provisions are not there to deal with this situation, the proceedings must be concluded within a reasonable time and hence the impugned proceedings are liable to be struck down and rightly done so by the learned Judge.
19. Admittedly, the facts including the dates are not under dispute. As regards the appeal in W.A.No.1854 of 2021, even though the remand was on 24.01.2013 and the assessee had received the order on 08.02.2013, the first notice by the DRP was issued on 19.02.2014 and the first hearing in the Chennai office was on 10.03.2014. Therefore, it is lucid that the DRP had the knowledge of the order before 19.02.2014. The matter was heard on various dates in Chennai office and written submissions were also filed. Thereafter, the files have been transferred to Bengaluru by the CBDT notification dated 31.12.2014. The Learned Judge relying upon the findings in the batch of cases which was decided first and rendered additional findings, which have been extracted in paragraphs 10 and 11 above, has allowed the writ petitions holding that the time limit under Section 153 (2A) was not adhered to and in any case, the proceedings have not been concluded within a reasonable time.
As rightly contended by the learned senior counsels and affirmed by the Learned Judge, the DRP proceedings is a continuation of assessment proceedings. To put it further,
I.T.A.No.332/Del/2021 it is a part of assessment proceedings, once the objections are filed and under section 144C (12) a period of 9 months is prescribed, within which, directions are to be issued by the DRP, failing which any directions are to be treated as otiose. As seen from the timeline discussed in the earlier paragraphs, the original assessment proceedings are to be completed within 21 months and the additional time of 12 months is granted when proceedings before TPO is pending. The TPO has to pass orders before 60 days prior to the last date. Then 30 days time is given to the assessee to file their objection before the DRP and the DRP is given 9 months time and thereafter, within one month from the end of the month of receipt of directions from DRP, the final order is to be passed. This court is not in consonance with the contention of the learned senior panel counsel for the appellants/ revenue that the time period of 33 months, provided initially is for the draft order and not for the final order. A careful perusal of the timeline would indicate that the time limit is for the final assessment and not for the draft order. The anomaly in the argument is that in the present cases, no fresh draft order was passed, but the DRP had issued the notices. If the contention of the appellants / revenue was to hold some water, they must have passed the draft assessment order immediately on receipt of the order from the Tribunal, but instead, notice was issued by the DRP. In any case, it is a far cry for the revenue as because no order has been passed for more than 5 years.
21. As held above, the assessment has to be concluded within 21 months when there is no reference and when there is a reference, it has to be concluded within 33 months. In the additional 12 months, the draft order is to be passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be passed. The provisions under section 144C and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are inter-dependant and overlapping. On remand, prior to amendment as per Section 153 (2A), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on him to do so, irrespective of the fact that DRP has completed the hearing and issued the directions or not. As rightly held by the learned judge, we are of the view that the DRP ought to have concluded the proceedings within 9 months from the date of receipt of the Tribunal's order, when it had issued a notice on 19.02.2014 and conducted the hearing as 15
I.T.A.No.332/Del/2021 early as on 10.03.2014 and on several dates. The DRP at Chennai, in fact ought to have passed orders before 19.11.2014, even if the date of receipt of the notice is taken as 19.02.2014. In that event, the assessing officer ought to have passed the order before 31.12.2014 or at the latest before 31.03.2015 considering that the order was received during the Financial year 2013-14. The transfer of the files to Bengaluru, after the lapse of the time, will not indefinitely extend the time and can have no impact on the time lines. It is an inter-department arrangement and it cannot defeat the rights of the assessee.
Insofar as the non-obstante clause in Section 144C(13) is concerned, we concur with the view of the Learned Judge. The exclusion of applicability of Section 153 or Section 153 B is for a limited purpose to ensure that dehors larger time is available, an order based on the directions of the DRP has to be passed within 30 days from the end of the month of receipt of such directions. The section and the sub- section have to be read as a whole with connected provisions to decipher the meaning and intentions. At this juncture it would be useful to refer to the following decisions: (i) Sultana Begum v. Prem Chand Jain. (1997) 1 5CC 373 at page 381:
"11. The statute has to be read as a whole to find out the real intention of the legislature.
In Canada Sugar Refining Co. v. R. [1898 AC 735 : 67 LJPC 126] , Lord Davy observed: "Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter."………….
14. This rule of construction which is also spoken of as "ex visceribus actus" helps in avoiding any inconsistency either within a section or between two different sections or provisions of the same statute.
15. On a conspectus of the case-law indicated above, the following principles are clearly discernible:
I.T.A.No.332/Del/2021 (1) It is the duty of the courts to avoid a head-on clash between two sections of the Act and to construe the provisions which appear to be in conflict with each other in such a manner as to harmonise them. (2) The provisions of one section of a statute cannot be used to defeat the other provisions unless the court, in spite of its efforts, finds it impossible to effect reconciliation between them. (3) It has to be borne in mind by all the courts all the time that when there are two conflicting provisions in an Act, which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is the essence of the rule of "harmonious construction". (4) The courts have also to keep in mind that an interpretation which reduces one of the provisions as a “dead letter" or "useless lumber" is not harmonious construction. (5) To harmonise is not to destroy any statutory provision or to render it otiose." (ii) CIT v. Hindustan Bulk Carriers. (2003) 3 SCC 57 : 2002 SCC OnLine SC 1226: "16. The courts will have to reject that construction which will defeat the plain intention of the legislature even though there may be some inexactitude in the language used. (See Salmon v. buncombe [(1886) 11 AC 627 : 55 LJPC 69 : 55 LT 446 (PC)] AC at p. 634, Curtis v. Stovin [(1889) 22 QBD 513 : 58 LJQB 174 : 60 LT 772 (CA)] referred to in S. Teja Singh case [AIR 1959 SC 352 : (1959) 35 ITR 408]).
