A.T. Kearney Ltd.- India Branch Office, Gurgaon v. ADIT, New Delhi

ITA 4405/DEL/2011 | 2003-2004
Pronouncement Date: 25-05-2021 | Result: Allowed

Appeal Details

RSA Number 440520114 RSA 2011
Assessee PAN AADCA0861H
Bench Delhi
Appeal Number ITA 4405/DEL/2011
Duration Of Justice 9 year(s) 7 month(s) 21 day(s)
Appellant A.T. Kearney Ltd.- India Branch Office, Gurgaon
Respondent ADIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-05-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 25-05-2021
Date Of Final Hearing 15-06-2017
Next Hearing Date 15-06-2017
First Hearing Date 15-06-2017
Assessment Year 2003-2004
Appeal Filed On 04-10-2011
Judgment Text
I.T.A.NO.4405/DEL/2011/A.Y.2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER AND SHRI KULDIP SINGH JUDICIAL MEMBER . . /. I.T.A NO.4405/DEL/2011 / ASSESSMENT YEAR:2003-04 A.T. KEARNEY LTD. INDIA BRANCH OFFICE 14 TH FLOOR TOWER D GLOBAL BUSINESS PARK GURGAON. VS. ADIT CIRCLE 1(1) INTERNATIONAL TAXATION NEW DELHI. PAN NO. AADCA0861H APPELLANT / RESPONDENT /ASSESSEE BY SH. AJAY VOHRA SR. ADV. /REVENUE BY SH. PRABHA KANT CIT DR / DATE OF HEARING: 2 0.05 .20 2 1 /PRONOUNCEMENT ON 2 5 .05 .20 2 1 /O R D E R PER N.K. BILLAIYA A.M. 1. WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE VA LIDITY OF THE ASSESSMENT ORDER DATED 19.08.2011 FRAMED U/S 144C(13)/143(3)/254 OF THE ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE ORDER PASSED BY THE LD. ASSISTANT DIRECTOR OF I NCOME-TAX (HEREINAFTER REFERRED TO AS THE LD. ASSESSING OFFI CER) IN PURSUANCE TO THE DIRECTIONS OF THE HONBLE DISPUTE RESOLUTION PANEL 1 (HEREINAFTER REFERRED TO AS T HE LD. I.T.A.NO.4405/DEL/2011/A.Y.2003-04 2 DRP) UNDER SECTION 143(3) READ WITH SECTION 144C O F THE INCOME TAX ACT 1961 (ACT) IS BAD IN LAW AND VOI D AB- INITIO. 2. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW THE HONBLE DRP HAS ERRED IN CONFIRMING THE AD DITIONS PROPOSED BY THE LD. ASSESSING OFFICER DETERMINING THE TAXABLE INCOME OF THE APPELLANT FOR THE SUBJECT ASS ESSMENT YEAR AT RS. 197 829 055 AS AGAINST LOSS OF RS. 5 03 0 030 RETURNED IN THE RETURN OF INCOME. 3. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. ASSESSING OFFICER/HONBLE DRP HAS ERRED IN HOLDING THAT THE INCOME EARNED BY THE APPELLANT QUALIFIES A S (FEES FOR TECHNICAL SERVICES) AS PER ARTICLE 13 OF INDIA UK TAX TREATY AND IS TAXABLE ON PRESUMPTIVE BASIS UNDER SE CTION 44D READ WITH SECTION 115A OF ACT THEREBY NOT ACCEPTIN G THE NET INCOME RETURNED BY THE APPELLANT IN ACCORDANC E WITH THE RELEVANT PROVISIONS OF THE ACT AND INDIA UK T AX TREATY. 4. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. ASSESSING OFFICER/HONBLE DRP HAS ERRED IN NOT FOLLOWING THE BINDING RULINGS OF THE HONBLE COURTS AND NOTIFICATIONS/CIRCULARS ISSUED BY THE CBDT WHILE DE TERMINING THE ASSESSED INCOME OF THE APPELLANT IN INDIA. 