Income Tax Appellate Tribunal – Delhi
Religare Capital Markets Ltd., … vs Acit, New Delhi on 10 October, 2019 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “I-2”: NEW DELHI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No. 1881/Del/2014 (Assessment Year: 2009-10) ITA No. 1583/Del/2015 (Assessment Year: 2010-11) ITA No. 753/Del/2016 (Assessment Year: 2011-12) ITA No. 1763/Del/2017 (Assessment Year: 2012-13) Religare Capital Markets Limited, Vs. DCIT, D3, P3B, District Centre, Saket, Circle-15(1), New Delhi New Delhi PAN: AADCR5200R (Appellant) (Respondent) Assessee by : Shri Ajay Vohra, Sr Advoate Shri Neeraj Jain, Adv Revenue by: Shri H. K. Choudhary, CIT DR Date of Hearing 16/07/2019 Date of pronouncement 10/10/2019 ORDER

PER PRASHANT MAHARISHI, A. M.

1. This is an appeal filed by the assessee against the order of the ld Assessing Officer dated 30.01.2014 passed u/s 143(3) read with section 144C of the Income Tax Act, 1961 wherein, the total income of the Assessee is determined at Rs. 454117532/- against the returned income of the Assessee of Rs. 390678800/-.
2. The brief facts show that the Assessee filed return on 29.11.2011 which was revised on 31.03.2011. As the Assessee has entered into international transactions of loan and receipt of interest the case of the Assessee was referred to the ld TPO for determination of arm’s length price. The ld TPO passed an order u/s 92CA(3) of the Act on 30.01.2013 wherein, he recommended an awkward suggestion of international transaction of Rs. 86095422/-. The Assessee filed objections before the ld DRP against the draft order dated 11.03.2013. The ld DRP issued direction u/s 144C(5) on 20.12.2013. Pursuant to that direction the ld Assessing Officer passed order Page | 1 u/s 143(3) read with Section 144C of the Act on 30.01.2014. On the above facts in the appeal Assessee has raised an additional grounds as under
3.
“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 therefore, is liable to be quashed.‖ 4. The ld AR adverting to the additional ground pressed for its admission submitted as under:-

“The aforesaid additional ground of appeal raises a purely legal issue which does not require any fresh investigation into facts; facts already being on records. The aforesaid additional ground of appeal calls for being admitted and adjudicated on merits in view of the discretion conferred on your Honours under Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963 and the Supreme Court decision in the case of National Thermal Power Co. Ltd. vs. CIT : [1998] 229 ITR 383 (SC).

It is further settled law that the question of limitation goes to the root of the matter and can be raised at any stage of the proceedings. [Refer: ITW Signode India Ltd. vs. CCE (2004) 3 SCC 48; JDB Srinivasan vs. Secretary of Govt. of Tamil Nadu [1994] 92 STC 631 (Mad.), Zakir Hussain vs CIT: 202 CTR 40 (Raj.), Shilpa Associates vs ITO 181 CTR 92 (Raj)], KC Khajanchi vs. ITAT (Civil Writ No. 2164/99), Jindal polyester & steel Ltd vs. DCIT (ITA No. 3044/Del/97), Deep Chand Kothari vs CIT : 171 ITR 381 (Raj.).

Thus it was submitted that the additional ground raised must be admitted.
5. The learned departmental representative vehemently objected to the admission of the additional ground and submitted that same should not be admitted as it was never raised before the lower authorities.
6. We have carefully considered the rival contentions and found that above additional ground raised by the assessee is a purely legal issue which does not require any fresh investigation into the facts as the facts are already on record. Therefore the above additional ground of appeal is admitted for adjudication on merits in accordance with rule 11 of The Income Tax Appellate Tribunal Rules, 1963 and the decision of the honourable Supreme Court in case of National thermal Power Co Ltd vs CIT (supra) wherein it was held that any legal ground which can be decided on the basis of the facts already available on record should be admitted for adjudication. The additional ground raises a legal issue that the order passed by the learned Page | 2 assessing officer was is beyond the period of limitation. Therefore this ground is admitted for adjudication.
7. On the merits of the issue learned authorized representative extensively read various provisions of the income tax act and also submitted a detailed note there on which covers is all the arguments as under:-

Submissions on merits:

In support of the contention that the assessment order passed under section 143(3) / 144C(13) of the Income-tax Act, 1961 (―the Act‖) is barred by limitation, the appellant seeks to elucidate the legal position as under:

A. Scheme of the Act with respect to assessment:

The assessing officer, who enjoys territorial jurisdiction over an assessee gets the jurisdiction to make assessment on filing of return by the assessee. Where the assessing officer seeks to scrutinize the return, the assessing officer issues notice under section 143(2) within the stipulated time. After collating the necessary details that may be required from the assessee and after granting an assessee adequate opportunity of being heard, the assessing officer would pass the assessment under section 143(3) of the Act.

Where the assessee had entered into international transactions within the meaning of section 92B of the Act, (―eligible assessee’) the assessing officer is required to make a reference to the Transfer Pricing Officer (―TPO‖) to determine the arm’s length price (―ALP‖) in respect of such international transactions. In case of such an eligible assessee, (as also defined in sub- section 15(b) of section 144C of the Act), the assessing officer is mandatorily required to pass proposed order of assessment (hereinafter referred to as ‗draft assessment order’).

Once the draft assessment order is passed by the assessing officer and served on the eligible assessee, the eligible assessee may within 30 days of receipt thereof either (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with the Dispute Resolution Panel (―DRP‖). [Refer section 144C(2) of the Act].

In case the eligible assessee is to accept the variations made in the draft assessment order or does not file objection thereto within the stipulated time (intending to pursue the appeal remedy before the CIT(A)), the assessing officer in such circumstances has to pass the final assessment order within one month from the end of the month in which the acceptance is received. [Refer section 144C(4) of the Act].

Where the eligible assessee chooses to file objection before the DRP, the DRP is duty bound to dispose of the objections within 9 months from the end of the month in which the draft order is forwarded to the eligible assessee.[Refer section 144C(12) of the Act].
Page | 3 Upon receipt of directions issued by DRP, the assessing officer has to
complete the assessment within one month from the end of the month in
which the direction is received. [Refer section 144C(13) of the Act].

It is respectfully submitted that section 144C requiring reference to the DRP is
part of the procedure of the assessment. The passing of a draft assessment
order, filing of objection before the DRP, disposal of objection by DRP and
passing of assessment order by assessing officer in compliance with the
directions of the DRP are all part of the procedure for assessment contained in
Chapter XIV of the Act.

That the assessment completed under section 143(3) / 144C(13) of the Act
pursuant to the directions of the DRP is an order of assessment, is further
supported by the following provisions:

– Section 2(8) of the Act, which defines assessment to include reassessment;

– Section 253(1)(d) of the Act governing filing of appeals to the Tribunal by the eligible assessee, which reads as under:

―an order passed by an Assessing Officer under sub-section (3), of section 143 or section 147 38[or section 153A or section 153C] in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order;‖ – Section 253(2A) of the Act (omitted by the Finance Act, 2016, w.e.f. 1-6-
2016) providing Revenue the power to file appeal against the order of assessment completed pursuant to directions of the DRP, which reads as under:

“(2A) The Principal Commissioner or Commissioner may, if he objects to any direction issued by the Dispute Resolution Panel under sub- section (5) of section 144C in respect of any objection filed on or after the 1st day of July, 2012, by the assessee under sub-section (2) of section 144C in pursuance of which the Assessing Officer has passed an order completing the assessment or reassessment, direct the Assessing Officer to appeal to the Appellate Tribunal against the order.”

