Himalaya Drug Company Makali Vs DCIT (Karnataka High Court)
Karnataka High Court held that the assessment order passed is beyond the time limit prescribed under Section 144C(13) of Income Tax Act. Accordingly, the appeal is disposed of.
Facts- The present appeal has been preferred by the assessee. The assessee had raised the contention that the order passed by the Income Tax Appellate Tribunal is beyond the period prescribed under section 144C(13) of IT Act. The said questions were answered against the assessee under order dated 21.06.2017 in the same appeal and the Appellate Tribunal had proceeded further to pass the order on merits dated 04.07.2018, which is the subject matter of the above two appeals.
Conclusion- Held that the assessment order passed is beyond the time limit prescribed under Section 144C(13) of IT Act. Hence, the examination of the impugned order, which is passed subsequently on merit, would not arise. Thus, the question of considering the substantial questions of law raised by the assessee as well as the revenue, would not arise.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The above two appeals are filed under section 260-A of Income Tax Act, 1961 (hereinafter referred to as “IT Act”) questioning the order dated 04.07.2018 passed by the Income Tax Appellate Tribunal, Bengaluru, ‘B’ Bench in IT(TP)A No.807/Bang/2016. ITA No.764/2018 is by the assessee and the said appeal was admitted to examine the following two substantial questions of law, vide order dated 04.07.2018.
“1. Whether on the facts and circumstances of the case, is the Tribunal justified in law in impliedly upholding validity of draft assessment order which is in substance final assessment order?
2. Whether on the facts and circumstances of the case, is the Tribunal justified in law in impliedly holding that the Appellant and certain overseas entities are associated enterprises as defined under section 92A of the IT Act?”
ITA No.835/2018 is filed by respondent/Commissioner of Income Tax and the said appeal was admitted on 08.07.2019 to examine the following 3 substantial questions of law in the order dated 8.07.2019;
“1. Whether on the facts and in the circumstances of the case, Tribunal was justified in holding that Revenue has failed to notice the fundamental principle of international taxation and Chapter X of the Income Tax Act that the foreign associated enterprise and the Indian Associated Enterprise are separate tax centres and taxable entitles whereas, the Revenue has held that no independent entity would incur such an elevated level of AMP expenses on account of a brand held by some other entity and yet not seek Arm/s Length compensation on the same principle?
2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in relying on the case of Essilor Manufacturing India Pvt. Ltd. V/s. DCIT and DCIT V/s. Nike India Pvt. Ltd. To delete the transfer pricing adjustment of Rs.31,69,02,034/- in respect of AMP Expenditure without appreciating that assessee has incurred huge expenditure for advertisement and selling i.e. for marketing its products though it does not won the title to the brands of products?
3. Whether in the facts and circumstances of the case, the Tribunal’s order can be held as perverse in nature in holding that the Transaction net Margin Method is the most appropriate method and not Cost Price Method without considering the facts of present case whereby the assessee performs intense functions such as marketing, advertisement and sales promotion and admission, utilises more assets and bears higher risks in the domestic segment whereas AE performs all aforesaid functions in the export segment, thus on Far profile under TNMM, is akin to comparing a simple manufacturer devoid of any other functions to full-fledged manufacturer, which is not correct?”
2. The assessee had raised the contention that the order passed by the Income Tax Appellate Tribunal is beyond the period prescribed under section 144C(13) of IT Act. The said questions were answered against the assessee under order dated 21.06.2017 in the same appeal and the Appellate Tribunal had proceeded further to pass the order on merits under Annexure ‘A’ dated 04.07.2018, which is the subject matter of the above two appeals.