5. WITHOUT PREJUDICE BASED ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW THE LD. ASSESSING OFFICER/HON BLE DRP HAS ERRED IN NOT ALLOWING SET OFF OF BROUGHT FORWAR D BUSINESS LOSS AND UNABSORBED DEPRECIATION WHILE COMPUTING TA XABLE INCOME FOR THE SUBJECT ASSESSMENT YEAR. 5.1BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. ASSESSING OFFICER HAS ERRED IN NOT ALLOWING SET OFF OF BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPREC IATION WHILE COMPUTING TAXABLE INCOME FOR THE SUBJECT ASSE SSMENT I.T.A.NO.4405/DEL/2011/A.Y.2003-04 3 YEAR DESPITE THE FACT THAT EARLIER THE BENEFIT OF S ET OFF OF LOSSES/UNABSORBED DEPRECIATION HAD BEEN ALLOWED BY THE LD. ASSESSING OFFICER BY WAY OF RECTIFICATION OF ORIGIN AL ASSESSMENT ORDER DATED MARCH 23 2006. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. ASSESSING OFFICER/HONBLE DRP HAS ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. ASSESSING OFFICER/HONBLE DRP HAS ERRED IN LEVYING INTEREST U/S 234D OF THE ACT. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. ASSESSING OFFICER HAS ERRED IN WITHDRAWING INTEREST U/S 244A OF THE ACT. 9. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. ASSESSING OFFICER HAS ERRED IN PROPOSING TO INITIATE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE GROUNDS ABOVE ARE WITHOUT PREJUDICE TO EACH OTH ER. THE APPELLANT CRAVES LEAVE TO ADD AMEND VARY OMI T OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL A T ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. VIDE APPLICATION DATED 12.01.2021 THE ASSESSEE HAS REQUESTED THE BENCH FOR THE ADMISSION OF ADDITIONAL GROUND OF APPEAL UNDER RULE 11 OF THE ITAT RULES 1963. THE ADDITIO NAL GROUND RAISED READS AS UNDER: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE ASSESSMENT COMPLETED UNDER SECTION 144C(13)/143 (3) OF THE INCOME TAX ACT 1961 IS BAD IN LAW VOID AB INI TIO AND BARRED BY LIMITATION. I.T.A.NO.4405/DEL/2011/A.Y.2003-04 4 4. WE HAVE CAREFULLY PERUSED THE AFOREMENTIONED ADDITI ONAL GROUND OF APPEAL. BY WAY OF THIS ADDITIONAL GROUND THE ASSESSEE SEEKS TO CHALLENGE THE VALIDITY AND LEGALITY OF THE IMPUGNED ASSESSMENT ON THE GROUND THAT THE PROVISIONS OF SEC TION 144C OF THE ACT INTRODUCED BY THE FINANCE (NO. 2) ACT 2009 W.E.F. 01.04.2009 HAS NO APPLICATION FOR THE IMPUGNED ASSE SSMENT YEAR. 5. WE ARE OF THE CONSIDERED VIEW THAT THE ADMISSION OF THE AFOREMENTIONED ADDITIONAL GROUND DOES NOT REQUIRE V ERIFICATION OF ANY NEW FACT. THE SECTION DATE OF THE ASSESSME NT ORDER ARE VERY MUCH THERE IN THE FACE OF THE ASSESSMENT ORDER ITSELF THEREFORE THE ADDITIONAL GROUND RAISED BY THE ASSE SSEE IS ADMITTED FOR ADJUDICATION. 6. SINCE THE ADDITIONAL GROUND GOES TO THE ROOT OF THE MATTER WE PROCEED TO DECIDE IT FIRST. 