The assessment order passed by the assessing officer pursuant to the
directions of the DRP is under section 143(3) read with section 144C(13) of the
Act only. Such an order cannot be construed as having been passed
independently and on a stand-alone basis under section 144C(13) of the Act.
To put it differently, the order passed pursuant to the directions of the DRP
under section 144C(13) of the Act is regarded as the assessment order. The
same is the only operative assessment in case of an eligible assessee.

B. Scheme of the Act with respect to limitation: Page | 4
The relevant provisions of section153 of the Act as applicable at the relevant
time read as under:

―153. Time limit for completion of assessments and reassessments.–(1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of–

(a) two years from the end of the assessment year in which the income was first assessable ; or …. ….. …..

Provided also that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1st day of April, 2009 or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference under sub- section (1) of section 92CA is made, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words “two years”, the words “three years” had been substituted. …. ….. …..‖ The time limit for completion of assessment in terms of section 153(1) of the
Act is ordinarily 2 years from the end of the relevant assessment year. The
said limit was enhanced to 3 years in case of an assessee wherein reference
was made to the TPO (the eligible assessee).

It is the respectful submission of the appellant that the assessment for
assessment year 2009-10completed in pursuance of directions of the DRP
had mandatorily to be passed before 31st March, 2013, i.e., within 3 years
from the end of the relevant assessment year in terms of section 153(1) of the
Act read with third proviso thereto and, therefore, the assessment order
passed on 30.01.2014under section 143(3) / 144C(13) of the Act is barred by
limitation as elaborated hereunder:

The enhanced time limit of 3 years is provided in the statute in order to take
care of the time that would be taken, inter alia, in the TPO passing the order,
passing of draft assessment order, objections being filed before the DRP,
disposal of objections by DRP and passing of assessment order.

Provisions of section 144C do not, in the respectful submission of the
appellant, give a go bye to the limitation enshrined in section 153 of the Act.
In other words, section 144C does not provide for time beyond what is
stipulated in section 153 of the Act for completion of assessment. It is
important to note that the provisions of section 153 are not made subject to
provisions of section 144C of the Act nor do provisions of the latter section
override the former, notwithstanding the non-obstante clause in sub-sections
(4) and (13) thereof.

The provision of section 144C(1) of the Act mandating passing of draft
assessment order in case of an eligible assessee, is an exception to the
ordinary rule wherein the assessing officer has to pass only one order, i.e., Page | 5 assessment order under section 143(3) of the Act without making a draft
assessment order. The non-obstante provision in section 144C(1) of the Act is
to make it mandatory for the assessing officer to pass draft assessment order
in the case of an eligible assessee, contrary to the scheme of the Act wherein
the assessing officer is required to pass one and only assessment order in the
case of all other assessees. Having regard to the aforesaid, the non-obstante
clause in section 144C(1) of the Act requiring passing of a draft assessment
order in case of an eligible assessee is, therefore, to be read limited to the
context, i.e., exception to the ordinary rule that there will be only one
assessment order passed by the assessing officer on culmination of the
assessment proceedings.

The time limit of passing the assessment order in the circumstances
mentioned in section 144C(4), is, notwithstanding that the assessing officer
may have time available to complete the assessment in terms of section 153
of the Act. The non-obstante clause in section 144C(4) of the Act thus seeks to
shorten the time available for completion of assessment in case of an eligible
assessee who accepts the variation made in the draft assessment order or
intends to pursue the appeal remedy before the CIT(A) as opposed to filing
objections before the DRP. In other words, the sub limit in section 144C(4) to
pass the assessment order within one month, in case where the assessee
does not make an application to the DRP, notwithstanding the time limit
provided in section 153(1) of the Act is to curtail the limitation that would
otherwise have been available to the assessing officer to pass the final
assessment order. The time limit of one month in section 144C(4) cannot be
read as additional time provided to the assessing officer, over and above
limitation in section 153 of the Act to pass the final assessment order in the
case of an eligible assessee.

For the same reason, the time limit of one month in section 144C(13) to pass
the assessment order pursuant to the directions of the DRP cannot be
construed as additional time available to the assessing officer, over and
above the normal limitation in section 153 of the Act to pass the assessment
order. Ergo, section 144C(13) providing for time limit of one month is in the
nature of sub-limit, subsumed within the over-arching limitation provided in
section 153 of the Act and not in addition thereto.

To reiterate, the non-obstante clause(s) in sections 144C(1)/144C(4) /
144C(13) have to be read in context, limited to the purpose for which the same
are created and are not intended to completely bypass provisions of section
153 of the Act or provide for additional time over and above the limitation
contained in the said section.

It is submitted that the scheme of section 144C was introduced in the statute
and that the Dispute Resolution Panel was constituted to expedite the dispute
resolution process involving eligible assessees. The Memorandum to the
Finance (No. 2) Bill, 2009 while introducing the provisions of section 144C in
the statute clarified the legislative intent in the following terms:

―The dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained only after a Page | 6 long drawn litigation till Supreme Court. Flow of foreign investment is extremely sensitive to prolonged uncertainity in tax related matter.
Therefore, it is proposed to amend the Income-tax Act to provide for an alternate dispute resolution mechanism which will facilitate expeditious resolution of disputes in a fast track basis‖ It is submitted that if the non-obstante clause in sections144C(4)/ 144C(13) of
the Act is interpreted as allowing the assessing officer additional time over
and above the limit provided under section 153of the Act, the same would
defeat the entire purpose of expediting the dispute resolution process, by
enlarging the time available for completion of assessment to almost five years
from the end of the relevant previous year (four years from the end of the
relevant assessment year) as explained hereinafter.

C. Import of non obstante clause:
It is settled law that the non- obstante provisions have to be read in context
and for the purpose for which the same have been enacted, i.e., a non
obstante clause is to be interpreted consistent with the specific purpose and
legislative intent behind the enactment of such provision. In other words,
application of non obstante clauses ought to be confined to the purpose/
scheme for which they same was intended.

The Hon’ble apex Court in Bharat Hari Singhania vs. CWT 207 ITR 1 (SC)
outlined the meaning and import of a non obstante clause in the following
terms:
―21. The contention of the learned counsel for the assessees is that the Valuation Officer is not bound by and is not obliged to observe rule 1D. It is submitted that the Valuation Officer has to determine the market value of the asset referred to him independently and applying such method as appears appropriate to him in the circumstances. His only object is to determine the correct market value. The contention is mainly based upon the non obstante clause found at the inception of sub section (3) of section 7. It is argued that the non obstante clause – ‘not withstanding anything contained in sub-section (1)’ – indicates clearly that the Valuation Officer is not bound by the rules referred to in and by sub-section (1) of section 7.
We find it difficult to agree. Valuation Officer is a creature of the statute. He is, therefore, bound by the provisions of the statute and the rules made thereunder unless there is something either in the Act or in the rules to indicate otherwise. The question is whether the said non obstante clause has that effect. The scope and purport of the said non obstante clause has to be ascertained by reading it in the context of the provisions contained in section 7 and consistent with the scheme of the enactment. If so read, it only means this: Ordinarily it is for the WTO to estimate the price which in his opinion an asset would fetch if sold in the open market on the valuation date but where the WTO refers the question of valuation of an asset to the Valuation Officer under section 16A, it is for the Valuation Officer to make the said estimate which estimate shall be binding upon the WTO as provided in sub-section (5) of section 16A. Thus, in a case referred to Valuation Officer, the Page | 7 estimate is made by the Valuation Officer instead of the WTO. This is the limited function and purpose of the said non obstante clause ‘notwithstanding anything contained in sub-section (1)’ in section 7(3)……………..‖ To similar effect are the judgments of the Hon’ble apex Court in the cases of
R.S. Raghunath vs. State of Karnataka (1992) 1 SCC 335, ICICI Bank Ltd. vs.
SIDCO Ltd. (2006) 10 SCC 452,Ramdev Food Products (P.) Ltd. vs.
ArvindbhaiRambhai Patel (2006) 8 SCC 726and Central Bank of India vs.
State of Kerala (2009) 4 SCC 94, reiterating that, while interpreting a non-
obstante provision, the Court is required to keep in mind the intent of the
Legislature and any statutory construction of such a provision is to be limited
to the context/ purpose for which the same was intended.

