Article

Navigating limitation period labyrinth – Pitfalls in timelines of passing assessment orders under Section 144C read with Section 153

By Romil Hotwani, Snehal Ranjan Shukla and Ankur Kishanpuria

The Bombay High Court has recently held that the timelines for passing an assessment order specified in Section 153 of the Income Tax Act, 1961 are not to be extended in cases where the assessee takes the Dispute Resolution Panel route and the final assessment order under Section 144C(13) has to be passed within the overall timeline as prescribed under Section 153. Considering that the general practice followed by the tax officers is to pass only the draft orders within the timelines provided in Section 153, the article in this issue of Direct Tax Amicus highlights the impact of the said decision on the pending appeals and the possible arguments that may be advanced by the Revenue authorities in appeal before the Supreme Court. Elaborately discussing the interpretation of different Tribunals and Courts – both in favour of assessee and Revenue, the authors from the LKS Direct Tax practice vertical comment that the time available with each of the authorities, i.e. the TPO, AO and DRP for passing their respective orders/directions, would be considerably reduced. They also suggest that the taxpayers must, as soon as the assessment proceedings are initiated, keep the relevant information ready for submission before the income tax authorities so that they do not have to face any negative consequence due to the paucity of time available with each authority.

Notifications & Circulars

• Certain entities notified as ‘authority’ for the purpose of Section 10(46)
• ‘Investment fund’ definition amended for purpose of exemption from furnishing return of income
• ‘Investment fund’ – Revised definition incorporated in Circular No. 14 of 2019
• International Financial Services Centre (‘IFSC’) – Non-deduction of Tax at Source for certain entities
• Income Tax Rules amended through 12th, 13th and 14th Amendment Rules, 2023
• Delay in filing return by co-operative societies to be condoned in specified circumstances, for claiming deduction under Section 80P
• Sugar manufacturing co-operative societies – SOP issued for making application for re-computation of income

Ratio decidendi

• Consideration for managerial services is not Fee For Technical Services (‘FTS’) under India-UK DTAA where the make available clause was not satisfied – ITAT New Delhi
• Fee for editorial services do not constitute Fees For Included Services (‘FIS’) under India-US DTAA where the ‘make available’ clause was not satisfied – ITAT New Delhi
• Protocol of a DTAA is an integral and indispensable part of Tax Treaty – CBDT circular mandating issuance of notification for applicability of protocol not applicable to DTAA where there is no mandate of issuance of such notification – ITAT Kolkata
• Permanent establishment (‘PE’) – 183 days-period to be calculated from date of entry of oil rig in India and not from date of commencement of actual drilling – Bombay High Court
• Section 148(A)(b) notices issued in violation of CBDT Instruction No. 1/2022 dated 11 May 2022 and Section 282A quashed – Delhi High Court