7. FACTS ON RECORD SHOW THAT THE ORIGINAL ASSESSMENT F OR THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE AO VIDE OR DER DATED 28.03.2006 FRAMED U/S 143(3) OF THE ACT. THE SAID ASSESSMENT ORDER WAS ASSAILED IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE MATTER TRAVELLED UPTO THE TRIBUNA L AND THE TRIBUNAL VIDE ORDER DATED 31.08.2009 IN ITA NO. 259 9/DEL/2008 SET ASIDE THE ASSESSMENT FOR DENOVO CONSIDERATION BY THE AO. IN I.T.A.NO.4405/DEL/2011/A.Y.2003-04 5 THE PROCEEDINGS TO GIVE EFFECT TO THE ORDER OF THE TRIBUNAL THE ASSESSING OFFICER PASSED DRAFT ASSESSMENT ORDER ON 30.12.2010 THE DRP ISSUED INSTRUCTIONS ON 10.08.2011 AND CULMI NATING IN FINAL ASSESSMENT ORDER DATED 19.08.2011 WHICH IS I MPUGNED IN THE PRESENT APPEAL. 8. THE HONBLE MADRAS HIGH COURT IN THE CASE OF VEDANT A LIMITED IN WRIT PETITION NO. 1729/2011 HAS CATEGORICALLY HE LD THAT SINCE THE PROVISIONS OF SECTION 144C OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE (NO. 2) ACT 2009 W.E.F. 01.04.2009 TH E SAID AMENDMENT IS APPLICABLE FROM AY 2011-12 ONWARDS. T HEREFORE IN THE LIGHT OF THE DECISION OF THE HONBLE MADRAS HIGH COURT (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT THE DRA FT ASSESSMENT ORDER FRAMED BY THE AO IS NULL AND VOID. 9. A SIMILAR QUARREL WAS CONSIDERED BY THIS BENCH OF T HE TRIBUNAL IN THE CASE OF M/S TRAVELPORT L.P. USA IN ITA NOS. 649 9/DEL/2012 6500/DEL/2012 1480/DEL/2012 217/DEL/2014 AND 218/DEL/2014 VIDE ORDER DATED 09.11.2020. THE RELE VANT FINDINGS OF THE COORDINATE BENCH READ AS UNDER: FACTS ON RECORD SHOW THAT FOR AY 2007-08 DRAFT ASSESSMENT ORDER IS DATED DECEMBER 24 2009 AND FIN AL ASSESSMENT ORDER IS DATED 05.02.2010. FOR 2008-09 DRAFT ORDER IS DATED 24.12.2010 AND FINAL ORDER IS DATED 28.01.2011. FOR 2009-10 DRAFT ORDER IS DATED 19.12 .2011 AND FINAL ASSESSMENT ORDER IS DATED 30.01.2012. FOR AY 2010-11 I.T.A.NO.4405/DEL/2011/A.Y.2003-04 6 DRAFT ORDER IS DATED 15.03.2013 AND FINAL ORDER IS DATED 06.05.2013. IT CAN BE SEEN FROM THE ASSESSMENT ORDERS THAT THE ASSESSING OFFICER HAS FRAMED DRAFT ASSESSMENT ORDER AND THEREAFTER FINAL ASSESSMENT ORDERS WERE PASSED. PR OVISIONS OF SECTION 144C OF THE ACT WHICH RELATES TO REFEREN CE TO DISPUTE RESOLUTIONS PANEL WERE INSERTED VIDE FINANC E ACT [NO. 2]] ACT 2009 W.E.F. 01.04.2009. THE PROVISION S READ AS UNDER: THE ASSESSING OFFICER SHALL NOTWITHSTANDING ANYTH ING TO THE CONTRARY CONTAINED IN THIS ACT IN THE FIRST INSTANCE FORWARD A DRAFT OF THE PROPOSED ORDER OF ASSESSMENT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE DRAFT ORDER) TO THE ELIGIBLE ASSESSEE IF HE PRO POSES TO MAKE ON OR AFTER THE 1 ST DAY OF OCTOBER 2009 ANY VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSESSEE. THE AFORESAID SECTION 144C OF THE ACT CAN ONLY APP LY PROSPECTIVELY I.E. FROM AY 2011-12 AND IS NOT APPLI CABLE TO THE CAPTIONED ASSESSMENT YEARS. THE HONBLE HIGH C OURT OF MADRAS IN THE CASE