RENEW WIND ENERGY (MP TWO) PRIVATE LIMITED,DELHI vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 19(1), DELHI

• Aveva Solutions India LLP [TS-681-ITAT-2025 (HYD-TP] (Hyd-Trib.); • Super Brands Ltd. vs ADIT, & 2609/Del/2021 (Del-Trib.); & • Teva Pharmaceutical & Chemical Industries India P. Ltd. vs. Assessment Unit/DCIT [ITA No. 4197/del/2024] 3. Shri Dharam Veer Singh representing the department at the outset raised objection for taking up these appeals for adjudication. He submitted that the issue is now sub judice before the Hon’ble Apex Court. The Division Bench of Hon’ble to 5909/Del/2024(A.Y 2021-22)

& 5835/Del/2024 (A.Y 2021-22) Supreme Court of India in the case of Shelf Drilling Ron Tappmeyer Ltd. has examined the issue but due to divergent opinions expressed by the Hon’ble Judges, the issue is now referred to the Hon’ble Chief Justice of India for constituting a Larger Bench. Even otherwise the Hon’ble Apex Court in the case of Shelf Drilling Ron Tappmeyer Ltd. (supra), vide interim order dated 22.09.2023 has held that the operative part of the impugned judgment shall not be cited as a precedent in other subsequent matters. Thus, in light of the said order passed by the Hon’ble Apex Court it would not be in judicial propriety to proceed with the identical matter. He further referred to the judgement of Hon’ble Bombay High Court in the case of PayPal Payments P. Ltd. vs ACIT in Writ Petition (L) No. 30944 of 2023 decided on 13.08.2024, to contend that even the Hon’ble Bombay High Court, after taking note of the fact that the Hon’ble Supreme Court has stayed the operative part of the judgment in the case of Shelf Drilling Ron Tappmeyer Ltd. (supra), has refused to entertain the Writ Petition involving identical issue. The ld. DR further referred to the decision of Hon’ble Supreme Court of India in the case of UP Rashtriya Chini Mill Adhikari Parishad, Lucknow Vs. State of U.P. and Others reported as (1995) AIR SC 2148, to contend that when the issue is referred to a Larger Bench, during the pendency of such reference the matter involving identical issues which is subject matter of reference, should not be taken up for adjudication. The ld. DR vide detailed written submissions raised objection for taking up the appeals for hearing of the issue involving limitation of passing the final assessment order with reference to section 144C r.w.s. 153 of the Act. The relevant extract of the DR’s submissions (common for all appeals) is as under:-

“A. Introductory submission “2. The present appeals raise the issue as to whether in cases governed by section 144C of the I.T. Act, the time consumed in the proceedings undertaken after draft assessment to 5909/Del/2024(A.Y 2021-22)

& 5835/Del/2024 (A.Y 2021-22) order under section 144C of the I.T. Act before the Dispute Resolution Panel ("DRP") and the Assessing officer get subsumed within the time limitation prescribed under section 153 of the I.T. Act or whether section 144C operates as a special statutory mechanism with its own distinct timelines for completing the assessment after passing of the draft assessment order.

& 5835/Del/2024 (A.Y 2021-22) time limitation. Any such reliance would also be contrary to sound principles of judicial proprietary and institutional respect. This argument is duly supported by the judicious view taken by Hon'ble High Court of Bombay in the case of Paypal Payments Pvt. Ltd as discussed in subsequent paragraph. (iii) Bombay High Court decision in case of Paypal Payments Pvt. Ltd. (WPL (L) No.30944 of 2023, order dated 07.08.2024) 8. The Revenue further places reliance on the order dated 07.08.2024 passed by the Hon'ble Bombay High Court in case of Paypal Payments Private Limited v. ACIT (Writ Petition (L) No.30944 of 2023). In the said order, the Hon'ble Bombay High Court, while considering the very issue of interpretation of section 144C(1), 144C(4) and 144C(13) vis-à-vis section 153, recorded that the Supreme Court had, on 22.09.2023, directed that the Shelf Drilling judgment shall not be cited as precedent and clarified that the operative portion applies only inter partes. The Hon'ble High Court further noted that there was "quite a debate" on what one is permitted to do with the Shelf Drilling decision in view of the Supreme Court restraint. After hearing both parties in detail and after taking into consideration judgement of Hon'ble Madras High Court in the case of Roca Bathroom, Hon'ble Bombay HC, in its wisdom, has not quashed the assessment order and gave the parties the liberty to apply in the event of rendering a final order by Hon'ble Supreme Court on the impugned issue. The said view was again reiterated in the case of same assessee i.e. Paypal Payments Private Limited for another year in Writ petition (I) no. 27849 of 2024 vide judgement dated September 9, 2024 reported at [2024] 166 taxmann.com 521 (Bombay).

