Relief to Shell India: ITAT Quashes Demand of Rs 105.7crores on Ground of Limitation [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Shell India quashing the demand of Rs 105 77,29,782 on the ground of limitation.

The assessee, Shell India Markets Pvt company was engaged in the business of marketing motor spirit (petrol) and high-speed diesel through retail outlets, providing shared services to its group companies worldwide. It also involved in Trading and Manufacturing and selling of Modified Bitumen, Emulsion (Bitumen Business), Lubricants and Coolants (Lube Business), cost recharge to its group companies and providing IT Enabled Services in relation to Scientific and Technical consultancy.

It had electronically filed its Return of Income on 29/11/2011 declaring loss of Rs. 105,77,29,782. The case was selected for scrutiny and notice under Section 143(2) of the Income Tax Act, 1961 was issued.

Thereafter, the AO made a reference to the Transfer Pricing Officer (TPO) under Section 92CA (1) of the Income Tax Act for determination of arm's length price (ALP) in relation to the international transaction for A 2011-12 vide letter dated 01/07/2013.

The TPO thereafter passed the Transfer Pricing Order dated 30/01/2015 proposing adjustment of Rs. 231, 97,25,209. Subsequently, the AO passed Draft Assessment Order dated 02/03/2015 under Section 143(3) read with Section 144C (1) of the Income Tax Act.

The assessee, thereafter, filed its objections before the same Dispute Resolution Panel (DRP). The DRP disposed of the objections raised by the assessee via its directions dated 29/12/2015.

After considering the directions given by the DRP, the AO made adjustments/ disallowance in the Final Assessment Order (FAO) dated 26/02/2016 passed under Section 143(3) read with Section 144C (13) of the Income Tax Act and determined the assessed income as INR 95,11,65,902 The assessed income was Rs. Nil, after the same was adjusted against unabsorbed business loss. Assessed Long Term Capital Loss to be carried forward was Rs.38,62,584/-.

Ajit Kumar Jain, on behalf of the assessee submitted that the order of TPO is time barred in terms of Section 92CA (3) read with Section 153 of the Income Tax Act and consequently, the passing of draft assessment order and the entire proceedings initiated under Section 144C was bad in law, because in absence of valid TPO order, the assessee ceases to be an eligible assessee and therefore the provisions of section 144C were not applicable to the assessee.

He further submitted that the  AO was required to complete the assessment within the due date as prescribed under Section 153 of the Income Tax Act. Since the Final assessment order had been passed beyond the time limit as prescribed under Section 153 of the Income Tax Act the final assessment order was barred by limitation and deserves to be quashed.

Manoj Kumar, appeared on behalf of the respondent.

The two-member Bench of Amit Shukla, (Judicial Member) and Amarjit Singh, (Accountant Member)  quashed the final assessment order being barred by period of limitation under Section 92CA (3) of the Income Tax Act.

To Read the full text of the Order CLICK HERE

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