Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

p. 1619

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

basis and declared a total loss of Rs.120,18,44,672/- in their Return of Income filed on 29.11.2014. Vide Notice issued under Section 143(2) dated 28.08.2015, respondents’ Return of Income was selected for scrutiny. Subsequently, the Draft assessment order was issued on 26.12.2016 computing the respondent’s total income at Rs.4,34,79,980/-. Undisputedly, Respondents are eligible assessees as per Section 144C(15) of the Act. In accordance with Section 144C, respondents filed their objections before the Dispute Resolution Panel (for short, ‘DRP’) against the draft assessment order, which eventually did not accept respondents’ case and by an order dated 28.09.2017 gave directions to the Assessing Officer. Upon receipt of the directions of the DRP, the Assessing Officer passed the final assessment order on 30.10.2017 under Section 143(3) read with Section 144C(13) of the Act. 3.2 Aggrieved by the said Order dated 30.10.2017, the respondents filed an appeal before the Income Tax Appellate Tribunal (‘Tribunal’, for short) which by way of its order dated 04.10.2019 allowed the appeal and remanded the matter to the Assessing Officer for fresh adjudication. Pursuant to such remand, on 05.02.2020, the respondent, informed the Assessing Officer about the order and requested for an early disposal of the same. More than a year thereafter, on 22.02.2021, the respondent was called upon to produce certain contractual details and supply reasons for incurring a loss during A.Y. 2014-15. Further information was requested vide notice dated 10.09.2021 issued under Section 142(1) of the Act. Subsequently, several notices were issued under Section 142(1) of the Act calling upon the respondent to provide documents and details. Finally, on 23.09.2021 at 09:42 AM, the respondent was issued a show cause notice allowing it time to respond till 03:30 PM on the next day i.e. 24.09.2021. As required, the respondent filed its response on 24.09.2021. Thereafter, an assessment order came to be passed in remand on 28.09.2021, which was clarified on 29.09.2021 to be a draft assessment order. 3.3 In compliance with Section 144C(2), the respondent filed its objections before the DRP on 27.10.2021 and also filed the writ petitions before the High Court impugning the draft assessment order dated 28.09.2021 by contending that no final assessment

p. 1620

order could be passed now as the period of limitation expired on 30.09.2021 under Section 153(3) of the Act read with the provisions of the Taxation and other laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short, ‘TOLA”) and the Notification issued thereunder. 3.4 A perusal of the Memorandum of W.P. No.2340/2021 annexed by Petitioners confirms that the facts and dates in SLP(C) No.20569/2023 are congruent to those discussed above and therefore, the same need not reiterated. 3.5 The facts of SLP(C) Nos.20571-20572/2023 (arising out of W.P. Nos.3059-3060/2021) are slightly different although they call for an answer to the same question of law. Unlike the two other petitions which concern an order passed on remand, in these Petitions the original orders of assessment were required to be passed within the period of limitation set out in Section 153(1) of the Act. On 30.11.2018, the respondents therein filed their Return of Income declaring total loss for AY 2018-19. On 23.11.2020, the first notices under Section 142(1) were issued to them, which were replied to. Several other notices under Section 142(1) were issued and replies given before, finally, on 23.09.2021 a Show Cause Notice was issued in both cases and draft assessment orders under Section 144C passed on 28.09.2021. As per Section 153(1) of the Act, the limitation for passing of final assessment orders is eighteen months from the end of the Assessment Year. Ordinarily, the original due date would have been 30.09.2020, however, due to the operation of the TOLA and the Notifications issued thereunder, the due date was extended to 30.09.2021. Vide the Common Impugned Order, the High Court was of the view that there is no difference in the legal principle falling for consideration in all these petitions since, in these two petitions, the draft order under Section 144C was passed on 28.09.2021 and no final assessment order could forthwith be passed due to the expiry of due date on 30.09.2021. Being aggrieved by the said reasoning, the revenue has preferred these appeals. 3.6 The impugned order in SLP(C) No.25798 of 2024 is against an interim order passed by the Bombay High Court and the Writ Petition is pending adjudication.

p. 1621

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

Submissions:

4. We have heard learned Additional Solicitor General (ASG) Sri N. Venkataraman for the revenue and learned senior counsel Sri J.D. Mistry for the respondents at length. We have also perused the material on record. 4.1 Learned Additional Solicitor General contended that the method of assessment which is contemplated for eligible assessees as defined under Section 144C(15) of the Act is distinct from the normal category of assessees as there is a departure in the assessment procedure under Section 144C of the Act which is a Code by itself. This is because under Section 144C(1) of the Act, a draft order has to be made and communicated to the eligible assessees who are defined under Section 144C(15) of the Act. That a draft assessment order is not an enforceable order but is made by the Assessing Officer prior to the making of a final assessment order which is in the case of eligible assessees only. The respondents herein fall within clause (b) of Section 144C(15). That insofar as an ordinary assessment is concerned, the time frame is as provided under Section 153 of the Act but if there is a variation arising in respect of a proceeding before the Transfer Pricing Officer, then under Section 92CA of the Act as there is an extension of the period of twenty-one months contemplated under Section 153(1) of the Act by a further period of twelve months, the total time period is increased to thirty-three months for passing an assessment order from the end of the relevant year. That, Section 144C has its own timeline which is in addition to what is prescribed under Section 153 of the Act as it is in the nature of an exception to the latter provision. 4.2 It was submitted by Sri Venkataraman that under Section 144C of the Act, non-obstante clauses have been used in three sub- sections and the import of those clauses have to be clearly interpreted. In this context, he submitted that the Court must also bear in mind the difference between a non-obstante clause and a “subject to” clause which are used as distinct legislative devices for bringing forth the intent of the legislature, which is the Parliament in the instant case. Having regard to the non- obstante clause in sub-section (1) of Section 144C of the Act, it