OF M/S VEDANTA LIMITED VS. ACIT WRIT PETITION NO. 1729 OF 2011 HAS CATEGORICALLY HELD TH AT THE PROVISIONS OF SECTION 144C OF THE ACT CAN BE HELD T O BE APPLICABLE PROSPECTIVELY FROM AY 2011-12 ONLY. TH E RELEVANT FINDINGS READ AS UNDER: 26. THUS WHERE THERE IS A CHANGE IN THE FORM OF ASSESSMENT ITSELF SUCH CHANGE IS NOT A MERE DEVIAT ION IN PROCEDURE BUT A SUBSTANTIVE SHIFT IN THE MANNER OF FRAMING AN ASSESSMENT. A SUBSTANTIVE RIGHT HAS ENSURED TO THE PARTIES BY VIRTUE OF THE INTRODUCTIO N OF SECTION 144C THAT BEARING IN MIND THE SETTLED POS ITION I.T.A.NO.4405/DEL/2011/A.Y.2003-04 7 THAT THE LAW APPLICABLE ON THE FIRST DAY OF ASSESSM ENT YEAR BE RECKONED AS THE APPLICABLE LAW FOR ASSESSME NT FOR THAT YEAR LEADS ONE TO THE INESCAPABLE CONCLUS ION THAT THE PROVISIONS OF SECTION 144C CAN BE HELD TO BE APPLICABLE ONLY PROSPECTIVELY FROM AY 2011-12 ONLY . IN ALL THE AYS UNDER CHALLENGE ON THE PROPOSITION THAT THEY ARE BARRED BY LIMITATION THE ASSESSING OFFICE R HAS FRAMED DRAFT ASSESSMENT ORDER WHEN THE PROVISIONS W ERE NOT THERE IN THE STATUTE. THEREFORE THE PERIOD OF LIM ITATION AS PRESCRIBED U/S 153 OF THE ACT WERE APPLICABLE AND THEREFORE THE DATE OF FINAL ASSESSMENT ORDER MAKES THE ASSESSMENT BARRED BY LIMITATION. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF THE DECISION OF THE HONBLE MADRAS HIGH COURT (SUPRA) WE HAVE NO HESITATION IN HOLDING THAT THE ASSESSMENTS FOR A YS 2007- 08 TO 2010-11 ARE BARRED BY LIMITATION AND ACCORDIN GLY QUASHED. 10. THE LD. DR IN ADDITION TO HIS ORAL ARGUMENTS ALSO FILED A WRITTEN SUBMISSION CLAIMING THAT THE ADDITIONAL GRO UND TAKEN BY THE ASSESSEE OUGHT TO BE DISMISSED. IN HIS WRITTEN SUBMISSION THE LD. DR HAS STATED AS UNDER: SINGLE MEMBER JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF M/S VEDANTA LIMITED VS. ACIT WRIT PETITION NO. 1 729 OF 2011 IS NOT A GOOD LAW BECAUSE IT HAS BEEN PASSED I GNORING MADRAS HIGH COURT PREVIOUS DIVISION BENCH JUDGMENT IN THE CASE OF VIJAY TELEVISION PVT. LTD. VS. DRP 369 ITR 130. WHILE PASSING THE SAID ORDER THE HIGH COURT IGNORED A.P. HIGH COURT DIVISION BENCH JUDGMENT IN THE CASE OF ZUARI CEMENT LTD. VS. ACIT (DECISION DATED 21 ST FEBRUARY 2013 IN WP(C) I.T.A.NO.4405/DEL/2011/A.Y.2003-04 8 NO. 5557/2012). SLP FILED BY REVENUE AGAINST THIS ORDER WAS REJECTED BY S.C. IN CC NO. 16694/2013 ON 27 TH SEPTEMBER 2013. HENCE THE RATIO GIVEN IN ZAURI CEMENT LTD. HAS BECOME LAW OF THE LAND. THEREFORE THE MADRAS HIGH COURT JUDGMENT IN THE CASE OF VEDANTA LTD. HAS NO PRECEDE NCE VALUE. CONSEQUENTLY ITAT JUDGMENT IN THE CASE OF TRAVELPO RT L.P. USA ITA NO. 6499/DEL/2012 [AY 2006-07] ITA NO. 6500/DEL/2012 [AY 2007-08] ITA NO. 1480/DEL/2012 [ AY 2008-09] ITA NO. 217/DEL/2014 [AY 2009-10] IS ALSO NOT A GOOD LAW AND HAS NO PRECEDENCE VALUE SINCE IT HAS F OLLOWED MADRAS HIGH COURT IN THE CASE OF M/S