It may be useful to the refer to the observations in the case of Geeta vs.
State of U.P. (2010) 13 SCC 686, whereinafter exhaustively citing the
earlier legal precedents and interpretative guidelines on the subject, the
Hon’ble Court held as under:

―38. Interpretation of non obstante clauses has come up for consideration before this Court in a large number of decisions. In Aswini Kumar Ghose v. Arabinda Bose [AIR 1952 SC 369], a Constitution Bench of this Court speaking through Patanjali Sastri, C.J. observed that: (AIR p. 377, para 27) ―27. … the non obstante clause can reasonably be read as overriding ‗anything contained’ in any relevant existing law which is inconsistent with the new enactment.‖ But His Lordship made it clear that: (Arabinda Bose case [AIR 1952 SC 369], AIR p. 377, para 27) ―27. … The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously.‖ 39. Again in another Constitution Bench judgment of this Court in Dominion of India v. Shrinbai A. Irani [AIR 1954 SC 596], Bhagwati, J. observed at AIR para 10 as follows: (AIR pp. 599-
600) ―10. … although ordinarily there should be a close approximation between the non obstante clause and the operative part of the section, the non obstante clause need not necessarily and always be co-extensive with the operative part, so as to have the effect of cutting down the clear terms of an enactment. If the words of the enactment are clear and are capable of only one interpretation on a plain and grammatical construction of the words thereof a non obstante clause cannot cut down the construction and restrict the scope of its operation. In such cases the non Page | 8 obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the legislature by way of abundant caution and not by way of limiting the ambit and scope of the operative part of the enactment.‖ 40. In Chandavarkar Sita Ratna Rao v. Ashalata S. Guram
[(1986) 4 SCC 447] this Court stated that: (SCC pp. 477-78, para
67) ―67. … the expression ‗notwithstanding anything contained in this Act…. is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of the Act or the contract mentioned in the non obstante clause. It is equivalent to saying that in spite of the provision of the Act or any other Act mentioned in the non obstante clause … the enactment following it will have its full operation….‖ 41. Further, this Court in A.G. Varadarajulu v. State of T.N.
[(1998) 4 SCC 231], observed that: (SCC p. 236, para 16) ―16. It is well settled that while dealing with a non obstante clause under which the legislature wants to give overriding effect to a section, the Court must try to find out the extent to which the legislature had intended to give one provision overriding effect over another provision.‖ 42. The Bench in A.G. Varadarajulu case [(1998) 4 SCC 231]
referred to the principle in the Constitution Bench decision in
Madhav Rao Jivaji Rao Scindia v. Union of India [(1971) 1 SCC
85] wherein this Court held that: (A.G. Varadarajulu case [(1998)
4 SCC 231] , SCC p. 236, para 16) ―16. … the non obstante clause [was] a very potent clause intended to exclude every consideration arising from other provisions of the same statute or other statute but ‗for that reason alone we must determine the scope’ of that provision strictly. When the section containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions of the statute generally, it is not permissible to hold that it excludes the whole Act and stands alone by itself.‖ 43. This Court also held in ICICI Bank Ltd. v. SIDCO Leathers
Ltd. [(2006) 10 SCC 452] that the wide amplitude of a non
obstante clause must be kept confined to the legislative policy
and it can be given effect to, to the extent Parliament intended
and not beyond the same and that in construing the provisions of
a non obstante clause, it was necessary to determine the purpose
and object for which it was enacted (see pp. 465-66).
Page | 9
44. In Central Bank of India v. State of Kerala [(2009) 4 SCC 94] this Court reiterated that while interpreting a non obstante clause the Court is required to find out the extent to which the legislature intended to give it an overriding effect.

45. In view of such consistent opinion expressed by this Court on the purport and meaning of non obstante clause we are of the view that the operation of a non obstante clause in Section 7(3) of the amended Act shall be subject to the intent of the legislature, and must be interpreted in line with the scheme of the Act and the purpose for which it was enacted.‖ Furthermore, it is important to bear in mind that the limitation for completing
assessment / reassessment is progressively being reduced which shows the
conscious intent of the Legislature to ensure speedy finality and certainty of
the taxpayer’s liability.

In view of the aforesaid, it is submitted that non-obstante provisionin section
144C(13) is to be interpreted having regard to the stated intent of the
Legislature to expedite the dispute resolution process. Accordingly, it is
submitted that the time limitation in sections144C(4)/144C(13)of the Act is to
be read as a sub-limit, subsumed within the overall limitation of three years
from the end of the relevant assessment year provided in section 153 of the
Act.

D. Limitation provided in section 153 of the Act is to be strictly construed:
It bears repetition to point out that the limitation provided in section 153 of the
Act applies to all orders of assessment including an assessment order passed
in pursuance of directions of DRP. In case, section 153 of the Act is read as
referring to order(s) of assessment in case of non-eligible assessees only, that
would amount to creating two separate and distinct categories of assessment,
viz., (i) assessment completed without recourse to section 144C; and (ii)
assessment completed in pursuance of directions of DRP. Such an artificial
bifurcation is not warranted by the scheme of the Act which countenances
only one assessment, whether under section 143(3) or under section 143(3)
read with section 144C(13) of the Act.

Further, if section 153(1) of the Act were to apply only to cases of non-eligible
assessees, then, in that situation, the said section would have read as under:
―No order of assessment ……….. other than an assessment completed in pursuance of directions of the DRP … …. (words inserted) shall be made under section 143 or section 144 at any time after the expiry of…………‖ In such a situation, exception to the applicability of section 153 of the Act
would be done by doing violence to the language of the said section and
reading words into the statute which are conspicuous by their absence.

It is settled rule of interpretation of statutes to interpret the statute as it is;
further, it is contrary to all rules of construction to read words into a statute Page | 10 which the Legislature in its wisdom has deliberately not incorporated. [Refer
CIT vs. Tara Agencies: 292 ITR 444 (SC) reproduced infra] Explaining the same, Justice (Retd.) G.P. Singh in his celebrated treatise on
the ‗Principles of Statutory Interpretation’ [Twelfth Edition, 2010] @ 85-86,
noted that:

―The words of a statute are first understood in their natural, ordinary or popular sense and phrases and sentences are construes according to their grammatical meaning, unless that leads to some absurdity or unless there is something in the context, or in the object of the statute to suggest the contrary……………‖ In other words, Courts while interpreting a legal provision ought to assign
primacy to the plain, natural, grammatical, ordinary or popular meaning of
the words used by the Legislature as applied to the legal subject-matter,
unless such a construction leads to absurdity of consequence, unworkability
of the statute, or is patently contrary to the legislative intent and policy.The
rule of literal construction, often regarded as a ‗Cardinal Rule of Statutory
Interpretation’ is the bedrock principle for interpretation, especially for taxing
and penal statutes. The principle is firmly enshrined in tax jurisprudence as
outlined in the following cases:

(a) CIT vs. T.V. Sundaram Iyyengar [1975] 101 ITR 764 (SC) – If the language of the statute is clear and unambiguous, the Court cannot discard the plain meaning, even if it leads to an injustice.

