Archroma International India Private Limited 2010 11 vs Deputy Commissioner of Income Tax Circle 2(1)(1)

Headnote:(A) Income Tax Act, 1961 - Section 144C(1), (2), (5), (10), (13) - Section 153, 153B - Section 244A - Constitution of India, 1950 - Article 226 - Mandatory nature of time limit under Section 144C(13) - Non-obstante clause excluding Sections 153 and 153B - Directions of Dispute Resolution Panel binding on Assessing Officer - No distinction between ordinary cases and cases on remand - Failure to complete assessment within one month from end of month in which DRP directions are received renders proceedings time-barred and the disputed addition non est. (Paras 18-32)

(B) Interpretation of Statutes - Where a statute requires something to be done in a particular manner, it must be done in that manner - All words in a statute must be read and given meaning - Statutory provisions cannot be waived or deviated from. (Para 30)

Facts of the case:
The petitioner, an eligible assessee, filed its return for AY 2010-2011. A draft assessment order was issued under Section 144C(1). The petitioner objected before the DRP, which initially gave directions on 13th November 2014. The Assessing Officer passed a final assessment order on 31st December 2014. The petitioner appealed to the Income Tax Appellate Tribunal, which remanded the matter to the DRP for fresh adjudication regarding transfer pricing adjustment. The DRP issued fresh directions on 19th March 2020 directing the Assessing Officer to re-examine the corporate service charges. The Assessing Officer failed to complete the assessment within one month from the end of the month in which the directions were received, despite repeated reminders from the petitioner.

Findings of Court:
The language of Section 144C(13) is clear, unambiguous and mandatory. The word 'shall' makes the provision mandatory. The non-obstante clause expressly excludes the application of Sections 153 and 153B. The Assessing Officer has no discretion after the DRP issues directions and must complete the assessment in conformity with those directions within the strict timeline. There is no distinction between ordinary cases and cases on remand; the section applies equally. The proceedings pending before the Assessing Officer concerning the transfer pricing addition are barred by limitation. (Paras 23-32)

Issues: 1. Whether the failure to complete the assessment within the time limit prescribed under Section 144C(13) of the Income Tax Act renders the proceedings time-barred and the transfer pricing addition non est? 2. Whether the time limit under Section 144C(13) applies to cases remanded by the Tribunal?

Ratio Decidendi: Section 144C(13) mandates that upon receipt of DRP directions, the Assessing Officer shall complete the assessment in conformity with those directions within one month from the end of the month in which such direction is received. This timeline is mandatory and no exception exists for remand proceedings. Failure to comply renders the proceedings barred by limitation and the disputed addition cannot be sustained. Result : Rule made absolute. The transfer pricing adjustment of Rs.5,26,86,111 is treated as non est. The Assessing Officer is directed to recompute the petitioner's total income for AY 2010-2011 by excluding that adjustment and to pay the refund with statutory interest within eight weeks. The writ petition is disposed of accordingly. No order as to costs. Compliance report on 15th December 2025. (Paras 33-36)}}{{

Legal Category Hierarchy

1. Challenge to inaction in giving effect to DRP directions within one-month time limit under Section 144C(13) of the Income Tax Act. (Para 2 , 3 , 4 )

2. Dispute over whether the one-month timeline under Section 144C(13) is mandatory and applicable to remand proceedings. (Para 5 , 6 , 7 , 8 , 13 )

3. Writ petition allowed; transfer pricing adjustment declared non-est; respondent directed to recompute income and grant refund with interest. (Para 32 , 33 , 34 )

4. Is the one-month timeline under Section 144C(13) of the Income Tax Act mandatory for the Assessing Officer?

Yes. The language is clear, unambiguous, and mandatory, using 'shall' and a non obstante clause excluding Sections 153 and 153B. (Para 23 , 24 , 25 , 26 , 30 )

5. Does the Section 144C(13) timeline apply to cases on remand from the Tribunal?

Yes. The Act does not distinguish between ordinary cases and cases on remand; the provision applies equally to both. (Para 27 , 28 , 29 , 31 )

6. What is the consequence of the Assessing Officer's failure to complete assessment within the Section 144C(13) timeline?

The proceedings become barred by limitation, and the transfer pricing addition is treated as non-est. (Para 32 , 33 )

Ms. Sushma Nagaraj, with Mr. Abhinav Palsikar, Advocates

for the Respondents.

CORAM: B. P. COLABAWALLA &

AMIT S. JAMSANDEKAR, JJ.

Judgment Reserved On : 16th September, 2025

Judgment Pronounced On: 10th October, 2025

JUDGMENT (PER Amit Satyavan Jamsandekar, J ).

1. Rule. Rule made returnable forthwith. The Respondents waive service. With the consent of the parties, taken up for final hearing.

2. By the present Petition, filed under Article 226 of the Constitution of India, 1950, the Petitioner is challenging the inaction of the Respondents of not giving effect to the directions dated 19th March 2020 of the Dispute Resolution Panel (“DRP”) and consequently not processing the refund claim of the Petitioner. The directions were given by the DRP to the 1st Respondent under Section 144(C)(5) of the Income Tax Act, 1961 (“the Act”).