VEDANTA LTD. M ORE SO WHILE PASSING THE ORDER THE TRIBUNAL HAS IGNORED BI NDING JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF E SPN STAR SPORTS MAURITUS 388 ITR 383 (DELHI.). IN ITS RECENT JUDGMENT DELIVERED ON 24/12/2020 I.E. AFTER THE JUDGMENT OF TRAVELPORT AND VEDANTA LTD. IN THE CASE OF PCIT VS. HEADSTRONG SERVICES INDIA PVT. LTD. IN ITA NO. 77/2019 (COPY ENCLOSED) (DATE OF ORDER 24/12/2020) HAS CATEGORICALLY HELD THAT ANY ORDER INVOLVING INTERNA TIONAL TRANSACTION AND ELIGIBLE ASSESSEE PASSED AFTER 1/10 /2009 WHICH HAS NOT BEEN PASSED AS PER SECTION 144C OF TH E IT ACT IRRESPECTIVE OF ASSESSMENT YEAR INVOLVED IS BAD IN LAW AND IS VOID AB-INITIO. THE HONBLE HC HAS IMPOSED COST OF RS. 10 000/- ON AO FOR NOT FOLLOWING PROVISIONS OF SECT ION 144C IN AN ORDER FOR AY 2007-08 WHEN THE ORDER WAS PASSE D 31/03/2014. IN THIS CASE ALSO ORIGINAL DRAFT ASSES SMENT ORDER WAS PASSED ON 31/10/2010 DRP CONFIRMED THE D RAFT ASSESSMENT ORDER. AO PASSED FINAL ORDER. THE ASSE SSEE CHALLENGED FINAL ASSESSMENT ORDER IN ITAT DELHI. I TAT DELHI SET ASIDE THE FINAL ASSESSMENT ORDER AND RESTORED T HE MATTER I.T.A.NO.4405/DEL/2011/A.Y.2003-04 9 TO AO TO PASS FRESH ASSESSMENT ORDER. IN THE SECON D INNINGS THE AO DID NOT FOLLOW THE PROVISIONS OF SECTION 144 C HE PASSED THE FINAL ORDER DATED 31/03/2014 WITHOUT PAS SING THE DRAFT ASSESSMENT ORDER. THE ASSESSEE FILED APPEAL WITH CIT(A). THE CIT(A) PARTIALLY ALLOWED THE APPEAL. AGAINST THE CIT(A) ORDER THE ASSESSEE AGAIN FILED APPEAL IN ITAT DELHI. ITAT DELHI VIDE ITS ORDER DATED 30/09/2015 QUASHED THE ASSESSMENT ORDER DATED 31/03/2014 HOLDING IT TO BE IN VIOLATION OF SECTION 144C. AGAINST THE ITAT ORDER REVENUE FILED APPEAL BEFORE DELHI HIGH COURT. THE FACTS OF THE PRESENT CASE ARE EXACTLY THE SAME AS THAT OF HEADSTRONG SERVICES INDIA PVT. LTD. IN ITA NO. 77/2 019 (DELHI HC). ASSESSMENT YEAR HERE IS 2003-04 WHERE AS IN HEADSTRONG CASE IT WAS 2007-08 WHICH WAS PRIOR TO INTRODUCTION OF SECTION 144C (W.E.F. 1/4/2009). HE RE ALSO THE ORIGINAL ORDER DATED 23/3/2006 WAS CHALLENGED B EFORE CIT(A). CIT(A) ORDER WAS CHALLENGED BEFORE ITAT D ELHI. ITAT DELHI VIDE ITS ORDER DATED 31/08/2009 SET ASI DE THE ASSTT. ORDER WITH A DIRECTION TO PASS A FRESH ORDER AFTER CONSIDERING THE ADDITIONAL EVIDENCE FILED BY THE AS SESSEE. HERE AO PASSED DRAFT ASSESSMENT ORDER AS PER SECTIO N 144C ON 30.12.2010 AND DRP PASSED ORDER ON 10/08/2011 F INAL ORDER WAS PASSED BY THE AO ON 19/8/2011. THE ASSES SEE HAS FILED THIS APPEAL AGAINST THIS ORDER. THUS THE FACTS OF THE PRESENT CASE ARE EXACTLY SAM E AS THAT IN THE CASE OF HEADSTRONG SERVICES INDIA PVT. LTD. JUDGMENT OF DELHI HIGH COURT IN THE CASE OF PCIT VS . HEADSTRONG SERVICES INDIA PVT. LTD. IN ITA NO. 77/2 019 IS BINDING. IN VIEW OF THIS THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE OUGHT TO BE