Relief for BMW: ITAT sets aside Final Assessment Order as Time-Barred u/s 144C(13) for Delay in Giving Effect to DRP Directions [Read Order]
Relying on precedents including Honda R&D (India) Pvt. Ltd. and Louis Dreyfus Company India Pvt. Ltd., the ITAT held that uploading the DRP directions on the ITBA portal constituted valid service, and accordingly, the assessment order was set aside as barred by limitation.
BMW - Taxscan
BMW - Taxscan
The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to BMW India Pvt. Ltd. by setting aside the Final Assessment Order for Assessment Year 2011-12 as time-barred under section 144C(13) of Income Tax Act,1961 due to delay in giving effect to Dispute Resolution Panel ( DRP) directions.
BMW India Pvt. Ltd.,appellant-assessee, faced a Final Assessment Order dated 19/02/2016 for Assessment Year 2011-12 under sections 143(3) and 144C of the Income Tax Act, 1961. The Assessing Officer (AO) made additions of Rs. 1,71,32,019/- for information technology support services, holding that they did not meet the Arm’s Length Price, and disallowed Rs. 83,70,085/- paid to M/s Bhumi Consultants for legal and professional services.
The assessee appealed in ITA No. 1514/Del/2016. The Tribunal, by order dated 25/01/2019, deleted the AMP expenditure adjustment and remanded the IT services addition and the disallowance of Rs. 83,70,085/-.
Following this, the TPO issued an order on 31/01/2021 under section 92CA(3) read with section 254, which was rectified on 09/02/2021. The AO issued a Draft Assessment Order on 15/07/2021, and the assessee filed objections before the DRP on 31/08/2021. The DRP issued directions on 28/04/2022. The TPO gave effect to these directions on 20/05/2022, and the AO passed the Final Assessment Order on 28/06/2022.
Aggrieved, the assessee filed the present appeal.
The assessee counsel argued that the Final Assessment Order dated 28/06/2022 was barred by limitation under section 144C(13) of the Act. He submitted that the AO was required to complete the assessment within one month from the end of the month in which the DRP directions were received.
The DRP issued directions on 22/04/2022, uploaded on 28/04/2022, making the limitation period end in May 2022. Since the order was passed on 28/06/2022, it was beyond the time limit.
The Departmental counsel opposed this, stating that the order was passed after partial remand by the Tribunal, so the limitation under section 144C(13) did not apply, and the additional grounds of appeal should be dismissed.
The two member bench comprising Yogesh Kumar U.S (Judicial Member) and S.Rifaur Rahman (Accountant Member) after hearing the parties and examining the record, noted that following its earlier order dated 25/01/2019, the TPO passed an order on 31/01/2021, and the AO issued a Draft Assessment Order on 15/07/2021.
The DRP issued directions on 28/04/2022, which the TPO implemented on 20/05/2022, and the Final Assessment Order was subsequently passed on 28/06/2022.
The appellate tribunal observed that under section 144C(13) of the Act, the assessment had to be completed within one month from the end of the month in which the DRP directions were received.
Citing precedents including Honda R&D (India) Pvt. Ltd. and Louis Dreyfus Company India Pvt. Ltd., it held that the date of uploading DRP directions on the ITBA portal constituted valid service and started the limitation period.
Since the DRP directions were uploaded on 28/04/2022, the limitation period ended on 31/05/2022. The Final Assessment Order, passed on 28/06/2022, exceeded this period. Therefore, the tribunal set aside the order dated 28/06/2022 as barred by limitation.
Accordingly the appeal was allowed.
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