p. 1622

was submitted that there is no time frame envisaged for passing of a draft order by the Assessing Officer when a matter is remanded from the Tribunal under Section 254 of the Act. That the non-obstante clause would indicate that the time frame of twelve months mentioned in the proviso to sub-section (3) of the Section 153 would not apply to the passing of a draft order under sub-section (1) of Section 144C of the Act. However, the non-obstante clauses in sub-sections (4) and (13) of Section 144C would indicate that the said clauses are referrable directly to Section 153(3) of the Act. That, having regard to the use of the non-obstante clauses under Section 144C of the Act, the said Section would have to be interpreted in juxtaposition with Section 153(3) of the Act which deals with the limitation for the passing of an assessment order pursuant to a remand order passed by the Tribunal. 4.3 Learned Additional Solicitor General further submitted that in the impugned orders of the Bombay High Court which have followed the judgment of the Madras High Court in the case of Commissioner of Income Tax vs. Roca Bathroom Products Pvt. Ltd., 2022 SCC Online Madras 8777 (“Roca Bathroom Products”) are wholly incorrect inasmuch as the High Courts have failed to appreciate the fact that Section 144C is a Code by itself with regard to the making of an assessment order insofar as the category of eligible assessees are concerned. Hence, the said judgments require to be overruled. A similar view has also been taken by the Delhi High Court which is also incorrect.

5. Per contra, learned senior counsel Sri Mistry at the outset submitted that the Special Leave Petitions ought to be dismissed owing to “low tax effect”. However, the said submission has not been acted upon by us having regard to the important question of law which has been raised in these appeals. 5.1 Learned senior counsel for the respondents commenced his arguments by submitting that under the Act, there are only four provisions which empower the Assessing Officer to make an assessment order which are Sections 143(3), 144, 147 and

158. The exception to this is Section 172 of the Act under which an assessment order is passed on the landing of a ship on the Indian shores.

p. 1623

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

5.2 Arguing on the merits of the case, Sri Mistry contended that Section 153(1) of the Act prescribes the limitation period for completion of assessment, reassessment or recomputation which is twenty-one months subject to the provisos therein when an assessment is made under Sections 143 or 144 of the Act; that, in a case where Section 92C applies, sub-section (4) of Section 153 may have expressly extended the limitation period by twelve months which is by way of a recent amendment and is not applicable to the respondents-assessees in the present cases. Also, while calculating the period of limitation, the Explanation to Section 153 expressly provides the specific periods to be excluded. However, there is no reference to the time consumed in a proceeding under Section 144C being excluded and thereby extending the period of limitation as provided under sub-section (3) of Section 153 of the Act which is applicable to the present cases. Therefore, in all cases, pertaining to an eligible assessee, the procedure contemplated under Section 144C has to be within the time frame prescribed under Section 153(3) of the Act. There is no additional limitation period contemplated over and above what is prescribed in Section 153(3) of the Act which deals with a de novo assessment being made on the setting aside or cancellation of the assessment by the Tribunal under Section 254 of the Act. That in the instant case, there has been a breach of the limitation period while passing the re-assessment order. Hence, the High Court held that the re- assessment order was barred by limitation. 5.3 Elaborating on the said contention, it was argued that the overall time frame for passing an assessment/reassessment order is prescribed under Section 153(1) of the Act, which is a period of twenty-one months subject to the provisos thereto but when Section 153(3) applies, the procedure under Section 144C must be completed within the overall period of twelve months prescribed under Section 153(3). That the expression “an order of fresh assessment” means a final assessment order and not to a draft order to be passed in twelve months. Hence, an intermediary mechanism has been envisaged under Section 144C of the Act before the final order is passed under that Section itself. Further, specific timelines have been indicated under Section 144C for various stages to be completed, which

p. 1624

must be strictly adhered to in order to comply with the limitation period prescribed under Section 153(3) of the Act. In this regard, the judgment of the Madras High Court in the case of Roca Bathroom Products was relied upon. 5.4 Learned senior counsel submitted that the conundrum in this case is regarding a harmonious interpretation of Section 153(3) with Section 144C of the Act. In this regard, our attention was drawn to the Explanation to Section 153 which specifically excludes certain periods under certain circumstances while calculating the limitation period of twelve months under the proviso to Section 153(3) of the Act. It was submitted that if the Parliament intended that the period consumed while carrying out the procedure under Section 144C of the Act had to be excluded from Section 153(3) of the Act then there would have been an express provision to that effect. In the absence of such a provision, the Court would have to strictly interpret Section 144C in light of Section 153(3) of the Act having regard to the intention of the Parliament vis-à-vis eligible assessees. 5.5 Applying the aforesaid submissions to the facts of the case, learned senior counsel Sri Mistry submitted that in the instant case, the order of the Tribunal is dated 04.10.2019 and in terms of the proviso to Section 153(3) of the Act, a period of twelve months is the maximum period in which a final assessment order has to be made de novo by bearing in mind the procedure envisaged under Section 144C of the Act in which event, there would be a period of eighteen months available from 04.10.2019 for passing such a de novo order whereas twelve months is the minimum period available to pass such an order if the order of the Tribunal is dated 31st March of a particular year as the period of twelve months have to be calculated from the end of the financial year in which the order of the Tribunal is received by the concerned Income Tax Commissioner. That Section 153(3) has been amended in the year 2016 which is after the insertion of Section 144C to the Act and the Parliament was well aware of the process envisaged under Section 144C of the Act insofar as eligible assessees are concerned with regard to making of a final assessment order within the aforesaid time frame.