(b) CIT vs. Elphinstone Spg. &Wvg. Mills Co Ltd. 40 ITR 142 (SC) and CIT vs. Motors & General Stores Ltd. 66 ITR 692 (SC) – No tax can be imposed on the subject without words in the Act clearly showing an intention to lay a burden upon him. In other words, the subject cannot be taxed unless he comes within the letter of the law, and not merely the spirit of the law.

(c) KeshavjiRavji& Co. vs. CIT [1990] 49 Taxman 87 (SC) – As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible.
While applying and affirming the rule of literal construction, the Courts have
time and time again re-iterated that it is the bounden duty and obligation of
the Court to interpret the statute as it is. It is contrary to all rules of
construction to read words into a statute or to read down the words of a
statute, which the Legislature in its wisdom has or has not deliberately
incorporated.

The applicability of the aforementioned principle in the context of taxing
statutes, particularly the Income Tax Act, 1961, has been repeatedly affirmed
by the Hon’ble apex Court. Attention in this regard is invited to the judgment
in the case of CIT vs. Ajax Products Ltd. [1965] 55 ITR 741 (SC), wherein Page | 11 the Hon’ble apex Court, citing with approval the observations of Rowlatt J. in
Cape Brandy Syndicate vs. IRC [1921] 1 KB 64, observed as under:

―The rule of construction of a taxing statute has been pithily stated by Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 K.B. 64, 71 thus :
“In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used”.
To put it in other words, the subject is not to be taxed unless the charging provision clearly imposes the obligations.
Equally important is the rule of construction that if the words of a statute are precise and unambiguous, they must be-accepted as declaring the express intentions of the legislature.‖ Reference may also be made to the judgment in the case of Smt. Tarulata
Shyam vs. CIT [1971] 108 ITR 345 (SC), wherein the Hon’ble apex Court
cautioned against the judicial deployment of casus omissus, in the following
terms:

―We have given anxious thought to the persuasive arguments of Mr. Sharma. His arguments, if accepted, will certainly soften the rigour of this extremely drastic provision and bring it more in conformity with logic and equity. But the language of sections 2(6A)(e) and 12(1B) is clear and unambiguous. There is no scope for importing into the statute words which are not there. Such importation would be, not to construe, but to amend the statute. Even if there be a casus omissus, the defect can be remedied only by legislation and not by judicial interpretation.

To us, there appears no justification to depart from the normal rule of construction according to which the intention of the legislature is primarily to be gathered from the words used in the statute. It will be well to recall the words of Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 (KB) at page 71, that:

“……in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.” Page | 12 Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be.‖ Another oft-cited judgment in this regard is the case of CIT vs. Tara
Agencies [2007] 292 ITR 444 (SC), wherein the Hon’ble apex Court relying
on several earlier rulings in cases such as Union of India vs. Deoki Nandan
Aggarwal 1992 Suppl. (1) SCC 323 and Gwalior Rayons Silk Mfg. (Wvg.) Co.
Ltd. vs. Custodian of Vested Forests 1990 (Suppl) SCC 785, observed as
under:

―61. Since the Legislature in its wisdom has not used the term ‘processing’ in section 35(1)(B) of the Act, it would be erroneous to incorporate the word in the section and then interpret the Statute. In this view of the matter Chowgule& Co. (P.) Ltd.’s case (supra) and Nilgiri Ceylon Tea Supplying Co.’s case (supra) dealt with by this court in Chowgule& Co. (P.) Ltd.’s case (supra) are clearly distinguishable because of the language of the statutes.

62. The intention of the Legislature has to be gathered from the language used in the statute which means that attention should be paid to what has been said as also to what has not been said.

63. In Union of India v. Deoki Nandan Aggarwal 1992 Suppl. (1) SCC 323, a three-Judge Bench of this court held that it is not the duty of the court either to enlarge the scope of legislation or the intention of the Legislature, when the language of the provision is plain. The court cannot rewrite the legislation for the reason that it had no power to legislate. The power to legislate has not been conferred on the courts. The court cannot add words to a statute or read words into it which are not there.

64. In State of Kerala v. Mathai Verghese [1986] 4 SCC 746, this court has reiterated the well settled position that the court can merely interpret the section; it cannot re-write, recast or redesign the section. In interpreting the provision the exercise undertaken by the court is to make explicit the intention of the Legislature which enacted the legislation. It is not for the court to reframe the legislation for the very good reason that the powers to ‘legislate’ have not been conferred on the court.

65. In Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests 1990 (Suppl) SCC 785, the court rightly observed that in seeking legislative intention Judges not only listen to the voice of the Legislature but also listen attentively to what the Legislature does not say.

66. House of Lords in Pinner v. Everett [1969] 3 All. ER 257 aptly observed that we have been warned again and again that it is wrong and dangerous to proceed by substituting some other words for the words of the statute. Page | 13
67. Therefore the legal position seems to be clear and consistent that it is the bounden duty and obligation of the court to interpret the statute as it is. It is contrary to all rules of construction to read words into a statute which the Legislature in its wisdom has deliberately not incorporated.‖ To similar effect are other judgments of the Hon’ble Supreme Court in cases
such as Union of India vs. Dharamendra Textile Processors [2008] 306 ITR
277 (SC) and Babita Lila vs. Union of India [2016] 387 ITR 305 (SC).The same
dictum was reiterated in the case of CIT vs. Calcutta Knitwears [2014]
362 ITR 673 (SC) in the following terms:

―Section 158BD of the Act provides for “undisclosed income” of any other person. Before we proceed to explain the said provision, we intend to remind ourselves of the first or the basic principles of interpretation of a fiscal legislation. It is time and again reiterated that the courts, while interpreting the provisions of a fiscal legislation should neither add nor subtract a word from the provisions of instant meaning of the sections. It may be mentioned that the foremost principle of interpretation of fiscal statutes in every system of interpretation is the rule of strict interpretation which provides that where the words of the statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule (Swedish Match AB v. SEBI AIR 2004 SC 4219, CIT v. Ajax Products Ltd. [1965] 55 ITR 741 (SC).‖ Lastly, reference may be made to the judgment of the Hon’ble Andhra
Pradesh High Court in the case of Managing Director, M/s. LVSR Farms
Pvt Ltd. vs. Official Liquidator, High Court of A.P. (2012) 6 ALD 630
(AP),succinctly outlining and summarizing the legal position in the following
words:

―44…………………… A provision must be construed according to the natural meaning of the language used. The Court, in interpreting a statute, must therefore proceed without seeking to add words which are not to be found in the statute. (Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector 6B ETIO37: (2007) 5 SCC 447; Union of India v. Mohindra Supply Co.: AIR 1962 SC 256; Bank of England v. Vagliano Bros 39 LR (1891) AC 107; CIT v. Anjum M.H. Ghaswala 40: (2002) 1 SCC 633; J. Srinivasa Rao v.
Govt. of A.P.: (2006) 12 SCC 607. Statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances, (Chertsey Urban District Council v. Mixnam’s Properties Ltd. (1964) 2 All ER 627, and must be construed according to the rules of grammer. When the language is plain and unambiguous, and admits of only one meaning, no question of construction of a statute arises for the Act speaks for itself. The meaning must be collected from the expressed intention of the legislature. (State of U.P. v. Dr Vijay Anand Maharaj (1963) 1 SCR 1. In construing a statutory Page | 14 provision, the first and foremost rule of construction is the literal
construction. All that the court has to see at the very outset is what
does that provision say. If the provision is unambiguous and if, from
that provision, the legislative intent is clear, the court need not call
into aid other rules of construction of statutes. The other rules of
construction are to be called into aid only when the
legislative intention is not clear. (Raghunath Rai Bareja (2007) 2
SCC 230; HiralalRatanlal v. STO (1973) 1 SCC 216) 45. If the words used are capable of one construction only, it would
not be open to the Courts to adopt any other hypothetical
construction on the ground that such hypothetical construction is
more consistent with the alleged object and policy of the Act. The
words used in the material provisions of the Statute must be
interpreted in their plain grammatical meaning, (Kanai Lal Sur v.
ParamnidhiSadhukhan: 1958 SCR 360, and must be construed in
its ordinary sense as it is well recognised that the language used
speaks the mind and reveals the intention of the framers. (C.I.T. v.
T.V. Sundaram Iyengar (P) Ltd.: 1976 (1) SCC 77. The language
employed in a statute is the determinative factor of the
legislative intent. The legislature is presumed to have made
no mistake. The presumption is that it intended to say what
it has said. Assuming there is a defect in the words used by
the legislature, the court cannot correct or make up the
deficiency, especially when a literal reading thereof produces
an intelligible result. (Raghunath Rai Bareja’s case (supra);
Prakash Nath Khanna v. CIT: (2004) 9 SCC 686; Delhi Financial
Corpn. v. Rajiv Anand: (2004) 11 SCC 625. It would be
impermissible to call in aid any external aid of construction to find
out the hidden meaning. A statute should be construed according to
the intention expressed in the Statute itself. (D.D. Joshi v. Union of
India: (1983) 2 SCC 235. The other rules of interpretation i.e.,
the mischief rule, purposive interpretation, etc. can only be
resorted to when the plain words of a statute are ambiguous
or lead to no intelligible results or, if read literally, would
nullify the very object of the statute. Where the words of a
statute are clear and unambiguous, recourse cannot be had
to principles of interpretation other than the literal rule
(Swedish Match AB v. Securities and Exchange Board of India: AIR
2004 SC 4219; Raghunath Rai Bareja).

46. Resort can be had to the legislative intent for the purpose
of interpreting a provision of law, when the language
employed by the legislature is doubtful or susceptible of
meanings more than one. (Ombalika das v. Hulisa Shaw.: (2002)
4 SCC 539. Unless there is any ambiguity it would not be open to
the Court to depart from the normal rule of construction which is that
the intention of the Legislature should be primarily gathered from
the words which are used. It is only when the words used are
ambiguous that they would stand to be examined and construed in
the light of surrounding circumstances. (CIT v. Sodra Devi: AIR 1957 Page | 15 SC 832. A provision is not ambiguous merely because it contains a word which in different contexts is capable of different meanings. It would be hard to find anywhere a sentence of any length which does not contain such a word. A provision is ambiguous only if it contains a word or phrase which, in that particular context, is capable of having more than one meaning. (Kirkness (Inspector of Taxes) v. John Hudson & Co., Ltd. (1955) AC 696 (HL). It is only when the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, would Courts prefer to adopt the latter construction.‖ In view of the aforesaid, it would be appreciated that it is a settled judicial
position that the Courts are duty bound to interpret the words of a statute in
their ordinary sense as drafted by the Legislature and are not to resort of
creative devices of judicial incorporation or modification of statutory language.
It is submitted that words used in a statute, in plain and clear terms, serve as
the best guide towards determination of legislative intention, and any
external device, which enables a construction, contrary to such plain words of
the statute, is to be avoided Having regard to the aforesaid scheme of the Act, it is the respectful
submission of the appellant that over all limitation for making an assessment
including in the case of an eligible assessee is 3 years from the end of the
relevant assessment year which would include reference to the TPO, receipt of
order from the TPO, passing of draft assessment order, filing of objections
before the DRP, disposal of objections and issue of directions by DRP and
passing of assessment order by the assessing officer. The time limitation in
section 144C(4) or section 144C(13), as the case may be, are only sub-limits,
subsumed within the overall limitation of 3 years from the end of the relevant
assessment year provided in section 153 of the Act. Accordingly, the time
limit of 3 years from the end of the relevant assessment year provided in
section 153(1) of the Act read with third proviso thereto is absolute and
applies to all assessments including those completed pursuant to the
directions of the DRP.

Whether section 144C completely bypasses section 153?
In case it is held that section 144C is an independent / self-contained code
and that the limitation in section 153 of the Act would not apply in case of an
eligible assessee, then, the consequence would be that there would be no
limitation qua passing of the draft assessment order. In other words, the
assessing officer would be at liberty to pass the draft assessment at any
time, at his whims and fancies and the only limitation that would apply in
such a situation would be under section 144C(4) or section 144C(13) of the
Act, as the case maybe. Such an interpretation would clearly be contrary to
the legislative intent of expeditious dispute resolution and the scheme of the
Act. Such an interpretation cannot, therefore, be countenanced.

In view of the aforesaid, it is respectfully submitted that the order dated
30.01.2014passed under sections 143(3) / 144C(13) of the Act is clearly
barred by limitation and, therefore, is unlawful and is liable to be quashed.

Page | 16
8. On the merits he submitted that the issue is squarely covered in favour of the revenue by the order of the coordinate bench in ITA No. 1132/Del/2015 for the AY 2010-11. It was further contended that proceedings before the DRP are substitution of the appellate proceedings and the order passed by the DRP is akin to the appellate order; the final assessment order passed by the assessing officer under section 144C(13) of the Act is akin to the appeal effect order. It was further contended that as in the case of appellate proceedings, if provisions of section 144C are invoked applicability of section 153 of the Act is ousted.
9. In rebuttal ld AR submitted as under :-
Rebuttal to submissions of the Revenue I. It was contended by the Ld CIT DR that proceedings before the DRP are substitution of the appellate proceedings and the order passed by the DRP is akin to the appellate order; the final assessment order passed by the assessing officer under section 144C(13) of the Act is akin to the appeal effect order. It was further contended that as in the case of appellate proceedings, if provisions of section 144C are invoked applicability of section 153 of the Act is ousted.

At the outset, it is respectfully submitted that the aforesaid submissions on the side of the Revenue are contrary to the scheme of the Act. The proceedings before the DRP are not in substitution of appellate proceedings; the Act provides the assessee a choice of either invoking proceedings under section 144C before the DRP or opting to avail the appellate remedy before the CIT(A).

