The Delhi High Court directed to recompute the Income Tax refund payable. The period prescribed under Section 153(3) of the Income Tax Act,1961 would thus have to necessarily be computed from the date when the order of the Income Tax Appellate Tribunal ( ITAT ) was received by the respondents. Even if the benefits of TOLA were extended to the respondents, undisputedly, the order of assessment was liable to be framed lastly by 30 September 2021.
The Return of Income as submitted by the petitioner, Readers Digest Book and Home Entertainment ( India ) Pvt Ltd was Nill which included aspects about the import of books and music CDs‟ for re-sale in India from its associate enterprise – Readers Digest Asia Pte. Ltd. The Assessing Officer referring the case of the petitioner to the Transfer Pricing Officer ( TPO ) per Section 92CA of the Income Tax Act, 1961. The TPO by an order dated 30 January 2015 proposed an adjustment of Rs.16,62,47,629/- for advertisement and sales promotion and postage expenses incurred by the petitioner.
The petitioner questioned the proposed adjustment as contained in the Draft Assessment Order by applying to the Dispute Resolution Panel. That application came to be decided by the DRP. Proceeding further, the first respondent passed a Final Assessment Order on 29 January 2016 upholding the adjustments as referred to hereinabove. The ITAT by its order of 20 December 2018 set aside the Final Assessment Order and remitted the matter back to the AO and TPO for re-adjudication.
The respondents are stated to have preferred an appeal before the High Court which came to be dismissed. Taking the Court through the provisions made in Section 153(3) of the Act, Mr. Pardiwalla, senior counsel submitted that since the order dated 20 December 2018 passed by the ITAT was received by the respondents on 31 January 2019, the nine-month window which stands created in terms of Section 153(3) accorded the respondents the right to frame an order of assessment by 31 October 2019.
It was submitted additionally that the aforesaid period would stand further extended by Section 153(4) of the Act, since undisputedly in the facts of the present case a reference had been made to the TPO under Section 92CA. It is in the aforesaid backdrop that Mr Pardiwalla submitted that by Section 153(4), the respondents had time up to 31 October 2020 to pass a final order of assessment.
The Court also observed that in light of the plain language of Section 153(3) of the Act, the period of limitation is liable to be computed from the date when the order is received by the concerned statutory authority.
The period prescribed under Section 153(3) of the Act would thus have to necessarily be computed from the date when the order of the ITAT was received by the respondents. Even if the benefits of TOLA were extended to the respondents, undisputedly, the order of assessment was liable to be framed lastly by 30 September 2021. The respondents have thus abjectly failed to pass an order in terms of the mandatory provisions comprised in Section 153 of the Act.
A division bench comprising Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav directed the respondents to re-compute the refund payable to the writ petitioner along with statutory interest which shall run up to the date of remittance per law. The order of refund shall also bear in consideration our decision having annulled the adjustments that were made concerning AYs 2008-09, 2009-10 and 2010-11 against a perceived outstanding demand for AY 2011-12. An order of refund be consequently framed and passed within three weeks from today.
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