18. The statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute.
The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with other parts of the law and the setting in which the clause to be interpreted occurs. (See R.S. Raqhunath v. State of Karnatoka [(1992) 1 SCC 335 :
I.T.A.No.332/Del/2021 1992 SCC (LAS) 286 : (1992) 19 ATC 507 : AIR 1992 SC 81] .) Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between two different sections or provisions of the same statute. It is the duty of the court to avoid a head-on clash between two sections of the same Act. (See Sultana Begum v. Prem Chand Jain [(1997) 1 SCC 373 : AIR 1997 SC 1006])." (iii) Franklin Templeton Trustee Services (P) Ltd. v. Amruta Garci. (2021) 6 SCC 736 : 2021 SCC On Line SC 88 at page 752: “17. The concept of "absurdity" in the context of interpretation of statutes is construed to include any result which is unworkable, impracticable, illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief [See Bennion on Statutory Interpretation, 5th Edn., p.969.] . Logic referred to herein is not formal or syllogistic logic, but acceptance that enacted law would not set a standard which is palpably unjust, unfair, unreasonable or does not make any sense. [Bennion on Statutory Interpretation, 5th Edn., p. 986.] When an interpretation is beset with practical difficulties, the courts have not shied from turning sides to accept an interpretation that offers a pragmatic solution that will serve the needs of society [Id, p. 971, quoting Griffiths, L.J.]. Therefore, when there is choice between two interpretations, we would avoid a "construction" which would reduce the legislation to futility, and should rather accept the "construction" based on the view that draftsmen would legislate only for the purpose of bringing about an effective result. We must strive as far as possible to give meaningful life to enactment or rule and avoid cadaveric consequences [See Principles of Statutory Interpretation by Justice 6.P. Singh, 14th Edn., p. 50.]"
Further, similar non-obstante clause is also used in section 144C(4) with a same limited purpose to imply, even though there might be a larger time limit under Section 153. once the order of TPO is accepted or not objected to, causing a deeming fiction of acceptance, the final order is to be passed immediately. The object is to conclude the proceedings as expeditiously as possible and the authority need not wait for the last date to pass the orders. The limitation prescribed under the statute is for the assessing officer and therefore, it is his duty to pass order in time
I.T.A.No.332/Del/2021 irrespective of whether the directions are received from DRP or not. As held by us above, the DRP will have no authority to issue directions after nine months and a further period of one month as per section 144C (13) and three months under section 153 (2A) is available, within which period no orders have been passed in the present cases. The reference made by the learned senior counsels on the judgments in Nokia India Private Ltd (supra) and Vedanta Ltd (Supra) is well founded. The timeline given under the Act is to be strictly followed."
The Hon'ble High Court concluded as under: "(a) The provisions of Sections 144C and 153 are not mutually exclusive, but are rather mutually inclusive. The period of limitation prescribed under Section 153 (2A) or 153 (3) is applicable, when the matters are remanded back irrespective of whether it is to the Assessing Officer or TPO or the DRP, the duty is on the assessing officer to pass orders. (b) Even in case of remand, the TPO or the DRP have to follow the time limits as provided under the Act. The entire proceedings including the hearing and directions have to be issued by the DRP within 9 months as contemplated under Section 144C (12) of the Income Tax Act. (c) Irrespective of whether the DRP concludes the proceedings and issues directions or not, within 9 months, the Assessing officer is to pass orders within the stipulated time, (d) In matter involving transfer pricing, upon remand to DRP, the Assessing officer is to pass a denova draft order and the entire proceedings as in the original assessment, would have to be completed within 12 months, as the very purpose of extension is to ensure that orders are passed within the extended period, as otherwise the extension becomes meaningless. (e) The outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed,
I.T.A.No.332/Del/2021 (f) The non-obstante clause would not exclude the operation of Section 153 as a whole. It only implies that irrespective of availability of larger time to conclude the proceedings, final orders are to be passed within one month in line with the scheme of the Act, (g) When no period of limitation is prescribed, orders are to be passed within a reasonable time, which in any case cannot be beyond 3 years. However, when the statute prescribes a particular period within which orders are to be passed, then such period, irrespective of whether it is short or long, shall be applicable."
As no distinguishing decision has been brought to our knowledge on this additional ground also, the impugned assessment orders are held to be barred by limitation and are, accordingly, quashed.”
Thus, as could be seen from the aforesaid observations of the coordinate bench, identical additional grounds raised in the preceding assessment years have been allowed by the Tribunal.
At the time of hearing, learned Departmental Representative neither could demonstrate any factual difference between the present appeal and the appeals decided by the Tribunal nor could bring to our notice any contrary decision in favour of the Revenue.
In view of the aforesaid, respectfully following the decision of the coordinate bench in assessee’s case as discussed above, firstly; we hold that the assessment order is invalid due to wrongful assumption of jurisdiction under section 144C(1) of the Act and secondly; because it is barred by limitation. Accordingly, the I.T.A.No.332/Del/2021 impugned assessment order is quashed and the order of learned Commissioner (Appeals) is set aside. Additional grounds are allowed. In view of our decision above, all grounds raised by the assessee having become academic are not adjudicated.
In the result, the appeal is allowed, as indicated above.
Order pronounced in the open court on 26/12/2022