DISMISSED. I.T.A.NO.4405/DEL/2011/A.Y.2003-04 10 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE SUB MISSIONS OF THE DR AND THE JUDICIAL DECISIONS REFERRED BY HIM I N HIS WRITTEN SUBMISSION. WE FIND THAT NONE OF THE DECISION RELI ED UPON BY THE DR HAS CONSIDERED THE PRESENT QUARREL AND IN FA CT ALL THE DECISIONS HAVE ANSWERED THE QUESTIONS WHICH WERE PO SED BEFORE THE HONBLE HIGH COURT AND NONE OF SUCH QUARREL IS SIMILAR TO THE PRESENT QUARREL. 12. THE PRINCIPLE OF LAW LAID DOWN IN THE JUDGMENTS REL IED UPON BY THE DR IS TO THE EFFECT THAT FAILURE TO PASS DRAFT ASSTT. ORDER U/S 144C(1) OF THE ACT WHEREEVER MANDATED IN LAW WOUL D RESULT IN RENDERING THE FINAL ASSESSMENT ORDER WITHOUT JURISD ICTION TO THE NULL AND VOID AND ENFORCEABLE. 13. WE FIND THAT THE ONLY DECISION WHICH IS DIRECTLY ON THE POINT OF DISPUTE BEFORE US IS THAT OF THE HONBLE MADRAS HIG H COURT IN THE CASE OF VEDANTA LTD. (SUPRA) WHERE THERE WAS A DIRECT CHALLENGE TO THE APPLICABILITY OF SECTION 144C OF T HE ACT TO ASSESSMENT PROCEEDINGS FOR AY 2007-08 ON THE GROUND THAT THE SAID PROVISION WOULD APPLY PROSPECTIVELY VIZ. FRO M AY 2011-12. THE HONBLE MADRAS HIGH COURT HAD ACCEPTED THE SUBM ISSIONS OF THE ASSESSEE HAVING REGARD TO CIRCULAR NO. 5/2010 D ATED 3 RD JUNE 2020 ISSUED BY THE BOARD CLARIFYING THAT THE SUBSTANTIVE PROCEDURE OF ASSESSMENT ENSHRINED IN SECTION 144C O F THE ACT I.T.A.NO.4405/DEL/2011/A.Y.2003-04 11 WOULD APPLY FROM AY 2011-12 ONWARDS AND THE RATIO L AID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KARIMTH ARUVI TEA ESTATE LTD. VS. STATE OF KERALA (60 ITR 262) TO THE EFFECT THAT ASSESSMENT HAS TO BE MADE AS PER THE LAW IN FORCE O N THE FIRST DATE OF THE ASSESSMENT YEAR. THE DECISIONS RELIED UPON BY THE REVENUE INCLUDING THE DECISION FROM THE DIVISION B ENCH OF THE MADRAS HIGH COURT DO NOT SPECIFICALLY DEAL WITH TH E AFORESAID CONTROVERSY SINCE THE SAME HAVING NOT BEEN CANVASSE D BEFORE THE HONBLE COURT THE HONBLE COURT DID NOT HAVE A NY OCCASION TO DEAL WITH THE SAME. 14. IN OUR CONSIDERED VIEW THE DECISION OF THE COURT IS AN AUTHORITY FOR WHAT IT DECIDES HAVING REGARD TO THE FACTS AND CONTROVERSY PROJECTED BEFORE THE COURT AS IS EVIDENT FROM THE F OLLOWING EXTRACT FROM THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF SUN ENGINEERING WORKS (P) LTD. 198 ITR 297 AT PAGE 320: . . 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 D ECLARED BY THIS COURT. THE JUDGMENT MUST BE READ AS A WHOL E AND THE OBSERVATIONS FROM THE JUDGMENT HAVE TO BE CONSI DERED IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THI S COURT. A DECISION OF THIS COURT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE IN WHICH IT IS RENDERED AND WH ILE APPLYING THE DECISION TO A LATER CASE THE COURTS M UST I.T.A.NO.4405/DEL/2011/A.Y.2003-04 12 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 SUP PORT THEIR REASONING. .. 15. THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF VIJAY TELEVISION PVT. LTD. 369 ITR 130 RELIED UPON BY THE DR HAS DEALT WITH THE QUESTION OF VALIDITY OF CORRIGENDUM ISSUED SUBSEQUENTLY WHETHER THE SAME COULD CURE THE INVAL IDITY OF THE ASSESSMENT? THUS THE ISSUE DECIDED BY THE DIVISIO N BENCH OF THE HONBLE MADRAS HIGH COURT IS DIFFERENT THAN THE CONTROVERSY DECIDED IN THE CASE OF VEDANTA LTD. (SUPRA). 16. IN THE LIGHT OF THE ABOVE JUDICIAL BACKDROP THE FA CTS OF THE PRESENT CASE ARE THAT THE ORIGINAL ASSESSMENT WAS F RAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 28.03.2006 AND W HEN THE DISPUTE TRAVELLED UP TO THE TRIBUNAL THE TRIBUNAL S ET ASIDE THE MATTER BACK TO THE FILES OF THE AO TO FRAME DENOVO ASSESSMENT. WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL TH E AO HAS ERRONEOUSLY FRAMED A DRAFT ASSESSMENT ORDER FOLLOWI NG THE PROVISIONS OF SECTION 144C(1) OF THE ACT WHICH WAS CLEARLY NOT APPLICABLE ON THE FACTS OF THE CASE IN HAND. AFTER RECEIVING THE DIRECTIONS FROM THE DRP THE FINAL ASSESSMENT ORDER WAS FRAMED ON 19.08.2011 WHICH IS DEFINITELY BARRED BY LIMITAT ION IN THE I.T.A.NO.4405/DEL/2011/A.Y.2003-04 13 LIGHT OF THE PROVISIONS OF SECTION 153(2A) AS APPLI CABLE DURING THE YEAR UNDER CONSIDERATION AND THE SAME READS AS UNDER: (2A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SEC TIONS (1) (1A) (1B) AND (2) IN RELATION TO THE ASSESSME NT YEAR COMMENCING ON THE 1 ST DAY OF APRIL 1971 AND ANY SUBSEQUENT ASSESSMENT YEAR AN ORDER OF FRESH ASSES SMENT IN PURSUANCE OF AN ORDER U/S 150 OR SECTION 254 OR SEC TION 263 OR SECTION 264 SETTING ASIDE OR CANCELLING AN ASSE SSMENT MAY BE MADE AT ANY TIME BEFORE THE EXPIRY OF ONE YE AR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER U/ S 250 OR SECTION 254 IS RECEIVED BY THE PRINCIPAL CHIEF COMM ISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSION OR COMMISSIONER OR AS THE CASE MAY BE THE ORDER U/S 263 OR SECTION 264 OR SECTION 264 IS PASSED BY THE PR. CHI EF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER. 17. IN THE LIGHT OF THE JUDICIAL DISCUSSION MENTIONED ELSEWHERE ON THE FACTS OF THE CASE DISCUSSED HEREINABOVE WE HAV E NO HESITATION IN HOLDING THAT THE ASSESSMENT ORDER DAT ED 19.08.2011 IS BARRED BY LIMITATION. 18. BEFORE PARTING THE DR HAS PLACED STRONG RELIANCE O N THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF HEADSTRONG SERVICE INDIA P. LTD. IN ITA NO. 77/2019 ORDER DATED 24.12.2020. THIS DECISION IS NOT APPLICABLE TO THE DISPUTE UNDER CONSIDERATION BECAUSE IN THAT CASE THE REVENUE HAD CONTENDED THAT THE PROCEDURE IN SECTION 144C OF THE ACT WOULD NOT APPLY IN I.T.A.NO.4405/DEL/2011/A.Y.2003-04 14 THE REMAND PROCEEDINGS CONSIDERING THAT SUB SECTION (1) OF THE SAID SECTION USES THE EXPRESSION IN THE FIRST INST ANCE. REPELLING