p. 1625

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

5.6 In this regard, reliance was placed on the judgment of this Court in Kalyankumar Ray vs. Commissioner of Income Tax, West Bengal, (1991) 191 ITR 634 (SC) (“Kalyankumar Ray”) to contend that assessment under the Act is an integrated process involving not only the assessment of the total income but also the determination of tax and the latter is as crucial for the assessee as the former. This is because under Section 143(3) the Assessing Officer has to determine, by an order in writing, not only the total income but also the net sum which will be payable by the assessee for the assessment year in question and the demand notice under Section 156 has to be issued in consequence of such an order. The same principle would squarely apply to Section 144C of the Act in the case of eligible assessees also insofar as the limitation period is concerned. 5.7 That an order passed under Section 144C of the Act is not appealable before the Commissioner (Appeal) but directly before the Tribunal vide Section 246A(1)(a). On the other hand, an assessment order made pursuant to the directions of the DRP is appealable under Section 253(1)(d) of the Act before the Tribunal. Thus, an assessment order made under Section 144C is also an assessment made within the meaning of Section 143(3) but appealable before the Tribunal. Therefore, the limitation period prescribed under Section 153(3) to an order made under Section 144C of the Act is squarely applicable. Even though, no limitation period has been prescribed to make a draft assessment order pursuant to a remand made by the Tribunal on setting aside or cancelling the assessment, the fact remains that a final assessment order must be made under Section 144C within the limitation prescribed under the proviso to Section 153(3) of the Act. 5.8 It was emphatically submitted by learned senior counsel Sri Mistry that the non-obstante clause in sub-section (1) of Section 144C of the Act is not with reference to the limitation period prescribed under Section 153 of the Act. Since a draft order has to be made prior to a final assessment order in the case of eligible assessees unlike other categories of assessees, the Parliament has envisaged a special procedure as opposed to the procedure contemplated in the case of ordinary assessees. In

p. 1626

Opinion of Learned Satish Chandra Sharma J.:

6. My learned Brother Satish Chandra Sharma, J. who has penned his judgment is of the view that the learned Additional Solicitor General is right in his submissions and therefore has allowed the Revenue’s appeals while rejecting the contentions advanced on behalf of the respondents-assessees. He has opined that judgments of the Madras High Court in Roca Bathroom Products as well as the impugned orders have to be set-aside. 6.1 Referring to Roca Bathroom Products, my learned brother has stated that sub-section (4) of Section 153 of the Act applied to the instant case, which providing for an additional period of twelve months to complete the assessment and to pass a final order when there is a reference to the Transfer Pricing Officer in terms of Section 92CA of the Act. The Madras High Court on the other hand, held that the proceedings before the DRP and the passing of the Draft Assessment and thereafter the Final Assessment Orders ought to take place within the period of limitation of twelve months as prescribed under Section 153(3) of the Act and not under an additional period of twelve months. The above reasoning has not been accepted by my learned Brother by observing that a fine balance has to be maintained between ensuring that the revenue authorities must have ample time and opportunity to assess the income and to ensure that there is no evasion of tax or escapement of income while at the same time, the rights of the assessees in having their return scrutinised on a timely basis must be balanced. 6.2 In the above backdrop, it has been reasoned that if the entire procedure contemplated in terms of Section 144C of the Act has to be subsumed within the overall time period prescribed under Section 153(3) of the Act, then it would result “in a complete catastrophe for recovering lost tax”, as a narrower period of time will pressurise the Assessing Officer and as a

p. 1627

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

result, the system will become unworkable. However, under Section 144C, specified timelines have been prescribed within which the assessment order must be passed. That although Section 153(3) does not distinguish between persons who are to be assessed under Section 144C of the Act or otherwise, in fact, those whose assessments/reassessments are made under Section 143(3) are different from those under Section 144C of the Act. That under Section 144C of the Act, a totally distinct procedure is contemplated and if a matter is referred to the DRP, then the final assessment has to be made within the period of eleven months from the date of forwarding of the draft assessment order to the DRP. 6.3 According to my learned brother, the High Courts of Bombay and Madras have erred in opining that no exception has been carved out for Section 144C of the Act in any of the sub- sections of Section 153 and therefore, the procedure under Section 144C must necessarily conclude within the timeframe prescribed under Section 153(3) of the Act. My learned Brother has agreed with this view only to a limited extent, insofar as the timeline prescribed under Section 153(3) is concerned in as much as it must apply to the proceedings under Section 144C of the Act but only insofar as they relate to the passing of the draft assessment order contemplated under sub-section (1) of Section 144C of the Act. In other words, the view taken by my learned Brother is that in addition to the timeframe stipulated under Section 153(3) of the Act, i.e., twelve months for making an assessment order, the timeframe that is taken for completing the proceeding under Section 144C would also have to be excluded from the aforesaid twelve months which would automatically extend the limitation period beyond the twelve months as contemplated under Section 153(3) of the Act. This view is sought to be justified by holding that sub-sections (4) and (13) of Section 144C of the Act which contain the non- obstante clauses, exclude the application of Section 153(3) of the Act and the timelines prescribed thereunder. However, the High Courts of Madras and Bombay have taken the view that the timeline under Section 144C further reduces the timeline available to the Assessing Officer to pass an assessment order under that provision and that it limits the timeline in order to