& 5835/Del/2024 (A.Y 2021-22) cannot be permitted to be applied indirectly through relying on another non-jurisdictional decision ( Such as Roca Bathroom decision of Madras High Court) laying down an identical preposition, particularly when said Roca Bathroom decision of Madras High Court itself is under appeal, and leave has been granted by the Hon'ble Supreme Court. Accordingly, Roca Bathroom decision or any other decision on the said issue cannot be treated as determinative or enforced as a basis to conclude the controversy in present appeals, and the issue ought to await authoritative settlement by the Hon'ble Supreme Court. (v) Hon'ble Supreme Court judgment in case of UP Rashtriya Chini Mill Adhikari Parishad, Lucknow Vs. State of U.P. and others, I.A No. 4 of 1995 in SLP(C) no 19963 of 1992 dated 2nd July 1995 (copy enclosed) : 12. In this case, Hon'ble Supreme Court had made following observation when a Division Bench of High Court decided an issue which was pending consideration before Full Bench of High Court. "The matter was pending consideration before a Full Bench of High Court. Needless to say that the appropriate course for the Division Bench would have been to wait the decision of the Full Bench which finally delivered his verdict on 15.11.1994 overruling the Division Bench." The above observation of Hon'ble Supreme Court even if in the nature of obiter dicta would be binding on this Hon'ble Bench as in present appeals too, the issue of time limitation agitated by the assessee is pending for consideration of Larger Bench of Hon'ble Supreme Court.”

“5. Both sides heard. The issue which arises for consideration before us at the preliminary stage is whether we can proceed with the hearing of issue in appeal when on a similar issue the operative portion of the judgment passed by the Hon’ble High Court in the case of Shelf Drilling Ron Tappmeyer Ltd. (supra) has been stayed by the Hon’ble Supreme Court of India. In the present case, the appellant/assessee has placed reliance on the decision rendered in the case of Roca Bathroom Products P. Ltd. (supra). The identical objection now raised by the ld. DR was examined by the Hon’ble Bombay High Court in the case of PayPal Payments P. Ltd. (supra). The Hon’ble High Court deferred hearing of the issue for the reason that the hearing may not bring about any concreate conclusion as the similar question of law is pending determination before the Hon’ble Supreme Court of India. The Hon’ble Court further observed that similarly placed assessees who have succeeded before the Hon’ble Madras High Court inter alia in Roca Bathroom Products P. Ltd. (supra) as also before the Hon’ble Delhi High Court in Nokia India P. Ltd. (supra), the proceedings arising from said decisions of the Hon’ble Madras High Court and the Hon’ble Delhi High Court are pending before the Hon’ble Supreme Court of India. The said orders of the Hon’ble to 5909/Del/2024(A.Y 2021-22)

& 5835/Del/2024 (A.Y 2021-22) High Courts setting aside the assessment orders are not stayed by the Hon’ble Apex Court. Thus, it is evident that in so far as the decision rendered in the case of Roca Bathroom Products P. Ltd. (supra) by the Hon’ble Madras High Court, the same is not stayed. It is a well settled legal proposition that when the operation of a specific order is stayed by the Higher Court, then its enforcement is stayed but the ratio decidendi of such order/judgment is not nullified unless explicitly set aside. The Hon’ble Supreme Court of India in the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust (supra) has held that an order of interim stay does not result in quashing of the impugned order. It only means that the order will not be operative from the date that it is stayed. In the case of Govt of AP vs. N. Rami Reddy & Others 2011 AIR-AP 226, one of the issue for consideration before the Hon’ble High Court was; Whether the interim stay of a High Court order by the Hon’ble Supreme Court of India has the effect of wiping out the ratio of the High Courts order or otherwise nullifying the precedent relied upon by the petitioner? The Hon’ble High Court held that the ratio of judgment represents the reasons assigned in support of the conclusion. An order of interim stay actually stays the operative part of the decision, but does not wipe out its ratio decidendi.

