TMI Blog2020 (10) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that the amendment being substantive in nature would apply prospectively from assessment year 2011-12 onwards. The facts of the case, provisions of Section 153(1) of the Act (as they were applicable in AY 2009-10) and the ratio of judgement rendered in the case of M/s. Vedanta Limited (supra) makes it explicitly lucid that the provisions of section 144C would not apply in the impugned assessment year and hence, the time period for passing the assessment order would not get enlarged. AO was under obligation to pass the assessment order within the time specified under 3rd proviso to Sec. 153(1) of the Act i.e. on or before 31/03/2013. Since the order has been passed beyond the period of limitation the same is null and void. The assessee succeeds on the legal ground raised as additional ground of appeal. The assessment order is quashed and the appeal of assessee is allowed. - ITA NO. 1949/MUM/2015 - - - Dated:- 30-9-2020 - SHRI VIKAS AWASTHY , JUDICIAL MEMBER And SHRI MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER Appellant by : Shri Nitesh Joshi Respondent by : Shri A. Mohan ORDER PER VIKAS AWASTHY, JM This appeal by the assessee is directed against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast track dispute resolution. The introduction of section 144C was not merely procedural change but a substantive change providing an option to the assessee to take the advantage of fast track disposal of the grievance by Dispute Resolution Panel (DRP). The Hon'ble Madras High Court in the case of M/s. Vedanta Ltd.(supra) has held that the provisions of section 144C inserted by Finance (No.2) Act 2009 are applicable from assessment year 2011-12 onwards only and they would not apply to assessment year 2009-10 or to earlier assessment years. 2.2. The ld. Authorized Representative of the assessee filed written submissions to support his arguments. The same are reproduced herein below: The appellant had filed its return of income for A.Y 2009-10 on 29.09.2009. Its case was referred to Transfer Pricing Officer ( TPO ) to determine the arm's length price of international transaction entered into with its AE. The Learned TPO has passed order u/s 92CA on 09.01.2013 making an upward adjustment. Thereafter Ld. AO has passed draft assessment order on 26.03.2013. (copy enclosed at page no 6 to 8) Appellant did not file any reply in respect of the said dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR, it is quite evident that the assessee has challenged validity of the assessment order dated 13/05/2013 on the ground that it has been passed beyond the period of limitation as prescribed under 3rd proviso to section 153 (1) of the Act as was applicable to assessment year 2009-10. The relevant extract of the provisions (as applicable to AY 2009-10) reads as under: - Time limit for completion of assessments and reassessments. 153. [(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 (b) one year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under sub-section (4) or sub- section (5) of section 139, whichever is later :] ******** ******** 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e salient features of the alternate dispute resolution mechanism are as under:- ..... 45.5 Applicability - These amendments have been made applicable with effect from 1st October, 2009, and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958(E) dated 20th November, 2009.' 20. The Dispute Resolution Panel (DRP) was constituted as an alternate dispute resolution mechanism, to provide a specialized forum for expeditious disposal of disputes. An assessment involving transfer pricing disputes, is thus taken out of regular track and a fast track dispute mechanism evolved before a panel of three Senior Commissioners. The Explanatory Circular makes it clear that the scheme of assessment under Section 144C will apply in relation to A.Y.2010-11 and subsequent assessment years only. No doubt, this Court is not bound by the Explanatory Circular, though necessary weightage will have to be accorded to the explanation set forth by the Board, immediate and proximate to the insertion of the provision itself, in order to understand the applicability, scope and width of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment or change brought about by Section 144C is merely procedural or substantive would stand answered by the narration of the Scheme of assessment, as I have noticed above. No doubt, Section 144C prescribes a new procedure for assessment. But can it be called a mere shift in procedure? I believe not as that would be an oversimplification of the matter. The procedure inserted is substantive, in that it offers a new scheme of assessment to a distinct class of assessees, that is, those assessee whose assessments involve the issues of Transfer Pricing and determination of Arms Length Price. The provisions of Section 144C do not, thus merely prescribe procedure but a substantive exercise in assessment. 25. The Supreme Court in the case of R. Sharadamma (supra) after considering an earlier judgment of the Supreme Court in the case of Commissioner of Income Tax V. Dhadi Sahu (199 ITR 610), states as follows: '5. The assessee filed appeals before the Tribunal contending that by virtue of the amendment effect by Taxation Laws (Amendment) Act, 1970, the Inspecting Assistant Commissioner lost jurisdiction to proceed with the said penalty proceedings with effect from April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right in the matter of procedural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue inspite of the change of jurisdiction of the different Tribunals or forums.' 26. Thus, where there is a change in the form of assessment itself, such change is not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured to the parties by virtue of the introduction of Section 144C, that, bearing in mind the settled position that the law applicable on the first day of assessment year be reckoned as the applicable law for assessment for that year, leads one to the inescapable conclusion that the provisions of Section 144C can be held to be applicable only prospectively, from AY 2011-12 only. [Emphasised by us] 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o apply from 1st October, 2009 The right that has enured to the parties in 2009 cannot be modified by a Clarification issued by the Board, three years thereafter. It appears to me quite possible that the long silence of the Board followed by the sudden Clarification issued in 2013 might itself be inspired by challenges similar to the one before me now, perhaps, even the present one. Though the Clarificatory Circular has not been challenged, in the light of the detailed discussion as above, I am of the view that this Circular will not bind the Assessing Officer, particularly when it does not lay down the correct position of law. [Emphasised by us] 8. The facts of the case, provisions of Section 153(1) of the Act (as they were applicable in AY 2009-10) and the ratio of judgement rendered in the case of M/s. Vedanta Limited (supra) makes it explicitly lucid that the provisions of section 144C would not apply in the impugned assessment year and hence, the time period for passing the assessment order would not get enlarged. Ergo, the Assessing Officer was under obligation to pass the assessment order within the time specified under 3rd proviso to Sec. 153(1) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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