p. 1628

achieve the mandate under Section 153(3) of the Act which according to my learned Brother is an incorrect view. 6.4 That, after the directions are issued by the DRP under Section 144C, a period of one month is contemplated for passing the final assessment order, which in any case has to be passed within an overall twelve months period, under Section 153(3) of the Act. But learned Brother Sharma, J. has opined that the timelines in sub-sections (4) and (13) of Section 144C of the Act are independent of the timeline contemplated under Section 153(3) of the Act and Section 144C operates in a timeline in addition to the timeline contemplated under Section 153(3) of the Act. Therefore, the Bombay and Madras High Courts were not correct in their conclusions. 6.5 It is further reasoned by my learned Brother that Section 153(3) of the Act which prescribes the period of twelve months is only for the purpose of passing a draft order. The non-obstante clause contained in sub-sections (4) and (13) of Section 144C of the Act extend the timeline for passing a final order; that sub- section (4) of Section 144C operates only when the variation proposed in the draft assessment order is not accepted or when the period of filing objections before DRP has expired, which is subsequent to the passing of the draft assessment order. Therefore, the Assessing Officer has to comply with the requirements of Section 153(3) of the Act only insofar as the passing of the draft assessment order is concerned and if the variations made by him in the said order are accepted or objections are not made within a period of thirty days, then the period of one month is extended for passing the final assessment order under Section 144C(4) of the Act. 6.6 Applying the said reasoning to the present case, it has been held that the Tribunal passed the remand order on 04.09.2019 and Assessing Officer ought to have passed the draft assessment order before 30.09.2021 and if in case the acceptance was received or no objection was filed before 30.10.2021 then the final order had to be passed in a month’s time. But if objections were received from the eligible assessee then sub-sections (12) and (13) of Section 144C would apply and the Assessing Officer would have an additional period of one month to pass the final

p. 1629

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

assessment order. This means that if the DRP issues directions, then within a period of one month, the final assessment order has to be passed, which is practically impossible, and the provision would be reduced to an absurdity. Therefore, the view of the High Court of Madras and Bombay was not acceptable to my learned Brother. 6.7 Thus, according to my learned Brother, Sharma, J. the timeline mentioned under Section 153(3) would apply only to the passing of the draft assessment order and if Section 92C applies, then the period would automatically be extended by twelve months under Section 153(4) of the Act. 6.8 Therefore, the impugned orders of the Bombay High Court have been set-aside and the appeals have been allowed by directing the revenue authorities to pass afresh an appropriate order in accordance with law, reserving liberty to the assessees to take recourse to remedies available under the law (by referring to the liberty granted to the parties in terms of paragraph 20 of the judgment and order dated 30.08.2021 passed by the Bombay High Court in Writ Petition No.30944 of 2021).

Relevant Provisions:

7. Before proceeding further, it would be useful to extract the relevant provisions of the Act as under: “2. Definitions. – In this Act, unless the context otherwise requires, - xxx (40) “regular assessment” means the assessment made under sub-section (3) of section 143 or section 144;” 7.1 Section 44BB is a special provision for computing profits and gains in connection with the business of exploration etc., of mineral oils which provision is applicable to the respondent assessees. The explanation in Section 44BB states that a plant includes ships, aircrafts, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of such business and the expression “minerals oil” includes petroleum and natural gas.

p. 1630

7.2 Section 139 speaks of filing of return of income. Section 143 deals with ‘assessment’ while Section 144 deals with ‘best judgment assessment’. Under Section 144A the Joint Commissioner has the power to issue directions in certain cases while under Section 144BA reference can be made to the Principal Commissioner or Commissioner in certain cases. Section 144C deals with reference to dispute resolution panel. The time limit for completion of assessment, reassessment and recomputation is prescribed under Section 153 of the Act. The said Section prescribes the limitation period for the making of, inter alia, assessment orders on the application of several other provisions which is relevant for the purposes of this case. Sections 144C and 153 are extracted as under: “144C. Reference to dispute resolution panel. - (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,— (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with,— (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if— (a) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2).

p. 1631

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

(4) The Assessing Officer shall, notwithstanding anything contained in section 153 or section 153B, pass the assessment order under sub-section (3) within one month from the end of the month in which,— (a) the acceptance is received; or (b) the period of filing of objections under sub- section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely:— (a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),— (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it.

p. 1632

(8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. Explanation.—For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub- section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 or section 153B, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.

p. 1633

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

(14) The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. (14A) The provisions of this section shall not apply to any assessment or reassessment order passed by the Assessing Officer with the prior approval of the Principal Commissioner or Commissioner as provided in sub-section (12) of section 144BA. (14B) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of issuance of directions by the dispute resolution panel, so as to impart greater efficiency, transparency and accountability by— (a) eliminating the interface between the dispute resolution panel and the eligible assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a mechanism with dynamic jurisdiction for issuance of directions by dispute resolution panel. (14C) The Central Government may, for the purpose of giving effect to the scheme made under sub- section (14B), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. (14D) Every notification issued under sub-section (14B) and sub-section (14C) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. (15) For the purposes of this section,—

