Section 144C inserted in the statute by the Finance (No. 2) Act, 2009 with retrospective effect from 1st April, 2009 is prospective in nature and would not apply to A.Y. 2009-10 or earlier assessment years

4. Truetzschler India Pvt. Ltd. vs.
DCIT (Mumbai) Members: Vikas Awasthy (J.M.) and
Manoj Kumar Aggarwal (A.M.) ITA No. 1949/Mum/2015 A.Y.: 2009-10 Date of order: 30^th
September, 2020 Counsel for Assessee / Revenue: Nitesh Joshi / A. Mohan

Section 144C
inserted in the statute by the Finance (No. 2) Act, 2009 with retrospective
effect from 1st April, 2009 is prospective in nature and would not apply to
A.Y. 2009-10 or earlier assessment years

FACTS

In the
present appeal preferred against the order of the CIT(A), the assessee raised
an additional ground challenging the validity of the assessment order dated 13^th
May, 2013 passed u/s 143(3) r/w/s 144C(13). In the additional ground, the assessee
contended that the assessment order ought to be quashed as it has been passed
after the expiry of the time limit prescribed u/s 153.

The Tribunal
noted that the Transfer Pricing Officer (TPO) passed the order u/s 92CA(3) on 9^th
January, 2013. The A.O. passed the draft assessment order on 27^th
March, 2013. Thereafter, the A.O. was required to pass the final assessment
order within the limitation period provided u/s 153(1), i.e., by 31^st
March, 2013, whereas, actually the final assessment order was passed on 13^th
May, 2013, i.e., after the expiry of the limitation period.

On behalf of
the assessee, and relying on the decision of the Madras High Court in the case
of Vedanta Limited vs. ACIT in Writ Petition No. 1729 of 2011 decided on
22^nd October, 2019, it was contended that the time limit for
passing the assessment order in the impugned assessment year does not get
extended by application of section 144C mandating reference to the dispute
resolution panel as the provisions of the said section do not apply to the
impugned assessment year. On the other hand, the Departmental Representative placed reliance on CBDT Circular
No. 5 of 2010 dated 3^rd June, 2010 to counter the argument made on
behalf of the assessee.

HELD

The
additional ground being purely legal in nature and requiring no fresh evidence
was admitted by the Tribunal.

The Tribunal
noted that the Madras High Court has held that where there is a change in the
form of assessment itself, such change is not a mere deviation in procedure but
a substantive shift in the manner of framing an assessment. A substantive right
has enured to the parties by virtue of the introduction of section 144C.
Bearing in mind the settled position that the law applicable on the first day
of the assessment year be reckoned as the applicable law for assessment for
that year, leads one to the inescapable conclusion that the provisions of
section 144C can be held to be applicable only prospectively, that is, from
A.Y. 2011-12. The High Court also made it clear that the Circular issued in
2013 to bring the assessment year 2009-10 in the fold of the newly-inserted
provisions of section 144C would have no application.

The Tribunal
held that

i)    the provisions of section 144C would not
apply in the impugned assessment year, and hence the time period for passing
the assessment order would not get enlarged;

ii)   the A.O. was under obligation to pass the
assessment order within the time specified under the third proviso to
section 153(1), i.e., on or before 31^st March, 2013;

iii)  since the order has been passed beyond the
period of limitation, the same is null and void. The assessee succeeds on the
legal ground raised as additional ground of appeal;

iv)  the assessment order is quashed and the appeal
of the assessee is allowed.