Furthermore, the Bombay High Court in the case of Vodafone India Services Pvt. Ltd. : 361 ITR 531, conclusively held that the proceedings before the DRP are not appeal proceedings but a proceeding to finalize the assessment on the basis of the draft assessment order. The relevant observations of the Hon’ble Court read as follows:

“47…………….. The process before the DRP is a continuation of the assessment proceedings as only thereafter would a final appealable assessment order be passed. Till date there is no appealable assessment order. The proceeding before the DRP is not an appeal proceeding but a correcting mechanism in the nature of a second look at the proposed assessment order by high functionaries of the revenue keeping in mind the interest of the assessee. It is a continuation of the Assessment proceedings till such time a final order of assessment which is appealable is passed by the Assessing Officer.‖ Page | 17 In view of the aforesaid, it is submitted that the contention of the Revenue that proceedings before the DRP are appellate proceedings is contrary to provisions of the Act and is liable to be rejected.

II. Reliance was further placed by the ld CIT DR on the decision of the Hon’ble Supreme Court in the case of Aswini Kumar Ghosh and Another vs. Arabinda Bose and Another : 1952 AIR SC 369 for the proposition that by virtue of the non-obstante clause in section 144C(13), the limitation enshrined in section 153 of the Act has been overridden. In particular attention was invited to the following observations made by the apex Court in the said judgement:
―it is one of the settled rules of construction that to ascertain he legislative intent, all the constituent parts of a statute are to be taken together and each word, phrase or sentence is to be considered in the light of the general purpose and object of the Act itself. …. ….‖ As elaborately submitted infra, thenon-obstante clause in section 144C(13) has to be read in context of the overall scheme of the Act, including section 153 and the legislative intent behind enacting the speedy dispute resolution process in section 144C of the Act.

In support of the aforesaid proposition, viz, the non-obstante clause has to be read keeping in mind the Legislative intent and limited to the context / purpose for which the same was intended, the appellant has placed reliance on several decisions of the apex Court which, in turn, rely upon the decision in the case of Aswini Kumar Ghosh (supra) referred to by the Revenue.

III. The Revenue placed reliance upon the decision of the Delhi bench of the Tribunal in the case of Honda Trading Corporation vs. CIT : (2015) 61- taxmann.com-233, wherein the Hon’ble bench was pleased to hold that the provisions of section 144C override the provisions of section 153 of the Act.

While rejecting the assessee’s contention that the limitation in section 153 referred to passing of draft assessment order, the Tribunal held that:

(i) Section 144C gives a complete go bye to section 153; and
(ii) The Act does not contemplate any limitation for passing of draft assessment order, which can be passed within a reasonable time.

The relevant observations of the Tribunal are extracted hereinbelow:

―5.22 Now, we take up an important point raised by the ld. AR that if the time limit for the passing of the final assessment order is governed by section 144C, then, the time limit given in section 153 must be inferred for the passing of the draft order because there cannot be two simultaneous time limits for the completion of assessment. … …. … Though the question posed by the Page | 18 ld.AR that if the time limit for passing of the final assessment
order is contained in section 144C then section153 cannot cover
the same thing once again, is noteworthy, but we find that the
inference drawn by him that in such circumstances, the time limit
given u/s 153 should be construed as that for passing the draft
order, defies all logics.

5.23 At this juncture, we note that Chapter-X containing the
provisions relating to the computation of income from
international transactions having regard to the ALP was inserted
by the Finance Act, 2001 w.e.f.1.4.2002. On such insertion, it
became incumbent upon the AO to determine the ALP of the
international transactions. For the A.Y. 2002-03, the time limit for
completion of assessment, after determining the ALP, as was
earlier applicable also, continued to be governed by section
153(1)(a) which stood at two years from the end of the
assessment year. Section 92CA with the caption ‘Reference to the
Transfer Pricing Officer’ was brought into existence by the
Finance Act, 2002 w.e.f. 1.6.2002. Under this provision, the onus
of computing ALP of the international transactions in certain
cases was shifted to the TPO, who was supposed to pass his
order under sub-section (3). There was no separate time limit for
passing of the order by the TPO. The AO was obliged to pass the
assessment order having regard to the ALP, within the overall
time limit permitted by section 153, that is, two years from the
end of the relevant assessment year. This position continued till
the Finance Act, 2007, when sub-section (3A) to section 92CA
was inserted w.e.f. 1.6.2007 providing a distinct time limit for the
passing of the order by the TPO, being a period of sixty days
prior to the date of completion of assessment as per section 153.
Simultaneously, the time limit for passing of order u/s 153 in
cases where reference is made to the TPO, was also enhanced to
thirty three months. … … … The provisions of section 144C
about ‘Reference to the dispute resolution panel’, were inserted
by the Finance (No. 2) Act, 2009 w.e.f. 1.4.2009. This led to the
ushering in the era of passing the draft order. It means that up to
the A.Y. 2008-09, when the mechanism ofDRP and the passing of
draft order was not in place, the final assessment order pursuant
to the order of the TPO was required to be passed within the time
limit given in section 153. However, when the institution of the
DRP and the concept of passing a draft order came into being
w.e.f. the A.Y. 2009-10, the time limit for the completion of
assessment came to be governed by sub-section (4) or (13) of
section 144C. This shows that upon the introduction of section
144C, there emerged two simultaneous time limits for completion
of assessments, viz., the one which already existed as per
section 153 and the latest one, which came to be introduced
through section 144C. At this stage, it is significant to note one
salient feature in the time limits enshrined under sub-sections (4)
and (13) of section 144C. Such common thread is that the time
limits given in both the sub-sections are ‘notwithstanding Page | 19 anything to the contrary contained in section 153 or …’. This
transpires that the time limits for completion of assessment as
prescribed in sub-sections (4) and (13) of section 144C have been
superimposed on the time limit as given under third proviso to
section 153(1) for the passing of the assessment order. Effect of
the insertion of this non-obstante clause in sub-sections (4) and
(13) of section 144C is that the hitherto applicable time limit given
in section 153 came to expressly excluded for the purposes of
completion of the final assessment order pursuant to the draft
order. Under this scenario, as is also instantly prevalent, the time
limit for the passing of the final assessment order finds its place
under sub sections (4) or (13) of section 144C. On having covered
the time limit for completion of assessment u/s 144C,now it
became necessary for the legislature to remove the time limit for
completion of assessment as contained in section 153. This could
have been possibly done by omitting section 153, which was not
possible as this section ab initio contains general time limit for
completion of all assessments and reassessments and it is/was
never confined only to the orders passed pursuant to the
determination of the ALP by the TPO. Then the course open was
either to insert a sunset clause in this regard in section 153 itself
or add a non-obstante clause in section 144C(4) and (13). The
legislature chose the second option and made it unequivocal by
mentioning in sub-sections (4) and (13) that the provisions of
section 153 shall not apply. There is a reason for not adding a
sunset clause in section 153. The reason is that section 92CA
mandating the TPO to pass order determining the ALP of
international transactions, also contains sub-section (3A), which
provides time limit for the passing of the order by the TPO. As per
this provision inserted by the Finance Act, 2007 w.e.f.1.6.2007,
the TPO may pass order u/s 92CA(3) ‘at any time before sixty
days prior to the date on which the period of limitation referred to
in section 153,….. for making the order of assessment or
reassessment or recomputation or fresh assessment, as the case
may be, expires’. Since the time limit for passing of the order by
the TPO is not direct but is linked with the time limit as per
section 153, the legislature did not insert any sunset clause in
section 153, which would have otherwise made the provision of
sub-section (3A) of section92CA unworkable without the insertion
of a separate corresponding provision giving time limit for the
passing of the order by the TPO. This is the answer to the ld.
AR’s poser that when the time limit for completion of assessment
is contained in section 144C, then the provisions of section 153
cannot be read as meaningless except for linking it with draft
order. In our considered opinion, it is overt that the time limit
u/s153 is not meaningless as the same has been retained for
keeping alive the time limit given to the TPO for passing his order.