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(a) “Dispute Resolution Panel” means a collegium comprising of three Commissioners of Income- tax constituted by the Board for this purpose; (b) “eligible assessee” means,— (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company: Provided that such eligible assessee shall not include person referred to in sub-section (1) of section 158BA or other person referred to in section 158BD. (16) The provisions of this section shall not apply to any proceedings under Chapter XIV-B. xxx

153. Time limit for completion of assessment, reassessment and recomputation. - (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty- one months from the end of the assessment year in which the income was first assessable: Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for the words “twenty-one months”, the words “eighteen months” had been substituted: Provided further that in respect of an order of assessment relating to the assessment year commencing on— (i) 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words “twenty-one months”, the words “twelve months” had been substituted;

p. 1635

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

(ii) 1st day of April, 2020, the provisions of this sub-section shall have effect, as if for the words “twenty-one months”, the words “eighteen months” had been substituted: Provided also that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2021, the provisions of this sub-section shall have effect, as if for the words “twenty-one months”, the words “nine months” had been substituted: Provided also that in respect of an order of assessment relating to the assessment year commencing on or after the 1st day of April, 2022, the provisions of this sub-section shall have effect, as if for the words “twenty-one months”, the words “twelve months” had been substituted. (1A) Notwithstanding anything contained in sub- section (1), where a return under sub-section (8A) of section 139 is furnished, an order of assessment under section 143 or section 144 may be made at any time before the expiry of twelve months from the end of the financial year in which such return was furnished. (1B) Notwithstanding anything in sub-section (1), where a return is furnished in consequence of an order under clause (b) of sub-section (2) of section 119, an order of assessment under section 143 or section 144 may be made at any time before the expiry of twelve months from the end of the financial year in which such return was furnished. (2) No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of nine months from the end of the financial year in which the notice under section 148 was served: Provided that where the notice under section 148 is served on or after the 1st day of April, 2019, the

p. 1636

provisions of this sub-section shall have effect, as if for the words “nine months”, the words “twelve months” had been substituted. (3) Notwithstanding anything contained in sub- sections (1), (1A) and (2), an order of fresh assessment or fresh order under section 92CA, as the case may be, in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, or an order under section 92CA, as the case may be, may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be: Provided that where the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words “nine months”, the words “twelve months” had been substituted. (3A) Notwithstanding anything contained in sub- sections (1), (1A), (2) and (3), where an assessment or reassessment is pending on the date of initiation of search under section 132 or making of requisition under section 132A, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections shall,—

p. 1637

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

(a) in a case where such search is initiated under section 132 or such requisition is made under section 132A; (b) in the case of an assessee, to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; (c) in the case of an assessee, to whom any books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein, relates to, be extended by twelve months. (4) Notwithstanding anything contained in sub- sections (1), (1A), (2), (3) and (3A), where a reference under sub-section (1) of section 92CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections (1), (1A), (2), (3) and (3A), shall be extended by twelve months. (5) Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer or the Transfer Pricing Officer, as the case may be, wholly or partly, otherwise than by making a fresh assessment or reassessment or fresh order under section 92CA, as the case may be, such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be:

p. 1638

Provided that where it is not possible for the Assessing Officer or the Transfer Pricing Officer, as the case may be, to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be on receipt of such request in writing from the Assessing Officer or the Transfer Pricing Officer, as the case may be, if satisfied, may allow an additional period of six months to give effect to the order: Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3). (5A) Where the Transfer Pricing Officer gives effect to an order or direction under section 263 by an order under section 92CA and forwards such order to the Assessing Officer, the Assessing Officer shall proceed to modify the order of assessment or reassessment or recomputation, in conformity with such order of the Transfer Pricing Officer, within two months from the end of the month in which such order of the Transfer Pricing Officer is received by him. (6) Nothing contained in sub-sections (1), (1A) and (2) shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of sub-sections (3), (5) and (5A), be completed— (i) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any

p. 1639

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be; or (ii) where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. (7) Where effect to any order, finding or direction referred to in sub-section (5) or sub-section (6) is to be given by the Assessing Officer, within the time specified in the said sub-sections, and such order has been received or passed, as the case may be, by the income-tax authority specified therein before the 1st day of June, 2016, the Assessing Officer shall give effect to such order, finding or direction, or assess, reassess or recompute the income of the assessee, on or before the 31st day of March, 2017. (8) Notwithstanding anything contained in the foregoing provisions of this section, sub-section (2) of section 153A or sub-section (1) of section 153B or section 158BE, the order of assessment or reassessment, relating to any assessment year, which stands revived under sub-section (2) of section 153A or sub-section (5) of section 158BA, shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B or section 158BE, whichever is later.

p. 1640

(9) The provisions of this section as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment, reassessment or recomputation made before the 1st day of June, 2016: Provided that where a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 has been issued prior to the 1st day of June, 2016 and the assessment or reassessment has not been completed by such date due to exclusion of time referred to in Explanation 1, such assessment or reassessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016). Explanation 1.—For the purposes of this section, in computing the period of limitation— (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129; or (ii) the period commencing on the date on which stay on the assessment proceeding was granted by an order or injunction of any court and ending on the date on which certified copy of the order vacating the stay was received by the jurisdictional Principal Commissioner or Commissioner; or (iii) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B), under clause (i) of the first proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the

