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Quashes Against Thomson Reuters Over During Pending Assessment
In a significant ruling that clarifies the scope of , the quashed proceedings initiated against Thomson Reuters International Services Private Limited for Assessment Year 2022-23. The Division Bench of Justices B.P. Colabawalla and Farhan P. Dubash held that when assessment proceedings for the original return are pending, the filed after a must be considered within those pending proceedings and cannot be subjected to a fresh, parallel scrutiny.
The Background: Merger and
Thomson Reuters International Services Private Limited (the petitioner) filed its original Return of Income for AY 2022-23 on , declaring total income of Rs. 127.92 crore. The return was selected for scrutiny, and a notice under was issued on . During the assessment proceedings, the matter was referred to the (TPO), who proposed adjustments of over Rs. 100 crore on three counts: IT services, IT-enabled services, and interest on outstanding receivables. A under was passed on .
Meanwhile, the approved the merger of Confirmation.com India Private Limited with Thomson Reuters, with effect from . Pursuant to this order, Thomson Reuters filed a under Section 170A on . The declared the same income as the original return, without claiming the losses of the amalgamating company.
However, the issued a fresh notice under on , seeking to scrutinise the separately. This was followed by a notice under on for fresh transfer pricing proceedings. The petitioner challenged both notices before the .
Petitioner's Contentions: Statutory Scheme Precludes Parallel Proceedings
, appearing for Thomson Reuters, argued that (b) of the clearly applies when assessment proceedings are pending at the time of furnishing the . In such a situation, the Assessing Officer is required to pass an order assessing the total income by taking the into account, not to initiate a . The petitioner relied on the judgment in Vodafone India Services Pvt. Ltd. vs. Union of India (2014), where the held that proceedings before the are a continuation of the assessment. Since the was passed just four days before the was filed, and the petitioner had filed objections with the DRP, the assessment proceedings were undeniably pending.
Moreover, the petitioner pointed out that the Department itself admitted to taking the into consideration while passing the on . Having already considered the , the Revenue could not simultaneously conduct a separate scrutiny.
Revenue's Stand: Need to Examine
The Department argued that Section 170A is an enabling provision, and upon filing a , the original return becomes . Therefore, the must be scrutinised afresh under to ensure correct determination of income. They contended that no express prohibition exists against issuing a fresh notice, and preserves the application of other provisions of the Act.
Court's Reasoning: Pending Assessment Includes DRP Stage
The Court rejected the Revenue's argument, emphasizing the clear distinction between clauses (a) and (b) of . Where assessment is completed, clause (a) applies and the Assessing Officer merely modifies the completed assessment. Where proceedings are pending, clause (b) applies, and the must be considered within those pending proceedings.
The Court observed that a under does not conclude the assessment. Citing Vodafone India Services , it held that the process before the DRP is a . Since the petitioner had filed objections with the DRP on , the assessment was pending on when the was filed.
The Court further relied on its recent decisions in Bajaj Electricals Ltd. (2026) and Technoforce Solutions (I) Pvt. Ltd. (2026), which held that a of a is impermissible when assessment proceedings are pending. The Court stated:
"The filing of theof Income does not alter the character of theor require the Assessing Officer to commence a fresh assessment proceeding. All that has to be done is to incorporate the income/loss arising as a consequence of theinto the income that is proposed to be assessed in the pending proceeding."
The Court also noted that the Revenue's own conduct supported the petitioner. In its affidavit, the Department admitted that the
was passed after taking the
into consideration and that
"apparently, no separate proceedings under
were required."
Key Observations from the Judgment
-
"The
under
did not bring the assessment proceedings to an end. The process before the DRP is a continuation of the assessment proceedings and continues until the final appealable Assessment Order is passed."
-
"
(b) requires the Assessing Officer to pass an order assessing or reassessing the total income in accordance with the order of
and by considering the
of Income. It does not contemplate that the filing of the
of Income would extinguish the pending proceedings and simultaneously give rise to a second assessment proceeding for the same Assessment Year."
-
"Once the
of Income is taken into consideration in the
and the assessment proceedings culminated in the
, the subsequent initiation or continuation of another proceeding for scrutinising the very same
of Income requires a clear statutory basis."
Final Decision and Implications
The Court quashed the impugned notice dated under , the notice dated under , and all consequential proceedings. The writ petition was disposed of with no order as to costs.
The ruling reinforces the principle that the tax department cannot run for the same assessment year merely because a is filed under Section 170A. It provides clarity and relief to companies undergoing business reorganisations, ensuring that the statutory framework under Section 170A is followed faithfully. The decision aligns with the legislative intent of streamlining assessments and preventing unnecessary multiplicity of proceedings.
