EPAM SYSTEMS INDIA PRIVATE LIMITED,HYDERABAD vs. ACIT, CIRCLE-8(1), HYDERABAD

1. XSCAD India Private Limited 2. Exilant Technologies Private Limited 3. Larsen & Tourbo Infotech Limited

3 ITA.Nos.83 and 498/Hyd./2022

1:4 The learned AO/TPO/DRP has erred in law and in facts in not including the following comparable companies requested for inclusion by the Appellate:

TP Study comparable: 1. Harbinger Systems Private Limited 2. Sasken Technologies Limited 3. E-Zest Solutions Limited 4. SK Miles Software Services Limited 1:5 The learned AO/TPO/DRP has erred in appreciating the fact that the Appellate has maintained transfer pricing study report on a contemporaneous basis.

Without prejudice to the appellant's contention that benchmarking analysis as per transfer pricing document needs to be considered:-

1:6 The learned AO/TPO/DRP has erred both in law and facts, in applying inappropriate filters.

1:7 The learned AO/TPO has erred in considering provision for bad and doubtful debts as non-operating in nature while computing the operating margins of comparable companies.

4 ITA.Nos.83 and 498/Hyd./2022 1:8 The learned AO/TPO has committed arithmetical errors while computing the margins of certain comparable companies.

Without prejudice to the appellant's contention above: 1:9 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the International transaction relating to software development segment entered into by the Appellant with its AE was at arm's length and hence no adjustment in respect thereof was called for and the stand taken by the learned AO/TPO/DRP in this regard is misconceived, erroneous and incorrect.

2:0 Erroneous rejection of working capital adjustment in respect of margin computation of the Appellant: 2:1 The learned AO/TPO have erred in disallowing working capital adjustment on the margin of the Appellate.

2:2 The learned AO/ TPO has erred, both in laws and on facts, in incorrectly disallowing for the working capital adjustment to eliminate the difference in the working capital requirement of the Appellant and the comparable companies.

2:3 The Appellant submits that the learned AO/TPO be directed to recalculate the adjustment made by him to the Appellant's total income and to re-compute its total income and tax liability accordingly.

3:0 Erroneous rejection of market risk adjustment in respect of margin computation of the Appellant: 3:1 The learned AO/TPO have erred in disallowing market risk adjustment on the margin of the Appellate.

3:2 The learned AO/ TPO has erred, both in laws and on facts, in incorrectly disallowing for the market risk adjustment to eliminate the difference in the risk level of the Appellant and the comparable companies.

3:3 The Appellant submits that the learned AO/TPO be directed to recalculate the adjustment made by him to the Appellant's total income and to re-compute its total income and tax liability accordingly.

4:0 Transfer Pricing Adjustment of INR 38,70,851/- to the international transaction relating to Employee compensation benefit/ESOP

5 ITA.Nos.83 and 498/Hyd./2022 4:1 The learned AO/TPO/DRP has erred in making an upward adjustment of INR 38,70,851/-to the total income of the Appellant by holding that recovery from AE with respect to TDS on ESOP is an international transaction with its AE which was not at arm's length.

4:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the international transactions relating to recovery of expenses were at arm's length and hence no adjustment in respect thereof was called for and the stand taken by the AO/TPO/DRP in this regard is misconceived, erroneous and incorrect.

4:3 The Appellant submits that the AO be directed to delete the upward adjustment of INR 38,70,851 made by him to the Appellant's total income and to re-compute its total income and tax liability accordingly.

5:0 Transfer Pricing Adjustment of INR 82,92,560/- to the international transaction relating to Interest on delayed receivables 5:1 The learned AO/TPO/DRP has erred in making an upward adjustment of INR 82,92,560/-to the total income of the Appellant by holding that interest on deferred receivables is an International transaction with its AE.

5:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the international transactions relating to interest on deferred receivables is not an international transaction and hence no adjustment in respect thereof was called for and the stand taken by the AO/TPO/DRP in this regard is misconceived, erroneous and incorrect.

5:3 The Appellant submits that the AD be directed to delete the upward adjustment of INR 82,92,560 made by him to the Appellant's total income and to re-compute its total income. and tax liability accordingly.