“C. Revenue's submissions on merit of the limitation issue- interplay of sections 144C and 153 of the Act (without prejudice to earlier arguments): 13. Without prejudice to the prayer for deferral of present appeals, the Revenue respectfully submits that time limits given in section 153 of the Act are independent of those provided under section 153 of the Act. The legislative design of section 144C indicates that it is a special self contained code in itself with regard to assessment of eligible assessee and prescribes entire procedure and time line for the framework of Dispute Resolution Panel (DRP) to work: The provisions of this section cannot be interpreted in a manner that renders the entire scheme unworkable. As such, it is clearly stipulated in the said section to 5909/Del/2024(A.Y 2021-22)

& 5835/Del/2024 (A.Y 2021-22) by way of use of multiple non-obstante clauses that the timelines prescribed under section 153 will not apply to the final assessment order passed u/s 144C(13) of the Income Tax Act.

& 5835/Del/2024 (A.Y 2021-22) backward from such shortened time limit allowed under section 153, then in many cases (such as not involving TP reference), the draft assessment order would be required to be issued even before end of the relevant assessment year. In many cases even involving Transfer Pricing Reference, such time available with the A.O. and T.P.O will be only few months, effectively scuttling possibility of any meaningful verification or scrutiny of details frustrating very purpose of entire scrutiny assessment related provisions under the I.T. Act. Such a situation will be hit by doctrine of impossibility or doctrine of frustration and courts should avoid any interpretation of 144C and 153 provisions of the Act which leads to such situations as 'Law does not compel the impossible'. This aspect having serious repercussions has not been considered while interpreting the interplay between section 153 and 144C of the Act. This again creates a very absurd situation which could never have been contemplated by the Legislature.Thirdly, it needs to be appreciated that overall mandate to reduce time lines for completing the assessment is being achieved by the Legislature over the years by way of shortening time lines given in section 153 of the Act. Section 144C is not meant for that as it has already very shortened and stiff timelines prescribed. Section 144C is meant for providing the alternate dispute resolution mechanism to eligible assessee and for doing away with one appellate level i.e. CIT(A) from entire chain of tax litigation. This objective requires to be appreciated for interpretation of section 144C of the Act.

& 5835/Del/2024 (A.Y 2021-22) case and Assessment year would be required to be dealt and examined separately to see if sufficient or atleast some reasonable time was available with the AO and TPO to finalize the assessment. Mass application of ration of Roca Bathroom ( supra) decision can not be made due to distinguishable facts in the case of Roca Bathroom (supra). Hence, without prejudice to all other arguments, the ration of Roca Bathroom decision can be made applicable only where there is inordinate delay in completing set aside proceedings similar to the case of ROCA Bathroom, there was delays of many years. Hence, without prejudice to all arguments in earlier paragraphs, the ration of Roca Bathroom decision can not be applied to present appeals due to distinguishable facts as discussed above.

“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 to 5909/Del/2024(A.Y 2021-22)

& 5835/Del/2024 (A.Y 2021-22) 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.

& 5835/Del/2024 (A.Y 2021-22) 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 19-2-2014 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.” [Emphasized by us] 7. The stand of the Revenue is that section 144C of the Act is a complete code in itself for completing the assessments where reference is made to Dispute Resolution Panel (DRP) and in sub section (1) to section 144C of the Act there is “non obstante” clause which mandates exclusion of all other provisions contained in the Act. The Hon’ble Single Judge of the Madras High Court in the case of Roca Bathroom Products (P.) Ltd. vs. Dispute Resolution Panel-2, 127 taxman.com 332 (Madras) while dealing with aforesaid arguments made on behalf of the Department in a lucid manner explained the reason for reading section 144C & 153 of the Act together for determining limitation for passing the final assessment order, and held:-

