ITAT quashes Oracle India assessment as time-barred under Section 153

The Delhi ‘H’ Bench of the Income Tax Appellate Tribunal has quashed the final assessment order passed against Oracle India Private Limited for Assessment Year 2007–08, holding that the order was barred by limitation under Section 153 of the Income-tax Act, 1961. The Tribunal followed the ratio laid down by the Madras High Court in Roca Bathroom Products Pvt. Ltd. and rejected the Revenue’s plea to defer adjudication merely because the issue is pending before a Larger Bench of the Supreme Court.

Assessment beyond statutory time limit

The dispute arose from a final assessment order passed on 30 October 2014 under Section 143(3) read with Section 144C, pursuant to transfer pricing proceedings. Oracle India contended that the outer statutory time limit for completing the assessment had expired much earlier and that the order was therefore void ab initio. Relying on Roca Bathroom Products Pvt. Ltd., the assessee argued that Sections 144C and 153 are mutually inclusive and that the non-obstante clause in Section 144C does not override the limitation prescribed under Section 153.

The Revenue opposed the plea, contending that the issue of limitation arising from the interplay between Sections 144C and 153 is pending before the Supreme Court in Shelf Drilling Ron Tappmeyer Ltd. and that the Tribunal should defer adjudication.

Tribunal rejects Revenue’s plea, grants liberty

The Tribunal rejected the Revenue’s objection, holding that in the absence of any stay on the Madras High Court judgment, the ratio in Roca Bathroom Products remains binding. It observed that the Income-tax Act is an all-India statute and, until a contrary view is taken by another High Court or the Supreme Court, such judgments must be followed. Holding that the final assessment order was clearly beyond the statutory limitation under Section 153, the Tribunal quashed the assessment. Consequently, the Revenue’s appeal and the assessee’s rectification appeal were dismissed as infructuous. However, keeping in view the pending proceedings before the Supreme Court, the Tribunal granted liberty to both parties to seek revival of the appeals if the decision of the Larger Bench necessitates reconsideration.