p. 1641

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

case may be, under those clauses is received by the Assessing Officer; or (iv) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited or inventory valued under sub-section (2A) of section 142 and— (a) ending with the last date on which the assessee is required to furnish a report of such audit or inventory valued under that sub-section; or (b) where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner; or (v) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer; or (vi) the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under sub-section (1) of section 158A and ending with the date on which the order under sub-section (3) of that section is made by him; or (vii) in a case where an application made before the Income-tax Settlement Commission is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which an application is made before the Settlement Commission under section 245C and ending with the date on which the order under sub- section (1) of section 245D is received by the Principal Commissioner or Commissioner under sub-section (2) of that section; or

p. 1642

(viii) the period commencing from the date on which an application is made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub-section (3) of section 245R; or (ix) the period commencing from the date on which an application is made before the Authority for Advance Rulings or before the Board for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub-section (7) of section 245R; or (x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the Assessing Officer; or (xii) the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A

p. 1643

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee,— (a) in whose case such search is initiated under section 132 or such requisition is made under section 132A; or (b) to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; or (c) to whom any books of account or documents seized or requisitioned pertains or pertains to, or any information contained therein, relates to; or (xiii) the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner under the second proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order under clause (ii) or clause (iii) of the fifteenth proviso to clause (23C) of section 10 or clause (ii) or clause (iii) of sub- section (4) of section 12AB, as the case may be, is received by the Assessing Officer, shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-sections (1), (1A), (2), (3) and sub-section (8) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly:

p. 1644

Provided further that where the period available to the Transfer Pricing Officer is extended to sixty days in accordance with the proviso to sub-section (3A) of section 92CA and the period of limitation available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: Provided also that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (4) of section 245HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under sections 149, 154, 155 and 158BE and for the purposes of payment of interest under section 244A, this proviso shall also apply accordingly: Provided also that where the assessee exercises the option to withdraw the application under sub- section (1) of section 245M, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, shall, after the exclusion of the period under sub-section (5) of the said section, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year: Provided also that for the purposes of determining the period of limitation under sections 149, 154 and 155, and for the purposes of payment of interest under section 244A, the provisions of the fourth proviso shall apply accordingly:

p. 1645

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

Provided also that where after exclusion of the period referred to in clause (xii) the period of limitation for making an order of assessment, reassessment or recomputation, as the case may be, ends before the end of the month, such period shall be extended to the end of such month. Explanation 2.—For the purposes of this section, where, by an order referred to in clause (i) of sub- section (6),— (a) any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order; or (b) any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, if such other person was given an opportunity of being heard before the said order was passed.” 7.3 Section 246A deals with appeals before the Commissioner (Appeals) which is essentially with regard to an assessment order passed under sub-section (3) of Section 143 or sub- section (12) of Section 144BA or Section 144 made by the Assessing Officer. However, any order passed in pursuance of the directions of the DRP is not appealable to the Commissioner (Appeals) as the same is excluded under the said provision. On the other hand, under Section 253(1)(d), an order passed by an Assessing Officer under sub-section (3) of Section 143 or Section 147 or Section 153A or Section 153C in pursuance of the directions issued by the DRP, or an order passed under Section 154 in respect of such order can be appealed directly to the tribunal.

p. 1646

Material relied upon by the Respondents in support of their Submissions:

8. Learned senior counsel for the respondents relied upon the Budget Speeches of the Finance Ministers of the relevant years in support of their submission that it has been the intention of the Parliament to reduce the time consumed in making an assessment order in the case of eligible assessees. The relevant portions are extracted as under:

(i) Speech of Finance Minister on July 6, 2009 “96. In order to further improve the investment climate in the country, we need to facilitate the resolution of tax disputes faced by foreign companies within a reasonable time frame. This is particularly relevant for such companies in the Information Technology (IT) sector. I, therefore, propose to create an alternative dispute resolution mechanism within the Income Tax Department for the resolution of transfer pricing disputes. To reduce the impact of judgemental errors in determining transfer price in international transactions, it is proposed to empower the Central Board of Direct Taxes (CBDT) to formulate ‘safe harbour’ rules. (underlining by me)

(ii) Memorandum Regarding Delegated Legislation Clause 55 “Clause 55 of the Bill seeks to insert a new section 144C relating to reference to Dispute Resolution Panel. The proposed new section provides for a dispute resolution mechanism for the purpose of speedy disposal of the objections raised by the eligible assessee under this new section. Accordingly, it is proposed to empower the Board to make rules for the efficient functioning of the Dispute Resolution Panel for expeditious disposal of the objections filed by the eligible assessee.” xxx

p. 1647

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

Provision for constitution of alternate dispute resolution mechanism The dispute resolution mechanism presently in place is time consuming and finality in high demand cases is attained only after a long-drawn litigation till Supreme Court. Flow of foreign investment is extremely sensitive to prolonged uncertainty in tax related matter. Therefore, it is proposed to amend the Income-tax Act to provide for an alternate dispute resolution mechanism which will facilitate expeditious resolution of disputes in a fast track basis. The salient features of the proposed alternate dispute resolution mechanism are as under:— (1) The Assessing Officer shall, forward a draft of the proposed order of assessment (hereinafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,- (a) File his acceptance of the variations to the Assessing Officer; or (b) File his objections, if any, to such variation with,— (i) The Dispute Resolution Panel; and (ii) The Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if — (a) The assessee intimates to the Assessing Officer the acceptance of the variation; or (b) No objections are received within the period specified in sub-section (2). (4) The Assessing Officer shall, notwithstanding anything contained in section 153, pass the assessment order

p. 1648

under sub-section (3) within one month from the end of the month in which,— (a) The acceptance is received; or (b) The period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objections are received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely:— (a) Draft order; (b) Objections filed by the assessee; (c) Evidence furnished by the assessee; (d) Report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) Records relating to the draft order; (f) Evidence collected by, or caused to be collected by, it; and (g) Result of any enquiry made by, or caused to be made by it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5), - (a) Make such further enquiry, as it thinks fit; or (b) Cause any further enquiry to be made by any income tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order.

