Case Law Details
Nokia India (P) Ltd. Vs Dy. CIT (Delhi High Court)
Having perused the impugned order of the ITAT carefully and the operative portions qua which the assessment order was set aside and the matter remanded to the assessing officer, the Court is unable to agree with the contention of learned ASG that the aforementioned order of the ITAT did not constitute a complete setting aside of the assessment with directions to the assessing officer to pass a fresh order. The Court does not agree with the submission of the learned ASG that the assessing officer was ‘chained’ by the ITAT’s directions and could not have passed a fresh assessment order de novo pursuant to such remand.
The Court is also unable to agree with the contention that unless the entire assessment order is wholly set aside, the time limit for passing the fresh order under section 153(2A) would not be attracted. There is no warrant for such an interpretation. The object behind introduction of sub-section (2A) was to prescribe a time limit for completing the assessment proceedings upon the original assessment being set aside or being cancelled in appeal. Clearly, the intention was not to restrict the applicability of sub-section (2A) only to such cases where the ‘entire’ original assessment order is set aside. It was noted that, “Under the existing provisions of section 153 (3), such fresh assessments are not subject to any time limit.” Indeed, section 153, as it stood at that time, did not prescribe any time limits. Section 153(3)(ii), in particular, did not require the order passed thereunder to be issued within any particular time limit. Further there is a distinction between an ‘assessment’ that is set aside and an ‘assessment order’ being set aside. When the assessment on an issue is set aside and the matter remanded, with a direction that the issue has to be determined afresh, section 153(2A) of the Act would get attracted.
What is important to note is that, along with the insertion of sub-section (2A), sub-section (3) underwent a simultaneous change. It was expressly made “subject to the provisions of sub-section (2A).” This meant that section 153 (3) would thereafter apply only to such cases where section 153(2A) did not apply. In other words, in all instances of an assessing officer having to pass a fresh assessment order upon remand where section 153(2A) would apply, the assessing officer would be bound to follow the time-limit imposed by sub-section (2A). Where the assessing officer was only giving effect to an appellate order, then section 153(3)(ii) of the Act would apply.
In the present case, of the seven issues, the assessment in respect of five was set aside and the issues remanded for a fresh determination. Whether the remand was to the Transfer Pricing Officer or the Dispute Resolution Panel would not make a difference as long as what results from the remand is a fresh assessment of the issue. Clearly, therefore, the time limit for completing that exercise was governed by section 153(2A) of the Act.
Full Text of the High Court Judgment / Order is as follows:-
This writ petition by Nokia India (P) Ltd. (‘Assessee’) seeks the quashing of the notice dated 14-9-2015 issued by the Deputy Commissioner, Circle-18 (2), New Delhi (hereafter the assessing officer–’AO’) under section 254 read with sections 144-C and 143 (3) of the Income Tax Act, 1961 (‘Act’) for assessment year (‘AY’) 2007-08. The assessee also challenges the consequential order dated 2-12-2015 passed by the assessing officer rejecting the plea of the assessee that in terms of section 153(2A) of the Act, the proceedings under the aforementioned notice dated 14-9-2015 would be time-barred.
Background facts
2. The Petitioner, which is engaged in manufacture and sale of mobile handsets, filed its return of income for the assessment year 2007-08 on 1-11-2007 declaring an income of Rs. 8,10,62,32,096. Since, during the assessment year in question, the assessee was involved in international transactions with its Associated Enterprise (‘AE’), a reference was made by the assessing officer to the Transfer Pricing Officer (‘TPO’).
3. The assessee filed objections to the report of the Transfer Pricing Officer before the Dispute Resolution Panel (Dispute Resolution Panel) contesting the transfer pricing (TP) adjustment by which the returned income of the assessee stood enhanced. These objections were disposed of by the Dispute Resolution Panel. On the basis of the directions issued by the Dispute Resolution Panel, the assessing officer completed the assessment by passing an assessment order under section 143 (3) read with section 144C (13) of the Act on 29-9-2011. The total income of the Petitioner was assessed at Rs. 12,37,03,19,800.
4. In the aforementioned final assessment order, the assessing officer made the following disallowances and additions to the income of the Petitioner :–
| S.No. | Nature of Addition made | Amount of addition (INR) |
| 1. | Addition on account of disallowance of Marketing Expenses |