6:0 General 6:1 The Appellant craves leave to add, alter, amend and/or substitute and/or modify in any manner whatsoever modify all or any of the foregoing grounds of appeal at or before the hearing of the appeal.”

6 ITA.Nos.83 and 498/Hyd./2022 ITA.No.498/Hyd./-2022 – A.Y. 2018-2019 :

1. “On the facts and circumstances of the case and in law, the assessment proceedings in the Appellant's case for AY 2018-19 are barred by limitation and accordingly the final assessment order dated 30th July 2022 ought to be quashed in-limine.

2. On the facts and circumstances of the case and in law, the learned Transfer Pricing Officer ('TPO') and the learned Assessing Officer ('AO'), under directions of the Hon'ble Dispute Resolution Panel ('DRP'), have erred in making an addition of Rs. 9,60,77,283/- to the total income of the Appellant by holding that the international transaction relating to the Software development services entered into by the Appellant with its Associated Enterprise ("AE") was not at arm's length.

3. On the facts and circumstances of the case and in law, the learned TPO and the learned AO, under the directions of the Hon'ble DRP, have erred in rejecting. comparable companies selected by the Appellant in the transfer pricing study report.

4. On the facts and circumstances of the case and in law, the learned TPO and the learned AO under the directions of the Hon'ble DRP, have erred in conducting a fresh search and modifying filters for identifying comparable companies.

5. On the facts and circumstances of the case and in law, the learned TPO and the learned AO, under the directions of the Hon'ble DRP, have erred in selecting companies, that are having different functional, asset and risk profile, as comparable to the Appellant.

7 ITA.Nos.83 and 498/Hyd./2022 6. On the facts and circumstances of the case and in law, the learned TPO and the learned AO, under the directions of the Hon'ble DRP, have erred in not selecting companies, that are having similar functional, asset and risk profile, as comparable to the Appellant

7. On the facts and circumstances of the case and in law, the learned TPO and the learned AO, under the directions of the Hon'ble DRP, have erred in considering provision for bad and doubtful debts as non-operating in nature while computing the operating margins of comparable companies.

8. On the facts and circumstances of the case and in law, the learned TPO and the learned AO, under the directions of the Hon'ble DRP, have erred in computing the margins of comparable companies.

9. On the facts and circumstances of the case and in law, the learned TPO and the learned AO under the directions of the Hon'ble DRP, have erred in not allowing working capital adjustment while determining the arm's length price of the international transaction relating to the Software development services entered into by the Appellant with its AE.

10. On the facts and circumstances of the case and in law, the learned TPO and the learned AO, under the directions of the Hon'ble DRP, have erred in not allowing market risk adjustment while determining the arm's length price of the international transaction relating to the Software development services entered into by the Appellant with its AE.

11. The learned AO has erred in calculating the amount to be paid by the appellant, in pursuance of the final assessment order dated 30th July 2022. The above grounds are independent and without prejudice to one another. The Appellant craves leave to add, alter, amend and/or

8 ITA.Nos.83 and 498/Hyd./2022 substitute and/or modify in any manner whatsoever modify all or any of the foregoing grounds of appeal at or before the hearing of the appeal.”

4. The assessee has also raised additional ground in both the appeals for the assessment years 2017-2018 and 2018-2019 vide application dated 16.08.2023 under Rule 11 of ITAT Rules, 1963. The common additional ground raised by the assessee reads as under:

“Final assessment order barred by limitation

1. On the facts and circumstances of the case and in law, Ld. AO erred in passing the final assessment order beyond time limit prescribed under section 153 of the Act and hence the same is liable to be quashed. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal

, at any time before or at the time of hearing of the appeal, so as to enable your Honours to decide this appeal according to law.”

5. We have heard the learned Authorised Representative of the Assessee and the learned DR on the admission of additional ground. There is no dispute that the additional ground raised by the assessee is purely legal in nature and goes to the root of the matter. It is also pertinent

9 ITA.Nos.83 and 498/Hyd./2022 to note that for adjudication of this additional ground, no fresh material or record or facts are required to be investigated, verified or considered, but, the same can be adjudicated on the basis of the material and facts already on record. Accordingly, by following the Judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd., vs., CIT [1998] 229 ITR 383 (SC) we admit the additional ground raised by the assessee for adjudication.