p. 1649

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

(9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub- section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which the direction is received. (14) The Board may make rules for the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed, under sub-section(2), by the eligible assessee. (15) For the purposes of this section,— (a) “Dispute Resolution Panel” means a collegium comprising of three commissioners of Income-tax constituted by the Board for this purpose; (b) “eligible assessee” means,- (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any foreign company.

p. 1650

Further, it is proposed to make consequential amendments— (i) in sub-section (1) of section 131 so as to provide that “Dispute Resolution Panel” shall have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908); (ii) in clause (a) of sub-section (1) of section 246 so as to exclude the order of assessment passed under sub- section (3) of section 143 in pursuance of directions of “Dispute Resolution Panel” as an appealable order and in clause (c) of sub-section (1) of section 246 so as to exclude an order passed under section 154 of such order as an appealable order; (iii) in sub-section (1) of section 253 so as to include an order of assessment passed under sub-section (3) of section 143 in pursuance of directions of “Dispute Resolution Panel” as an appealable order. These amendments will take effect from 1st October, 2009. [Clauses 49,55,71,72]” (underlining by me)

(iii) Notes on Clauses Clause 55 of the Bill seeks to insert a new section 144C in the Income-tax Act relating to Dispute Resolution Panel. The subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view take very long time with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been proposed to be inserted so as to provide inter alia the Dispute Resolution Panel as an alternative dispute resolution mechanism. This amendment will take effect from 1st October, 2009.

p. 1651

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

(iv) Explanatory Notes to the Provisions of the Finance Act, 2016 dated 20th January 2017

57. Rationalisation of time limit for assessment, reassessment and recomputation. 57.1 The existing statutory time limit for completion of assessment proceedings is two years from the end of the assessment year in which the income was first assessable. It is desirable that proceedings under the Act are finalised more expeditiously as digitisation of processes within the Department has enhanced its efficiency in handling workload. In order to simplify the provisions of existing section 153 of the Income-tax Act by retaining only those provisions that are relevant to the current provisions of the Income-tax Act, section 153 of the Income-tax Act has been amended by substituting the existing section with the following changes in time limit from the existing time limits: (i) the period, for completion of assessment under section 143 or section 144 has been changed from existing two years to twenty-one months from the end of the assessment year in which the income was first assessable; (ii) the period for completion of assessment under section 147 has been changed from existing one year to nine months from the end of the financial year in which the notice under section 148 was served; (iii) the period for completion of fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment has been changed from existing one year to nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, or the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner 57.2 It is further provided that the period for giving effect to an order, under sections 250 or 254 or 260 or 262 or 263

p. 1652

or 264 of the Income-tax Act or an order of the Settlement Commission under sub-section (4) of section 245D of the Income-tax Act, where effect can be given wholly or partly otherwise than by making a fresh assessment or reassessment shall be three months from the end of the month in which order is received or passed, as the case may be, by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. It is also provided that in a case where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such reasons in writing from the Assessing Officer, if satisfied, may allow additional time of six months to give effect to the said order. However, in respect of cases pending as on 1st June 2016, the time limit for passing such order has been extended to 31.3.2017. 57.3 It is also provided that where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263, or section 264 of the Income-tax Act or in an order of any court in a proceeding otherwise than by way of appeal or reference under the Income-tax Act, then such assessment, reassessment or recomputation shall be made on or before the expiry of twelve months from the end of the month in which such order is received by the Principal Commissioner or Commissioner. However, for cases pending as on 1.6.2016, the time limit for taking requisite action is 31.3.2017 or twelve months from the end of the month in which such order is received, whichever is later. 57.4 Where an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147 of the Income-tax Act, such assessment shall be made on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. However, for cases pending as on 1.6.2016, the time limit for taking requisite

p. 1653

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

action shall be 31.3.2017 or twelve months from the end of the month in which order in case of firm is passed, whichever is later. 57.5 Similarly, consequential changes in time limit for completion of assessment or reassessment by the Assessing Officer have been made in accordance with the extension of time limit provided to the Transfer Pricing Officer in certain cases by amendment in subsection (3A) to section 92CA of the Income-tax Act. 57.6 The provisions of section 153 of the Income-tax Act as they stood immediately before their amendment by the Act shall apply to and in relation to any order of assessment, reassessment or recomputation made before the 1st of June, 2016. 57.7 Applicability: These amendments take effect retrospectively from 1st of June, 2016 (underlining by me)

(v) Explanatory Notes to the Provisions of the Finance Act, 2017 dated 15th February 2018