“15. No doubt, section 144C is a self contained code of assessment and time limits are inbuilt each stage of the procedure contemplated. Section 144C envisions a special assessment, one which includes the determination of Arms Length Price (ALP) of international transactions engaged in by the assessee. The DRP was constituted bearing in mind the necessity for an expert body to look into intricate matters concerning valuation and transfer pricing and it is for this reason that specific timelines have been drawn within the framework of section 144C to ensure prompt and expeditious finalisation of this special assessment. to 5909/Del/2024(A.Y 2021-22)

& 5835/Del/2024 (A.Y 2021-22) 16. The purpose is to fast-track a specific type of assessment. This does not however lead to the conclusion that overall time limits have been eschewed in the process. In fact, the argument to the effect that proceedings before the DRP are unfettered by limitation would run counter to the avowed object of setting up of the DRP a high powered and specialised body set up for dealing with matters of transfer pricing. Having set time limits every step of the way, it does not stand to reason that proceedings on remand to the DRP may be done at leisure sans the imposition of any time limit at all.

“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 (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 (P.) Ltd. (supra) and Vedanta Ltd. (Supra) is well founded. The timeline given under the Act is to be strictly followed.” [Emphasized by us] to 5909/Del/2024(A.Y 2021-22)

& 5835/Del/2024 (A.Y 2021-22) Thus, the Hon’ble High Court negatived the arguments made by the Department on ‘non obstante’ clause used in section 144C of the Act. The Hon’ble High Court thus, concluded:-

“27. For the reasons set out herein before, we conclude 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 denovo 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.”

& 5835/Del/2024 (A.Y 2021-22)

ITA No. Events 5907/Del/2024 5908/Del/2024 5909/Del/2024 No.5788/Del/2024 5835/Del/2024 AY 2021-22 AY 2021-22 AY 2021-22 (AY 2021-22) (AY 2021-22) Date of Draft 21.12.2023 28.12.2023 27.12.2023 28.12.2023 26.12.2023 Assessment Order u/s.144C(1) of the Act Date of DRP 25.09.2024 25.09.2024 25.09.2024 26.09.2024 27.09.2024 directions u/s.144C(5) of the Act Due date for 31.12.2023 31.12.2023 31.12.2023 31.12.2023 31.12.2023 passing Final Assessment Order u/s.144C(13) r.w.s. 153(4) of the Act Actual date 23.10.2024 29.10.2024 23.10.2024 23.10.2024 25.10.2024 of Final Assessment Order The dates mentioned in the above table have not been disputed by the Revenue. A perusal of dates for passing the final assessment order in the respective appeals would clearly show that the final assessment order in the respective appeals have been passed by the AO beyond the period of limitation u/s.144C(13) r.w.s. 153 of the Act. Thus, following the ratio laid down in the case of Roca Bathroom Products P. Ltd. (supra), we hold that final assessment orders in the appeals by different assessees passed beyond the period of limitation is without jurisdiction. Consequently, the final assessment order in the respective appeals are quashed.

to 5909/Del/2024(A.Y 2021-22)

& 5835/Del/2024 (A.Y 2021-22) 10. Before parting with the order, we may observe that both sides are at liberty to revive the appeal in case the Hon’ble Apex Court allows the appeal of Revenue in the case of Roca Bathroom Products P. Ltd. (supra).

Order pronounced in the open court on Wednesday the 28th day of January, 2026.

Sd/- Sd/- (SANJAY AWASTHI) (VIKAS AWASTHY) लेखाकार सदस्य/ACCOUNTANT MEMBER न्यानयक सदस्य/JUDICIAL MEMBER धिल्ली/Delhi, ददिांक/Dated 02.02.2026 NV/- प्रतिलिपि अग्रेपििCopy of the Order forwarded to : अपीलार्थी/The Appellant , 1. प्रनिवादी/ The Respondent. 2. 3. The PCIT/CIT(A) ववभागीय प्रनिनिथि, आय.अपी.अथि., दिल्ली /DR, ITAT, धिल्ली 4. गार्ड फाइल/Guard file. 5.

BY ORDER, //True Copy//

(Asstt. Registrar) ITAT, DELHI