10 ITA.Nos.83 and 498/Hyd./2022 of Certain Provisions) [in short “TOLA”] Act, 2020, the limitation was further extended up-to 30.09.2021, however, the impugned order was passed on 28.01.2022. Therefore, in view of judgment of Hon’ble Madras High Court in the case of CIT vs., vs., Roca Bathroom Products (P.) Ltd., [2022] 445 ITR 537 (Madras) as well as the Judgment of Hon’ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Ltd., vs., ACIT, International Taxation [2023] 457 ITR 161 (Bombay), the assessment order passed by Assessing Officer is invalid and liable to be quashed. Thus, the Learned Counsel for the Assessee has submitted that the overall limitation for passing the assessment order cannot be exceeded as provided u/sec.153(1) read with sub-sec.(4) of said Section and the limitation as provided u/sec.144C(13) is only a restriction on the Assessing Officer to pass the final order within one month from the receipt of the Directions of the DRP and not enlarging the limitation which is provided u/sec.153 of the Act. The Hon’ble Madras High Court has held that provisions u/sec.144C and 153C are not mutually exclusive as both contains the provisions relating to sec.92CA and are inter-

11 ITA.Nos.83 and 498/Hyd./2022 dependent and overlapping. Similar view has been taken by the Hon’ble Bombay High Court in the case of Shelf Drilling Ron Tappmeyer Ltd., vs., ACIT, International Taxation (supra) and held that the limitation prescribed u/sec.153 of the Act would prevail over and above the assessment time limit prescribed u/sec.144C of the Act.

12 ITA.Nos.83 and 498/Hyd./2022 assessee” as defined u/sec.144C(15)(b) of the Act and the “other method” is applicable for the assessees’ who falls under the normal category. In case of ordinary or normal category of assessee , the assessment order must be completed within the limitation as provided u/sec.153(1) of the Act, whereas, if the matter is referred to the TPO u/sec.92CA of the Act, this period of limitation is further extended by a period of 12 months as per sub-sec.(4) of sec.153. The learned DR has further submitted that as per the special provisions u/sec.144C, the assessee is having an option to accept the Draft Assessment Order and variations in the draft assessment or to object the same by filing objections before the DRP or to the Assessing Officer for going to challenge the order of the Assessing Officer under regular appeal before the learned CIT(A). Therefore, once the assessee decided to go for the objections before the DRP, the limitation for completing the assessment is applicable as provided u/sec.144C(13) of the Act. Thus, the learned DR has submitted that once the Final Assessment Order is passed within the period of 30 days from the receipt of the DRP

13 ITA.Nos.83 and 498/Hyd./2022 directions, then, it is well within the period of limitation provided u/sec.144C(13) of the Act. The learned DR has further submitted that this issue is pending adjudication before the Hon’ble Supreme Court. Earlier the Division Bench of the Hon’ble Supreme Court has given divergent decisions and, therefore, now this controversy has to be resolved by a Larger Bench of Hon’ble Supreme Court. Thus, the learned DR has submitted that till the dispute is resolved by the Larger Bench of the Supreme Court, this issue may be kept open. She has further submitted that the limitation was also extended by the Hon’ble Supreme Court in case of suo motu Cognizance for Extension of Limitation reported in Re 441 ITR 722 (SC) and, therefore, as per the Judgment of Hon’ble Supreme Court the limitation was extended up-to the end of 2022 and further period of 90 days was already granted by the Hon’ble Supreme Court. The learned DR has thus, submitted that in view of Judgment of Hon’ble Supreme Court, the assessment order passed for the assessment year 2017-2018 is within the period of limitation.