5.24 We have noticed above that the term ‘draft order’ has been
statutorily coined u/s 144C(1). It means that the term ‘draft
order’ has been recognized as and is actually different in ambit Page | 20 from the term ‘assessment order’. With the insertion of section 144C, which led to the birth of the draft order, the legislature did not substitute the term ‘order of assessment’ with the term ‘draft order’ in section 153. If the intention of the legislature had been to substitute the hitherto time limit for passing of the assessment order as the time limit for the passing of draft order henceforth, on shifting the time limit for passing of the final assessment order to section 144C(4) or (13), then it would have made necessary changes in section 153 by substituting the term ‗draft order’ with the term ‘order of assessment’. In fact, the term ‘draft order’ is totally absent in section 153,which indicates that it has been treated as alien to section 153. If we accept the contention of the ld. AR that after the introduction of section 144C, the time limit provided u/s 153 applies only to the draft order, it would amount to re-writing section 153 which falls in the exclusive domain of the Parliament. We are unable to read the term ‘draft order’ interchangeably with the term ‘assessment order’ in the context of section 153 or practically for any other purpose.

5.25 Now we take up the next argument of the ld. AR that if the time limit prescribed u/s 153 is considered as relating to the completion of assessment, this will leave no other provision setting out the time-frame for passing of the draft assessment order. … …. …. We find that, in fact, no time limit has been prescribed for the passing of the draft order. It is also equally relevant to note that prior to the introduction of sub-section (3A) to section 92CA by the Finance Act, 2007, there was no time limit for the passing of the order by the TPO, though sub-section (3) requiring the passing of order by the TPO, was inserted by the Finance Act, 2002. It means that during the interregnum, though there was a requirement for the passing of order by the TPO, but there was no specific time limit for the passing of such order. The mere fact that no time limit has been prescribed for the passing a draft order, does not and cannot mean that the time limit for the completion of assessment given u/s 153 should be inferred as that for passing a draft order.
…. …. ……‖ It is respectfully submitted that the decision of the Hon’ble bench in the
case of Honda Trading Corporation (supra) does not lay down the
correct position in law. While the Tribunal has rightly come to the
conclusion that the words ―draft order of assessment‖ can be read into
section 153, the Hon’ble Tribunal erred in holding that section 144C
gives a go bye to section 153 of the Act and provides independent time
limit for completion of assessment in pursuance of directions of the
DRP. In taking the aforesaid view, the following conclusions arrived at
by the Tribunal are erroneous in law:

1. The Tribunal has held that the term draft order has been recognized as and is actually different in ambit from the term ‗assessment order’. The Tribunal has not appreciated that the draft assessment Page | 21 order is proposed order of assessment (refer section 144C(1)) and does not have any independent existence / locus in law. The same is not accompanied by notice of demand and is not enforceable; the same is not appealable and cannot form the basis for initiation of penalty proceedings. In that view of the matter, the draft order of assessment can be equated with the assessment completed in pursuance of the directions of the DRP under section 143(3) read with section 144C(13) of the Act.

2. The conclusion of the Tribunal that there is no time limit for passing of the draft assessment order under the scheme of section 144C and the same can be passed within a reasonable time, is clearly flawed. Keeping in view the legislative intent in progressively reducing the limitation for passing the assessment order so as to expedite the dispute resolution process and impart certainty and finality to assessment proceedings, the finding of the Tribunal is clearly contrary to law.

3. Further the finding of the Tribunal that the limitation under section 153 is only retained with reference to passing of the order by the TPO is again contrary to the overall scheme of the Act. The passing of the order by the TPO is the first step; subsequent to receipt of the order by the TPO, the AO passes the draft assessment order which is forwarded to the assessee. Once the assessee files objections to the DRP against the variations proposed in the draft assessment order, the DRP disposes off the same; the AO thereafter completes the assessment in pursuance of the directions of the DRP. The assessment order so passed is the only assessment order in law. The Tribunal is, therefore, not correct in holding that limitation under section 153 has been retained only for the purpose of passing of the order by the TPO, which is the first step in the process of assessment of an eligible assessee.

For the aforesaid reasons, it is respectfully submitted that the decision in the case of Honda Trading Corporation (supra) being contrary to law is not required to be followed as a binding precedent.

IV. In the case of Envestnet Asset Management (India) Pvt. Ltd. : 53 taxmann.com 430 (Cochin) relied by the Ld. Departmental Representative, the facts were that after the Transfer Pricing assessment, directions of the Dispute Resolution Panel (DRP) were issued vide order dated 29-11-2013 and the final assessment order was passed on 28-03-2014. The assessing officer was however, not willing to disclose the date on which the order passed by the DRP was received by him. The assessee in that case, therefore, contended that the final assessment order dated 28-03-2014, passed by the assessing officer, was barred by limitation as the same was passed beyond the period of 30 days after the date on which the directions issued by the DRP were received by the assessing officer, as provided in sub-section (13) of section 144C of the Act.

Page | 22 The Hon’ble Tribunal in the aforesaid case was only concerned with the
issue relating to determination of the date on which the directions
passed by the DRP were received by the assessing officer so as to
examine whether the final assessment order was passed within 30
days of receipt of directions issued by the DRP as per section 144C(13)
of the Act. While allowing the appeal of the assessee, the Hon’ble
Tribunal made a passing observation that ―………… even though the
period of limitation provided in 3rd proviso to section 153(1) expired on
31.3.2013, Section 144C(13) gives extension of further period of one
month from the date of receipt of direction from the DRP. …. ….‖.

It is respectfully submitted therefore that the aforesaid observation
cannot be construed as the ratio of the said decision and therefore,
cannot be considered to be a binding precedent. In the aforesaid case,
the controversy related to determination of the date on which direction
passed by the DRP was received by the AO so as to determine whether
the assessment order was passed by the AO within 30 days of receipt
of directions of the DRP. It was not the case of the assessee that
section 144C had the effect of overriding the overall limitation contained
in section 153 for passing the assessment order under section 143(3)
read with section 144C(13) of the Act, as is being canvassed in the
present case. The passing observation made by the Hon’ble bench to
the effect that section 144C(13) of the Act gives extension of further
period of one month, in addition to the limitation under section 153 of
the Act cannot, therefore, be said to be deciding the issue in dispute in
the present appeal, having regard to the arguments canvassed by the
present appellant before the Hon’ble bench.

It is settled law that it is improper to read a part of a judgment de hors
the context in which the judgment is rendered and the controversy in
dispute. Reliance is placed in this regard on the decision of the Hon’ble
Supreme Court in the case of CIT vs Sun Engineering Works Pvt. Ltd.
198 ITR 297, wherein the Hon’ble apex Court held as under (pg 320):
―Such an interpretation would be reading that judgment totally out of context in which the questions arose for decision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete ‘law’ declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings.‖ Page | 23 In view of the aforesaid, it is respectfully submitted that the order dated 30.01.2014passed under sections 143(3) / 144C(13) of the Act is clearly barred by limitation and, therefore, is unlawful and is liable to be quashed.

