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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF NOVEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE B M SHYAM PRASAD AND THE HON'BLE MR. JUSTICE T.M.NADAF INCOME TAX APPEAL NO. 455 OF 2022
BETWEEN:
THE PR. COMMISSIONER OF INCOME TAX KORAMANGALA BANGALORE.
THE DEPUTY COMMISSIONER OF INCOME TAX LTU, BMTC COMPLEX KORMANGALA BANGALORE.
…APPELLANTS (BY SRI. SANMATHI E I.,ADVOCATE) AND:
M/S YOKOGAWA INDIA LTD PLOT NO 96 ELECTRONIC CITY BENGALURU -560100.
…RESPONDENT
Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA
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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
(BY SRI. NAGESWAR RAO D D.,ADVOCATE)
THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 11/03/2022 PASSED IN M.P.NO. 136/BANG/2021 IN IT(TP)A NO.692/BANG/2016 FOR THE ASSESSMENT YEAR 2011-2012. PRAYING TO (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 11/03/2022 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'C' BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASESSEE'S CASE, IN APPEAL PROCEEDINGS IN M.P.NO.136/BANG/2021 IN IT(TP)A NO. 692/BANG/2016 FOR ASSESSMENT YEAR 2011- 2012 (ANNEXURE-A).
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD and HON'BLE MR. JUSTICE T.M.NADAF
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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD)
The Revenue is aggrieved by the Order dated 11.03.2022 in MP No.136/Bang/2021 by the Income Tax Appellate Tribunal 'C' Bench, Bengaluru [for short, 'the Tribunal']. The Tribunal, by this order dated 11.03.2022, in exercise of its jurisdiction under Section 254 to the Income Tax Act [for short, 'IT Act'] has substituted paragraph-11 in its Order dated 11.03.2021 disposing of the respondent's appeal in ITA[TP] A No.1715 & 692/Bang/2016. The Tribunal's order dated 11.03.2021 in the paragraph-11 reads as under, and this paragraph will no longer be because of the impugned order.
"11…………. Respectfully following the above view taken coordinate bench of this Tribunal in case of Xchanging Solutions Ltd., [Supra] we hold the assessment order to be bad in law and the same is quashed and set aside. As we have decided the preliminary issue in Ground No.5, other grounds raised are kept open.
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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
Accordingly, the appeal filed by the assessee stands allowed on the legal ground raised by the assessee for assessment year 2011-12."
This Court on the previous occasion has framed the following question as the substantial question of law on which the learned counsels must persuade this Court.
Whether the Revenue would be entitled for the benefit of limitation under Section 153 of the Income Tax Act, 1961 ['IT Act'] to complete the assessment in terms of Section 144 C(13) of the IT Act.
This Court must advert to the indisputable facts before the rival submissions are considered.
The Dispute Resolution Panel [DRP], in exercise of its jurisdiction under Section 144C[6] of the IT Act, has issued certain directions on 24.11.2015. The Transfer Pricing Officer [TPO] has communicated to the Assessing Officer that the DRP has directed the conduct of a fresh transfer pricing
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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
audit, which would require a year, and it is impossible to implement the directions within one month contemplated under the Act. It is after this Communication dated 22.01.2016 that the assessment, based on the Draft Assessment Order, is completed on 23.08.2016. The conclusion of these proceedings and the proceedings before the Assistant Commissioner of Income Tax, Circle-I on 31.08.2016 is carried in appeal by the respondent to the Tribunal in ITA[TP]/A No.1715 and 692/Bang/2016 that has resulted with the direction in the Order dated 11.03.2021 for remand in paragraph 11 as extracted above.
Sri E I Sanmathi, the learned Senior Standing Counsel for the Revenue, submits that the question formulated by this Court must be admitted for hearing along with the questions proposed in the memorandum of appeal because the Revenue would be entitled for the extended period under Section
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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
153A of the IT Act [even as it stood earlier] as it applies for the relevant assessment year 2011-12. As against these submissions, Sri Nageswar Rao D D, the learned counsel for the respondent, emphasizes the following:
[a] The directions on 24.11.2015 by the DRP are under Section 144C ( 5 ) of the IT Act. [b] The assessment should have been completed within the time limit permitted under Section 153 of the IT Act as it stood before the end of March 2015, but the Revenue could claim an extension of time only because of Section 144C of the IT Act and such extended time will only be until 31.01.2016. [c] The Revenue therefore cannot claim the benefit of extended time under Section 153 of the IT Act.
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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
On the Tribunal's exercise of its jurisdiction under Section 254[2] of the IT Act, Sri Nageswar Rao D D submits that paragraph-11 in the Tribunal's order dated 11.03.2021 is in view of the decision of its Co-ordinate Bench in M/s. Xchanging Solutions Limited v. DCIT'1; that the Tribunal has opined that the conclusions in the assessment order are null and void and allowed the appeal, but despite such reference there is an order of remand which is an error apparent.
Sri Nageswara Rao, emphasizing the afore submits that when these circumstances are pointed out, the Tribunal has reviewed its order resulting in the conclusion of the proceedings in the respondent's favour. In rejoinder, Sri E.I.Sanmathi submits that this Court may consider that the provisions of Section 144C(13) of the IT Act which contemplates giving effect to the directions by the DRP does not
1 ITA [TP] A No.2664/Bang/2017 Dated 21.12.2020
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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
extend to the scenario where there is a demand by the Tribunal.
This Court must first observe, as pointed out by Sri Nageswar Rao D.D., that the significant factor is that the TPO had to give effect to the DRP's directions as per the Order dated 24.11.2015 and not in terms of any directions that is contemplated under Section 153 of the IT Act which would come once there is a completion of the assessment procedures. The Revenue is required to complete the assessment, with the DRP's participation, within the timeline contemplated under 144C of the IT Act. However, more germane to the present dispute are two factors as discussed hereafter.
The TPO in its Communication dated 22.01.2016 does not assert any right in the Revenue for the extended time and this becomes significant in the light of the timeline that would be under Section 144C of the IT Act; and the Tribunal has exercised its
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HC-KAR NC: 2025:KHC:48752-DB ITA No. 455 of 2022
jurisdiction under Section 254(2) of the IT Act because of the error it noticed in paragraph - 11 of its order dated 11.03.2021 when it read such paragraph in juxtaposition with its reasoning and conclusion in such paragraph. This Court therefore opines that no substantial questions of law arise, and hence, the appeal is rejected.
Sd/- (B M SHYAM PRASAD) JUDGE
Sd/- (T.M.NADAF) JUDGE
AN/-, SA