THE AFORESAID ARGUMENT ON THE SIDE OF THE REVENUE THE HONBLE HIGH COURT OBSERVED THAT SINCE THE ORIG INAL ASSESSMENT IN THAT CASE HAD BEEN COMPLETED BY FOLLO WING THE PROCEDURE PRESCRIBED U/S 144C OF THE ACT IN THE RE MAND PROCEEDINGS THE AO COULD NOT BY PASS THE PROVISION S OF THE SAID SECTION. KIND ATTENTION IN THIS CONNECTION IS INVI TED TO THE OBSERVATIONS IN PARAS 13 14 AND 15 OF THE SAID JUD GMENT TO THE FOLLOWING EFFECT: 13. THE ITAT WHILE REMANDING THE MATTER OF TRANSF ER PRICING ADJUSTMENT TO THE AO VIDE ORDER DATED 17 TH JULY 2012 HAD NOT ONLY RESTORED THE MATTER TO THE FIL E OF THE AO FOR FOLLOWING PROPER PROCEDURE BUT ALSO TO DEC IDE THE MATTER DENOVO. 14. THIS COURT IS OF THE VIEW THAT ONCE THE ITAT D IRECTED THE ASSESSING OFFICER TO DECIDE THE MATTER DE NOVO IT MEANT THAT A NEW HEARING OF THE MATTER HAD TO BE CONDUCTE D AS IF THE ORIGINAL HEARING HAD NOT TAKEN PLACE. 15. CONSEQUENTLY THE ASSESSING OFFICER HAD TO DEC IDE THE MATTER IN ACCORDANCE WITH THE ELABORATE PROCEDURE MENTIONED IN SECTION 144C AND NOT DEHORS IT. FURTHER ATTENTION IS ALSO INVITED TO THE SPECIFIC O BSERVATIONS IN PARAS 19 TO 20 OF THE JUDGMENT TO THE FOLLOWING EFF ECT: 19. THE EXPRESSION IN THE FIRST INSTANCE HAS BE EN USED IN SECTION 144C TO SIGNIFY THE FIRST STEP TO BE TAKEN BY THE ASSESSING OFFICER IN A SERIES OF ACTS CONTEMPLATED BY THE SAID I.T.A.NO.4405/DEL/2011/A.Y.2003-04 15 SECTION WHILE DEALING WITH THE CASE OF AN ELIGIBLE ASSESSEE. THIS COURT IS FURTHER OF THE VIEW THAT IF THE ASSES SING OFFICER U/S 144C CAN PREPARE A DRAFT ASSESSMENT ORDER ONLY THEN BY VIRTUE OF A REMAND ORDER WHICH DIRECTS THE AO TO DE CIDE THE MATTER DE NOVO THE ASSESSING OFFICER CANNOT GET TH E POWER TO PASS AN ASSESSMENT ORDER WHEN THERE IS AN OBJEC TION BY THE ASSESSEE LIKE IN THE PRESENT CASE WITHOUT REFE RENCE TO THE DISPUTE RESOLUTION PANEL WHICH COMPRISES OF THR EE PRINCIPAL COMMISSIONERS OR COMMISSIONERS OF INCOME TAX CONSTITUTED BY THE BOARD. 20. NOW TO ACCEPT THE APPELLANTS ARGUMENT WOULD B E TO PERMIT THE ASSESSING OFFICER TO DECIDE THE OBJECTIO NS FILED BY THE ASSESSEE WHICH POWER HAS BEEN SPECIFICALLY DENIED BY THE STATUTE. 19. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF T HE JUDICIAL DECISIONS THE ADDITIONAL GROUND IS DECIDED IN FAVOU R OF THE ASSESSEE AND AGAINST THE REVENUE THE ASSESSMENT ORD ER IS BARRED BY LIMITATION. SINCE WE HAVE QUASHED THE AS SESSMENT ORDER AS NULL AND VOID WE DO NOT FIND IT NECESSARY TO DWELL INTO THE MERITS OF THE CASE. 20. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/05/2021. SD/- SD/- (KULDIP SINGH) (N.K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 TH MAY 2021 * KAVITA ARORA SR. P.S. I.T.A.NO.4405/DEL/2011/A.Y.2003-04 16 COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. BY ORDER ASSISTANT REGISTRAR ITAT: DELHI BENCHES-DELHI