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2025 Supreme(Online)(ITAT) 6451
INCOME TAX APPELLATE TRIBUNAL (HYDERABAD BENCH)
SHRI VIJAY PAL RAO, VP, SHRI MADHUSUDAN SAWDIA, AM
REPAL GREEN POWER PRIVATE LIMITED HYDERABAD – Appellant
Versus
DCIT CIRCLE 8(1) HYDERABAD – Respondent
ITA No.125/Hyd/2022 | ITA.No.474/Hyd./2022
Assessment orders must comply with statutory time limits; those exceeding limits are invalid.
Headnote:(A) Income Tax Act, 1961 - Sections 143(3), 144C, 32, 32AC, 32AD, and 270A - Limitation of assessment orders - The final assessment order passed after the statutory limitation is invalid and liable to be quashed consistent with rulings from relevant High Courts - The impugned orders were held to be beyond the prescribed limits and thus quashed. (Paras 10 to 12)
(B) Appeals - Grounds of appeal may cover various financial aspects such as transfer pricing adjustments and depreciation claims, however, the primary legal challenge revolved around the validity of the assessment orders based on limitation issues. (Paras 1 to 9)
Facts of the case:
The assessee challenged assessment orders made under the Income Tax provisions, arguing errors in re-characterizing financial transactions and claims regarding depreciation and investment allowances. The key issue was the timing and validity of these assessments.
Findings of Court:
The assessment orders for both years were found to be beyond the legal timeframes established by the Income Tax Act and were thus invalidated.
Issues: The main issues included the application of appropriate time limits for passing assessment orders, the validity of the re-characterizations made by the Assessing Officer, and the sufficiency of evidence for claims made by the appellant.
Ratio Decidendi: The court emphasised that assessment orders must comply with statutory time limits and jurisdictional requirements; any orders beyond these limits are rendered null. Both appeals were allowed due to the invalidity of the assessment orders based on limitation grounds.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. assessment validity based on compliance with statutory timelines. (Para 2) |
| 2. transfer pricing adjustments and their justifications. (Para 4 , 5) |
| 3. overall limitation compliance and judicial interpretation. (Para 8 , 9) |
ORDER
PER VIJAY PAL RAO, VICE PRESIDENT :
These two appeals by the assessee are directed against the assessment orders dated 26.02.2022 and 22.07.2022 passed by the Assessing Officer u/sec.143(3) r.w.s.144C(13) of the Income Tax Act [in short "the Act"], 1961, for the assessment years 2017-2018 and 2018-2019, respectively.
ITA .No.125/Hyd./2022 – A.Y. 2017-2018 :
2. The has raised the following grounds of appeal :
“Payment of interest towards purchase on supplier credit
1. On the facts and circumstances of the case and in law, the Id. AO and the Ld. TPO, under the directions of the Hon'ble Dispute Resolution Panel ('DRP'), erred in re-characterizing the transaction of 'Payment of interest towards purchase on supplier credit' as an external commercial borrowing and thereby calculating at its arm's length price. The authorities ought to have appreciated that the transaction undertaken by the Appellant is a trade payable and accordingly at arm's length price.
2. Without prejudice, the ld. AO and the Ld. TPO, under the directions of the Hon'ble DRP, erred in computing the amount of transfer pricing adjustment.
Payment for consultancy services availed
3. On the facts and circumstances of the case and in law, the Id. AO and the Ld. TPO, under the directions of the Hon'ble DRP, erred in disregarding the Appellant's benchmarking analysis, the documentation maintained thereunder and determining the arm's length price of the transaction of ‘Payment for consultancy services availed’ as Nil based on 'Other Method" purely on conjectures and surmises, without bringing on record any comparable instances in support thereof.
Payment of Interest on NCDs
4. On the facts and circumstances of the case and in law, the Id. AO and the Ld. TPO, under the directions of the Hon'ble DRP, erred in rejecting the Appellant's benchmarking analysis which demonstrated that payment of Interest on NCDs was at arm's length and conducting a fresh benchmarking exercise.
5. Without prejudice to the above, on the facts and circumstances of the case and in law, the ld. AO and the Ld. TPO, under the directions of the Hon'ble DRP, erred in selecting comparable instances for determining arm's length price for the payment of Interest on NCDs, which were in-fact not comparable to the Appellant. Once the incorrect comparable instances are rejected from the fresh benchmarking exercise conducted by the Id. TPO, the Appellant's transaction is at arm's length.
Depreciation and additional depreciation on plant and machinery
6. On the facts and circumstances of the case and in law, the Id. AO, under the direction of the Hon'ble DRP, erred in not allowing Appellant's claim of depreciation under Section 32 (ii) as well as additional depreciation under (iia) on plant and machinery by holding that the plant and machinery was not put to use in the current year.
7. On the facts and circumstances of the case and in law, the Id. AO, under the direction of the Hon'ble DRP, erred in not appreciating that additional depreciation under Section 32 (iia) ought to be granted is 35 per cent and not 20 per cent.
Investment allowance under Section 32AC
8. On the facts and circumstances of the case and in law, the Id. AO, under the direction of the Hon'ble DRP, erred in not appreciating that the Appellant ought to be granted investment allowance as per Section 32AC of the Act.
Investment allowance under Section 32AD
9. On the facts and circumstances of the case and in law, the Id. AO, under the direction of the Hon'ble DRP, erred in not appreciating that the Appellant ought to be granted investment allowance as per Section 32AD of the Act.
Computation of tax and interest payable
10. On the facts and circumstances of the case and in law, the Id. AO erred in computing the tax pay