3. The main issue raised in the petition is the effect of not completing the assessment within a period of one month from the end of the month in which the Assessing Officer receives such directions from the DRP under Section 144(C) (5) of the Act. According to the Petitioner, if the Assessing Officer fails to complete the assessment within the time frame as prescribed by Section 144 (C) (13), the transfer pricing addition ought to be treated as non est on the ground that it becomes time barred.

4. The facts and circumstances relating to the dispute, which is the subject matter of the present Petition, are as follows:-

(i) The Petitioner filed its Return of Income for AY 2010-2011 on 14th October, 2010. In the said Return of Income, the Petitioner declared its total income as Rs.78,58,40,928.00. The Petitioner claimed a refund of Rs.3,32,90,793.00 arising out of (a) tax deducted at source of Rs.60,49,110.00; and (b) advance tax paid of Rs. 29,51,10,000.00.

(ii) The Return of Income filed by the Petitioner was selected for a scrutiny assessment under Section 143(2)

of the Act. The order to that effect was passed on 21st September, 2011.

(iii) During the assessment proceedings, a reference was made to the 2nd Respondent, to determine the Arm’s length price of the international transactions entered into by the Petitioner. The transfer pricing proceedings culminated in an order dated 28th January, 2014, under Section 92CA(3) of the Act. By the said order, the 2nd Respondent proposed a transfer pricing adjustment of Rs.5,26,86,111.00, which was concerning the ‘Corporate Service Charges’.

(iv) On 26th February, 2014, the Petitioner filed a submission before the 1st Respondent, by which the Petitioner claimed depreciation on intangibles and challenged the disallowance made under Section 14(A) of the Act. The Petitioner further claimed depreciation on goodwill.

(v) Thereafter, on 12th March, 2014, the 1st Respondent issued a draft assessment order under Section 144 C (1) of the Act. By the draft assessment order, the 1st Respondent computed the total income at Rs.89,46,03,871/- as against the Return of Income of

Rs.78,58,40,928/-. By the draft assessment order dated 12th March, 2014, the 1st Respondent proposed additional disallowances to the Petitioner’s Return of Income. By the draft assessment order, the 1st Respondent also did not allow a depreciation claim on goodwill, which was made by the petitioner vide the letter dated 26th February, 2014.

(vi) The Petitioner, being aggrieved by the draft assessment order dated 12th March, 2014, filed its objections before the DRP under Section 144 C (2) of the Act. The Petitioner also filed additional grounds of challenge/objections to the draft assessment order before the DRP.

(vii) On 13th November, 2014, the DRP provided its directions in accordance with the provisions of Section 144 C (5) of the Act. The DRP, in its directions, allowed the depreciation on goodwill claimed by the Petitioner. Further, the DRP directed the Assessing Officer to give effect to the direction as per the provisions of Section 144 C (13) of the Act.

(viii) Thereafter, the 1st Respondent, on 31st December, 201

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2025 Supreme(Online)(Bom) 195097

HIGH COURT OF BOMBAY
HON'BLE SHRI JUSTICE B.P. COLABAWALLAHON'BLE SHRI JUSTICE AMIT SATYAVAN JAMSANDEKAR
Archroma International India Private Limited 2010 11 – Appellant
Versus
Deputy Commissioner of Income Tax Circle 2(1)(1) – Respondent
WPL/11226/2025

Legal Category Hierarchy

Table of Contents

4. Is the one-month timeline under Section 144C(13) of the Income Tax Act mandatory for the Assessing Officer?

5. Does the Section 144C(13) timeline apply to cases on remand from the Tribunal?

6. What is the consequence of the Assessing Officer's failure to complete assessment within the Section 144C(13) timeline?

2025 Supreme(Online)(Bom) 195097

HIGH COURT OF BOMBAYHON'BLE SHRI JUSTICE B.P. COLABAWALLAHON'BLE SHRI JUSTICE AMIT SATYAVAN JAMSANDEKARArchroma International India Private Limited 2010 11 – AppellantVersusDeputy Commissioner of Income Tax Circle 2(1)(1) – RespondentWPL/11226/2025

Legal Category Hierarchy

Table of Contents

4. Is the one-month timeline under Section 144C(13) of the Income Tax Act mandatory for the Assessing Officer?

5. Does the Section 144C(13) timeline apply to cases on remand from the Tribunal?

6. What is the consequence of the Assessing Officer's failure to complete assessment within the Section 144C(13) timeline?

HIGH COURT OF BOMBAY
HON'BLE SHRI JUSTICE B.P. COLABAWALLAHON'BLE SHRI JUSTICE AMIT SATYAVAN JAMSANDEKAR
Archroma International India Private Limited 2010 11 – Appellant
Versus
Deputy Commissioner of Income Tax Circle 2(1)(1) – Respondent
WPL/11226/2025