ITAT Delhi Quashes Cosmo Films Assessments for AYs 2009–10 to 2012–13 as Time-Barred

The Delhi Bench of the Income Tax Appellate Tribunal has quashed the final assessment orders passed against Cosmo Films Ltd. for Assessment Years 2009–10 to 2012–13, holding them to be barred by limitation under the Income Tax Act, 1961.

Background of the Dispute

Cosmo Films challenged multiple final assessment orders passed by the tax authorities following transfer pricing proceedings and directions issued by the Dispute Resolution Panel (DRP). The company raised an additional legal ground contending that all the impugned assessments were time-barred, having been completed after the statutory deadlines under Section 153.

The Revenue opposed this plea, arguing that the limitation issue arising from the interplay between Sections 144C and 153 was unsettled and pending before the Supreme Court of India in ACIT v. Shelf Drilling Ron Tappmeyer Ltd., and sought deferral of the proceedings.

Tribunal’s Reasoning

Rejecting the Revenue’s objection, the Tribunal relied heavily on the Madras High Court’s ruling in Roca Bathroom Products Pvt. Ltd., which held that Sections 144C and 153 are “mutually inclusive and interdependent”. The presence of a non-obstante clause in Section 144C(13), the High Court had clarified, does not override or exclude the limitation prescribed under Section 153. The Tribunal also followed its own recent decision in Teva Pharmaceutical & Chemical Industries India Pvt. Ltd., where similar arguments by the Revenue were rejected. After examining the detailed date charts placed on record, the Bench found that while the statutory limitation for the relevant assessment years expired between March 2013 and March 2016, the final assessment orders were passed as late as January 2017.

Relief Granted

Accordingly, the Tribunal quashed all the impugned assessment orders as time-barred. The Revenue’s appeal for AY 2009–10 was dismissed as infructuous. However, noting that the limitation issue is pending final adjudication before the Supreme Court, the Tribunal granted liberty to both parties to seek revival of the appeals on merits if the eventual ruling of the apex court so warrants. All appeals filed by Cosmo Films were allowed on the legal issue of limitation.