14 ITA.Nos.83 and 498/Hyd./2022 8. We have considered the rival submissions as well as the relevant material on record. In normal course the limitation for passing the assessment order was available for the assessment year 2017-2018 up-to 31.12.2019. However, since there was a reference u/sec.92CA of the Act, the time period for completing the assessment gets extended up-to 31.12.2020. Further, due to the Covid-2019 pandemic the Government has notified the TOLA whereby the time period was extended up-to 30.09.2021 vide Notification dated 25.06.2021. Therefore, by considering the extension of time period by Notification of TOLA, the Assessing Officer was to complete the assessment by 30.09.2021, but, in the case in hand, the Assessing Officer has passed the impugned order on 28.01.2022 which is beyond the time limitation provided u/sec.153 as well as extension by Notification of TOLA. The learned Department Representative for the Revenue has also relied upon Judgment of Hon’ble Supreme Court in suo motu Cognizance for Extension of Limitation (supra), for extending the limitation. However, in our considered view the limitation extended by the Hon’ble Supreme Court is not applicable for 15 ITA.Nos.83 and 498/Hyd./2022 passing the orders by the Tax Authorities beyond the limitation provided under the Act. The learned Authorised Representative of the Assessee has filed copy of the Circulars dated 157/13/2021 dated 20.07.2021 issued by the Central Board of Indirect Taxes and Customs [in short “CBITC”] whereby the CBITC has clarified this point that the extension of limitation was only with reference to the judicial and quasi- judicial proceedings in the nature of appeals/suits /petitions etc., and has not extended to every action or proceedings under the CGST Act, 2017. For ready reference, we reproduce the relevant part of the Circular dated 20.07.2021 vide Paras- 3 to 5 as under :

“3. Accordingly, legal opinion was solicited regarding applicability of the order of the Hon'ble Supreme Court to the limitations of time lines under GST Law. The matter has been examined on the basis of the legal opinion received in the matter. The following is observed as per the legal opinion:-

(i) The extension granted by Hon'ble Supreme Court order applies only to quasi-judicial and judicial matters relating to petitions/ applications/suits/appeals/all other proceedings. All other proceedings should be understood in the nature of the earlier used expressions but can only with reference to judicial and quasi- judicial proceedings. Hon’ble Supreme Court has stepped into to 16 ITA.Nos.83 and 498/Hyd./2022 grant extensions only with reference to judicial and quasi-judicial proceedings in the nature of appeals/suits/petitions etc. and has not extended it to every action or proceeding under the CGST Act.

(ii) For the purpose of counting the period(s) of limitation for filing of appeals before any appellate authority under the GST Law, the limitation stands extended till further orders as ordered by the Hon'ble Supreme Court in Suo Motu Writ Petition (Civil) 3 of 2020 vide order dated 27th April 2021. Thus, as on date, the Orders of the Hon'ble Supreme Court apply to appeals, reviews, revisions etc., and not to original adjudication.

(iii) Various Orders and extensions passed by the Hon'ble Supreme Court would apply only to acts and actions which are in nature of judicial, including quasi-judicial exercise of power and discretion. Even under this category, Hon'ble Supreme Court Order, applies only to a lis which needs to be pursued within a time frame fixed by the respective statutes.

(iv) Wherever proceedings are pending, judicial or quasi-judicial which requires to be heard and disposed off, cannot come to a standstill by virtue of these extension orders. Those cases need to be adjudicated or disposed off either physically or through the virtual mode based on the prevailing policies and practices besides instructions if any.

(v) The following actions such as scrutiny of returns, issuance of summons, search, enquiry or investigations and even consequential arrest in accordance with GST law would not be covered by the judgment of the Hon'ble Supreme Court.

(vi) As regards issuance of show cause notice, granting time for replies and passing orders, the present Orders of the Hon'ble

17 ITA.Nos.83 and 498/Hyd./2022 Supreme Court may not cover them even though they are quasi- judicial proceedings as the same has only been made applicable to matters relating to petitions/applications/suits, etc.

