Open Text Corporation India Private Limited Vs ACIT (Telangana High Court)
The Telangana High Court examined the legality of a consequential assessment order dated 26 September 2024, passed by the Assistant Commissioner of Income Tax (ACIT) for Assessment Year (AY) 2005–06, following a remand by the Income Tax Appellate Tribunal (ITAT) ten years earlier. The petitioner, a software development company, challenged the order on two principal grounds—first, that the mandatory draft assessment procedure under Section 144C of the Income Tax Act was not followed, and second, that the order was barred by limitation as it was passed a decade after the ITAT’s directions.
The petitioner had filed its return of income for AY 2005–06 on 1 November 2005. The case was referred to the Transfer Pricing Officer (TPO) on 8 May 2006 for determination of the Arm’s Length Price (ALP) of its international transactions. The TPO, by order dated 31 March 2008, determined an ALP adjustment of ₹7,07,47,467 under Section 92CA(3) of the Act. Consequently, the ACIT completed assessment on 14 October 2008 under Section 143(3), determining total income at ₹7,20,86,690 as against the returned income of ₹9,61,490.
The petitioner appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], who partly allowed the appeal on 21 September 2010, reducing the transfer pricing adjustment and granting exemption under Section 10A. The AO modified the assessment accordingly on 30 November 2010, determining the revised income at ₹7,10,57,050. The petitioner further appealed to the ITAT, challenging the upheld portion of the transfer pricing adjustment. Meanwhile, it had paid tax of ₹3,71,12,067, and refunds from other years amounting to ₹58,49,229 were adjusted against the demand.