10. We have carefully considered the rival contentions and perused the orders of the lower authorities as well as the time lines which are under challenge before us. We do not have any hesitation in holding that the issues argued by the ld AR are squarely covered against the assessee by the decision of coordinate bench in ITA No. 1132/Del/2015 . The above order of the coordinate bench has clearly covers from para No. 5.22 onwards that in such cases the passing of the final assessment order pursuant to the order of the ld TPO as contained in section 144C(4) and (13), the time limit given u/s 153 has no relation whatsoever with the passing of the draft order, which should be passed within a reasonable time and the time limit given u/s 153 of the Act is relevant for the determination of time available with the TPO for passing order u/s 92CA(3). The facts before the coordinate bench was that the assessment order u/s 143(3) was passed on 29.01.2015 which is well within the period of one month in which the direction was received from the ld DRP on 24.12.2014, thus, the final order passed by the ld AO is within the time prescribed u/s 144C(13). As the draft order was also passed within a reasonable time same is also not barred by limitation. Against this decision no further appeal is filed by the Assessee. However, the ld AR has given a detail rebuttal to the submission of the revenue.
11. The first argument of the ld AR was that argument of the ld CIT DR that DRP proceedings are substitution of the appellant proceedings, thus, direction of the ld DRP like an appeal order therefore, provision of section 153 of the Act does not apply. The ld Authorized Representative referred to the decision of the Hon’ble Bombay High Court in 361 ITR 531 where it is held that DRP proceedings are not appellate proceedings. The Hon’ble Bombay High Court has held that the process before the ld DRP Panel is continuation of assessment proceedings as only thereafter would a final appealable assessment order be passed. However, the Hon’ble High Court further held that process before the ld DRP is a correcting mechanism in the nature of a second look at the proposed assessment order by high functionaries of the revenue keeping in mind the interest of the Assessee.

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12. The ld Authorized Representative further stated that as the coordinate bench has held that the draft order is actually different in ambit from the assessment order and thus it is not appreciated that the draft assessment order is a proposed order of assessment and does not have any independent existence in law. It is not accompanied by notice of demand, not appealable and cannot be the basis of initiation of penalty. He therefore, submitted that draft order of assessment cannot be equated with the assessment completed in pursuance of direction of DRP u/s 143(3) read with section 144C(13) of the Act. The argument of the ld AR though looks attractive but on careful examination of the same we are not impressed. The provisions of the income tax act 1961 sets out a special scheme for the assessment of an entity engaged in international transaction under Chapter X of the income tax act in terms of section 144C (1) to section 144C (14) of the income tax act. Therefore it is apparent that it is not an assessment scheme as applicable to other assesses. It is a scheme of assessment in respect of matters that included the transfer pricing adjustment. According to the provisions of section 144C (1) and order of the draft assessment proposing a variation to the income or loss as returned by the assessee is to be forwarded to the assessee by the assessing officer. On receipt of that order assessee is given 2 options to be exercised within 30 days of the receipt of the draft order either to accept the draft order and intimate the assessing officer accordingly or to file objections to the proposed variations with the dispute resolution panel and the assessing officer. If the assessee exercised an option to accept the draft order nothing else is required to be done except to complete the assessment on the basis of the draft order. Such order i.e. the draft order becomes the final order when acceptances received or the period for filing of the objection expires. If the objections are filed by the assessee the dispute resolution panel issue directions as it thinks fit and enabling the assessing officer to complete and issue the order of final assessment. Provisions of subsection 6, 7, 8 and 9 of section 144C sets out the procedure to be followed by the dispute resolution panel in issue of the direction. The section further provides that every direction issued by the dispute resolution panel shall be binding on the assessing officer. Thus it seen that AO cannot tinker or apply anything further than what was Page | 25 mentioned in the draft assessment order except what is directed by the learned dispute resolution panel. The provisions of principles of natural justice are ingrained in the provisions of section 144C of the act. It further says a time limit of 9 months from the end of the month when the draft order is forwarded to the assessee for passing of issue of any directions. Upon receipt of the direction the AO shall pass an order of final assessment which is in conformity with the direction of the dispute resolution panel within one month from the end of the month in which the directions are received. There is no further provision of granting any opportunity to the assessee of further hearing. Thus the above provisions are a self-contained code. In this code, the role of the assessing officer ends the movement, the objections are filed by the assessee or draft order is accepted by the assessee. Therefore, the learned assessing officer cannot make any upward adjustment to the income of the assessee after passing of the draft assessment order. He also cannot initiate any further penalties which are attached to the assessment order if same are not initiated in the draft order. The rights of the variation to the income of the assessee are solely rest with the dispute resolution panel. Therefore the dispute resolution panel has a correcting power to the draft assessment order. AO does not have any power to do so. Therefore it is apparent that on the plain reading of the above provisions for all practical purposes the role of the assessing officer comes to an and the movement he passes the draft order. He is only authorized to pass the final assessment order which is according to the directions of the learned dispute resolution panel. The above provisions also contained the separate time limits and it has its own timelines which binds the revenue as well as the assessee. The honourable Madras High Court in 398 ITR 645 (2017) CIT vs Sanmina SCI India private limited in para number 7 has held that it is a self-contained code in itself. Thus , the provisions contained therein only determine the timelines of the passing of such order and not as provided u/s 153 of the act. Thus this argument of the assessee deserves to be rejected.
13. Further according to the provisions of section 253 of The act pertaining to appeals to the tribunal, clause (d) of subsection 1 also separately carves out the appealable order as order passed by the assessing officer under Page | 26 subsection 3 of section 143 of section 147 of section 153A or section 153C in pursuance of the directions of the dispute resolution panel. Further, it may also be possible that in certain circumstances the provisions of section 263 of the income tax act also do not apply to orders passed under directions of the dispute resolution panel. Thus law has seen the assessment passed in pursuance of direction u/s 144C of the act different from the regular assessment as envisaged u/s 153 of the act.
14. The further argument of the learned authorized representative is that there is no time limit for passing of the draft assessment order under the scheme of section 144C and then same can be passed within a reasonable time is flawed. The argument advanced is that legislative intent is to progressively reduce the limitations for passing the assessment order to expedite the dispute resolution process and impart certainty & finality to assessment proceedings. As we have already held that it is a complete code in itself therefore it in fact it supports the intention of the legislature in providing expeditious resolution of the dispute between the taxpayer and tax gatherer. Thus this argument deserves to be rejected.
15. No doubt, the final order of assessment is passed pursuant to the direction of the learned dispute resolution panel but it cannot be said that that limitations provided under section 153 applies to it. As we have already held that it is a complete code in itself as held by the honourable Madras High Court, which also provides for specific limitations ,if a particular procedure adopted by the assessee, then timelines provided therein will only apply.
16. Further, over and above the above decision of the Honda Trading Corp, Japan vs DCIT in ITA number 1132/del/2015 dated 15/9/2015 we also draw support from decision of the coordinate bench in case of Volvo India private limited vs ACIT IT (TP) A no. 1537/bang/2012 dated 8/5/2019 and Acer India Pvt Ltd V DCIT 502/bang/ 2017 dated 10/5/2019 which has also taken similar view against the assessee holding that if the assessment orders are passed within the timelines provided under section 144C of the income tax act, irrespective of the timelines prescribed under section 153 of the income tax act, they are passed within the timelines provided under the law and are not time barred.

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17. In view of the above reasons we dismiss the additional ground raised by the assessee. We direct the registry to post the hearing of the appeal on other grounds before the regular bench in due course. Order pronounced in the open court on 10/10/2019.

-Sd/- -Sd/- (KULDIP SINGH) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:10/10/2019
A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Page | 28

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