4. On the basis of the legal opinion, it is hereby clarified that various actions/compliances under GST can be broadly categorised as follows:-

(a) Proceedings that need to be initiated or compliances that need to be done by the taxpayers :- These actions would continue to be governed only by the statutory mechanism and time limit provided/ extensions granted under the statute itself. Various Orders of the Hon'ble Supreme Court would not apply to the said proceedings/compliances on part of the taxpayers Quasi-Judicial proceedings by tax authorities:- The tax authorities can continue to hear and dispose off proceedings where they are performing the functions as quasi- judicial authority. This may inter-alia include disposal of application for refund, application for revocation of cancellation of registration, adjudication proceedings of demand notices, etc.

Similarly, appeals which are filed and are pending, can continue to be heard and disposed off and the same will be governed by those extensions of time granted by the statutes or notifications, if any.

(c) Appeals by taxpayers/ tax authorities against anv quasi- judicial order:- Wherever any appeal is required to filed before Joint Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling. Tribunal and various courts against any quasi-judicial order or where a proceeding for 18 ITA.Nos.83 and 498/Hyd./2022 revision or rectification of any order is required to be undertaken, the time line for the same would stand extended as per the Hon'ble Supreme Court's order.

9. Accordingly, we do not find any merits in the arguments of the learned DR that the limitation for passing the assessment order was extended by the Hon’ble Supreme Court. We further note that even the Hon’ble Supreme Court in the case of Union of India vs., Ashish Agarwal [2022] 444 ITR 1 (SC) and Union of India & Ors. vs. Rajeev Bansal [2024] 469 ITR 46 (SC) has considered the extension of limitation only to the extent of TOLA Notification. We further note that an identical issue has been considered by this Tribunal in the case of Aveva Solutions India LLP, Hyderabad vs., ITO, Ward-8(1), Hyderabad in ITA.No.1170/Hyd./2024 vide Order dated 19.11.2025 in Paras-7 to 14 as under :

19 ITA.Nos.83 and 498/Hyd./2022 “7. We have considered the rival submissions as well as relevant material on record. In the case in hand, the assessee has challenged the validity of the assessment order passed u/sec.143(3) r.w.s.144C(13) of the Act dated 18.10.2024 being barred by limitation as provided u/sec.153 of the Act. At the outset, it is noted that the limitation for passing the assessment orders is provided u/sec.153 of the Act and the relevant provisions are in sub-sec.(1) and sub-sec.(4) of sec.153 reads as under :

"153. Time limit for completion of assessment, reassessment and re-computation.— (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable. Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted: Provided further that in respect of an order of assessment relating to the assessment year commencing on – (i) the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted. (ii) the 1st day of April, 2020, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted.

20 ITA.Nos.83 and 498/Hyd./2022 Provided also that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2021, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "nine months" had been substituted: Provided also that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2022, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted: (1A) xxxxx xxxxx (1B) xxxxx xxxxx (2) xxxxx xxxxx (3) xxxxx xxxxx xxxxx (3A) xxxxx (4) Notwithstanding anything contained in sub-sections (1), (1A), (2) (3) and (3A), where a reference under sub-section (1) of section 92CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections (1), (1A), (2), (3) and (3A) shall be extended by twelve months.

(5) Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer [or the Transfer Pricing Officer, as the case may be], wholly or partly, otherwise than by making a fresh assessment or reassessment [or fresh order under section 92CA, as the case may be], such effect shall be given within a 21 ITA.Nos.83 and 498/Hyd./2022 period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be. Provided that where it is not possible for the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer [or the Transfer Pricing Officer, as the case may be], if satisfied, may allow an additional period of six months to give effect to the order.

Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub- section (3).”

“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 IPO, 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 24-1-2013 and 23 ITA.Nos.83 and 498/Hyd./2022 the assessee had received the order on 8-2-2013, the first notice by the DRP was issued on 19-2-2014 and the first hearing in the Chennai office was on 10-3-2014. Therefore, it is lucid that the DRP had the knowledge of the order before 19-2-2014. 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.

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 he passed, the objections have to be filed, the DRP has to issue the directions and the final order is to be passed. The 24 ITA.Nos.83 and 498/Hyd./2022 provisions under section 1440 and section 153 are not mutually exclusive as both contain provisions relating to Section 92CA and are inter-dependent and overlapping. On remand, prior to amendment as per Section 153 (24), the Assessing officer is given 12 months to pass a fresh assessment order. Therefore, it is incumbent on hina to do ss, 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 19-2-2014 and conducted the hearing as early as on 10-3-2014 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 19-2-2014. In that event, the assessing officer ought to have passed the order before 31-12-2014 or at the latest before 31-3-2015 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.

25 ITA.Nos.83 and 498/Hyd./2022 15. On a conspectus of the case-law indicated above, the following principles are clearly discernible: 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] 126 Taxman 321/259 ITR 449: "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. Duncombe [(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.

19. 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 RS. Raghunath v. State of Karnataka [(1992) 1 SCC 335: 1992 SCC (L&S) 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])."

26 ITA.Nos.83 and 498/Hyd./2022 (iii) Franklin Templeton Trustee Services (P.) Lid. v. Amruta Garg [2021] 124 taxmann.com 326/164 SCL 720: "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.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 G.P. Singh, 14th Edn., p. 50.]"

23. 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 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 (24) 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 (P) Ltd. (supra) and Vedenta Ltd. (Supra) is well founded. The timeline given under the Act is to be strictly followed.

24. Insofar as the challenge to the show cause notice issued is concerned, though generally, the High Court will be circumspected to interfere at the stage of show cause notice, the law on the point is well settled with exceptions carved in the following cases; 27 ITA.Nos.83 and 498/Hyd./2022 a. when the notice is issued beyond the period of limitation, b. when the notice is without authority, c. when notice is issued without following the procedures under the applicable Act or the rules framed thereunder and d. when the notice is issued with a prejudiced mind. The challenge must be available ex-facic leaving no room for the court to peruse or discuss intricate facts. In the present case, the challenge is on the ground of limitation and hence, we hold that the proceedings under Article 226 of the constitution are maintainable, 25. As regards the relief sought in other appeals viz., W.A.No.1517/2021 etc. batch, the findings rendered above are equally applicable. In these cases, for the assessment year 2009-10, the order of remand to the Assessing officer was passed on 18-12-2015 and insofar as the assessment year 2010-11 is concerned, for one issue, it was passed on 18-12-2015 and for other two issues, it was passed on 23-9-2016 after the amendment, by which time, the time limit was brought dewn to 9 months. As such, fresh orders ought to have been passed before 31-3-2017 for the assessment year 2009- 10 and for one issue relating to the assessment year 2010-11 reckoning the 12 months from the financial year 2015-16 and on or before 31-12-2017 reckoning 9 months from the financial year 2016-17. Therefore, the Assessing officer ought to have passed a draft assessment order immediately and asked the assessee to file their objections with the DRP. For the mistake and the lapse of the Assessing officer, the vested right of the Assessee cannot be taken away.

26. We are not oblivious of the fact that any finding on the aspect of reasonableness in time in passing orders when no time is provided would be superfluous in view of our decision in earlier paragraphs. It is necessary to decide on the issue as in this case, the revenue has taken more than 5 years in one appeal and 4 years in other appeals, which is unacceptable as rightly held by the learned judge. We are not alone on this issue and are fortified by the following judgments of the Hon'ble Supreme Court in this regard. (i) Bharat Steel Tubes Ltd. v. State of Haryana 1988 taxmann.com 761 "15. Before we part with the case, we would like to indicate that assessment of tax should be completed with expedition. It involves the revenue to the State.

28 ITA.Nos.83 and 498/Hyd./2022 In the case of a registered dealer who collects sales tax on behalf of the State, there is no justification for him to withhold the payment of the is so collected. If a timely assessment is completed, the dues of the State can be conveniently ascertained and collected. Delay in completion of assessment often creates problems. The assessee would be required to keep up all the evidence in support of his transactions. Where evidence is necessary, with the lapse of time, there is scope for its being lost. Oral evidence as and when required to be produced by the assessing authority may not be available if a long period intervenes between the transactions and the consideration of the matter by the assessing authority. Long delay thus is not in the interest of either the assessee or the State, In view of the fact that a period of limitation has been prescribed for bringing the escaped turnover into the net of taxation, such an eventuality cannot be grappled with appropriately unless timely assessment is completed. In several taxing statutes, even in a situation like this, where assessment under Section 11(3) or 28(3) of the respective Acts is contemplated, a period of limitation is provided. Until by statute, such a limitation is provided, it is proper for the State Governments to require, by statutory rules or appropriate instructions, to ensure completion of assessments with expedition and reasonable haste but subject to rules of natural justice." (ii) Govt. of India v. Citedal Fine Pharmaceuticals [1989] 3 SCC 483: "6. Learned counsel appearing for the respondents urged that Rule 12 is unreasonable and violative of Article 14 of the Constitution, as it does not provide for any period of limitation for the recovery of duty. He urged that in the absence of any prescribed period for recovery of the duty as contemplated by Rule 12, the officer may act arbitrarily in recovering the amount after lapse of long period of time. We find no substance in the submission. While it is true that Rule 12 does not prescribe any period within which recovery of any duty as contemplated by the rule is to be made, but that by itself does not render the rule unreasonable or violative of Article 14 of the Constitution. In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the 29 ITA.Nos.83 and 498/Hyd./2022 inordinate delay in issuance of notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case." (iii) State of Punjab v. Bhatinda District Co-op. Milk P. Union Ltd. [2007] 11 SCC 363: 17. A bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefor, the same would not mean that the suo motu power can be exercised at any time.

18. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors.

31 ITA.Nos.83 and 498/Hyd./2022 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, 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.

28. With the above directions, all the writ appeals are dismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petitions are closed.”

27. Having considered the language of sections 144C and 153, we cannot accept that the provisions of section 153 are excluded to the operation of section 144C.

11. Therefore, following the Judgments of Hon'ble Madras High Court as well as Hon'ble Bombay High Court cited (surpa), we hold that the assessment order passed by the 36 ITA.Nos.83 and 498/Hyd./2022 Assessing Officer on 18.10.2024 is barred by limitation and consequently, the same is liable to be quashed. We order accordingly.

“15. What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the Finance 37 ITA.Nos.83 and 498/Hyd./2022 Act, 2020 and Finance Act, 2021. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court.

38 ITA.Nos.83 and 498/Hyd./2022 37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the point of Jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.

14. Accordingly, we dispose of this appeal on this legal issue and keep open the other issues raised by the assessee on the merits if the Hon'ble Supreme Court decides this issue otherwise."

39 ITA.Nos.83 and 498/Hyd./2022 10. Accordingly, to maintain the rule of consistency, we follow the earlier decision of this Tribunal in the case of Aveva Solutions India LLP, Hyderabad vs., ITO, Ward-8(1), Hyderabad (supra), we hold that assessment order dated 28.01.2022 passed by the Assessing Officer is barred by limitation and consequently, the same is liable to be quashed. We Order accordingly.

40 ITA.Nos.83 and 498/Hyd./2022 ITA.No.498/Hyd./2022 – A.Y. 2018-2019 : 12. For the assessment year 2018-2019, the assessment order is passed on 30.07.2022 and, therefore, the learned DR has not taken the arguments of extension of limitation in view of Judgment of Hon’ble Supreme Court in the case of suo motu Extension of Limitation (supra). For the assessment year 2018-2019, the time limit was available with the Assessing Officer to complete the assessment up-to 30.09.2020 which is also the time limit as extended by the TOLA Notification and, therefore, for the assessment year 2018-2019, there is no extension of time by virtue of TOLA Notification. As per the provisions of sec.153 of the Act, the time limit was available up-to 30.09.2021. Since the Order is passed on 30.07.2022, therefore, the same is barred by limitation. Our findings on this issue for the assessment year 2017-2018 in the preceding paragraphs hereinabove, is applicable mutatis mutandis for the assessment year 2018- 2019 as well. Accordingly, the assessment order is barred by limitation and liable to be quashed. We Order accordingly.

41 ITA.Nos.83 and 498/Hyd./2022 13. We dispose of this appeal on the legal issue and keep open the other issues raised by the assessee on merits if the identical legal issue is decided by the Hon’ble Supreme Court necessitates the modification of this order.

Order pronounced in the open Court on 26.11.2025.