60. Rationalisation of time limits for completion of assessment, reassessment and re-computation and reducing the time for filing revised return. 60.1 The provisions of section 153 of the Income-tax Act specify the time limit for completion of assessment, reassessment and re-computation of cases mentioned therein. 60.2 In an effort to minimise human interface and move towards technology, massive computerisation has been carried out in the Department, which has translated into overall enhanced efficiency in the functioning of the Department. In view of the same, sub-section (1) of section 153 of the Income-tax Act has been amended to provide that for the assessment year 2018-19, the time limit for making an assessment order under sections 143 or 144 of the Income-tax Act shall be reduced from twenty-one months

p. 1654

to eighteen months from the end of the assessment year, and for the assessment year 2019-20 and onwards, the said time limit shall be twelve months from the end of the assessment year in which the income was first assessable. 60.3 Sub-section (2) of section 153 of the Income-tax Act has further been amended to provide that the time limit for making an order of assessment, reassessment or recomputation under section 147 of the Income-tax Act, in respect of notices served under section 148 of the Income-tax Act on or after the 1st day of April, 2019 shall be twelve months from the end of the financial year in which notice under section 148 is served. 60.4 Sub-section (3) of section 153 of the Income-tax Act has also been amended to provide that the time limit for making an order of fresh assessment in pursuance of an order passed or received in the financial year 2019-20 and onwards under sections 254 or 263 or 264 of the Income-tax Act shall be twelve months from the end of the financial year in which order under section 254 is received or order under section 263 or 264 is passed by the authority referred to therein. (underlining by me)

(vi) Memorandum Explaining the provisions in the Finance Bill 2021 Reduction of time limit for completing assessment Section 153 of the Act contains provisions in respect of time-limit for completion of assessment, reassessment and re-computation under the Act. The sub-section (1) of the said section provides that the time-limit for passing an assessment order under section 143 or 144 of the Act shall be 21 months from the end of the assessment year in which the income was first assessable. However, this time limit had earlier been curtailed in order to improve the efficacy and efficiency of the Department to give effect to computerization of processes under the Act. As a result, the time limit for completion of assessment proceedings

p. 1655

Assistant Commissioner of Income Tax (International Taxation) & Others v. Shelf Drilling Ron Tappmeyer Ltd. Etc.

under sections 143 or 144 of the Act was reduced to 18 months for A.Y. 2018-19 and 12 months for A.Y. 2019-20 and subsequent assessment years vide the Finance Act, 2017. Since then, the assessment procedure has been completely overhauled by the introduction of the Faceless Assessment Scheme, 2019. The assessment procedure is now conducted in a completely faceless and jurisdiction- less way where all internal and external communication is made electronically and different aspects of the assessment procedure like verification, scrutiny of books of accounts etc. are carried on by different units. The person-to-person interface between the taxpayer and the Department has been eliminated. This team-based approach for assessment with a dynamic jurisdiction is technologically driven and very efficient. Thus, the time required for completion of assessment procedure needs to be further reduced. The benefits of shorter time period for scrutiny proceedings are manifold. On the one hand, it reduces the compliance burden on the taxpayers who find it easier to explain matters pertaining to a recent previous year which also improve the ease of doing business. On the other hand, it enhances the ability of the Department to detect and bring to tax any leakages of revenue as the instances of tax evasion come to the notice of the Department within a shorter span of time. Hence, it has been proposed that the time limit for completion of assessment proceedings may be reduced further by three months. Thus the time for completing of assessment is proposed to be nine months from the end of the assessment year in which the income was first assessable, for the assessment year 2021-22 and subsequent assessment years. This amendment will take effect from 1st April, 2021 [Clause 41]” (underlining by me)

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(vii) Memorandum Explaining the provisions in the Finance Bill 2022

2. As part of this process of making the tax administration transparent and efficient, provisions for notifying faceless schemes under sections 92CA, 144C, 253 and 264A were introduced in the Act through Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 01.11.2020 and under section 255, was inserted through Finance Act, 2021 with effect from 01.04.2021:

S. Section Scheme Date of No. Limitation

1. 92CA Faceless 31st day of determination of March, 2022 arm’s length price

2. 144C Faceless Dispute 31st day of Resolution Panel March, 2022

3. 253 Faceless appeal to 31st day of Appellate Tribunal March, 2022

4. 255 Faceless 31st day of procedure of March, 2023 Appellate Tribunal

3. Section 92CA and section 144C are principally related to the transfer pricing functions and international taxation which are presently out of the regime of faceless assessment. New schemes for these two functions are a part of the assessment function and should follow the faceless assessment procedure, wherein certain modifications are proposed which will have an impact on the information technology structure. Therefore, notification at this time shall result in delay in stabilization of the systems.

4. As for notification of scheme under section 255, the Appellate Tribunal is deemed to be a civil court for all the purposes of section 195 of the Act and Chapter XXXV of the Code of Criminal Procedure, 1898. Therefore, a scheme governing the procedures to be followed by such

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a body needs to be formulated after due consultations with Ministry of Law & Justice. Similarly, the scheme under section 253 have to follow the scheme under section 255.

5. In light of the above limitations it is proposed to extend the date for issuing directions for the purposes of these sections 92CA, 144C, 253 and 255 till 31st March, 2024. (underlining by me)

8.1 A perusal of the speech of the Finance Minister dated 06.07.2009 in support of the Finance (No.2) Bill, 2009 (for short, ‘the 2009 Bill’) makes it apparent that the intent of the Parliament behind Section 144C is to expedite the final disposal of tax disputes pertaining to an eligible assessee. It should be recalled that a three-Judge Bench of this Court in Shree Sajjan Mills Ltd. vs. CIT, (1985) 4 SCC 590 observed that the principle that a taxing statute should be strictly construed does not exclude a reasonable construction which gives effect to the purpose or intention of a provision as apparent from the scheme of the Act. It goes without saying that such reasonable construction is to be achieved only with the assistance of the internal and external aids permissible under the law and not by drawing reliance on any superlative or equitable considerations or, even, the goal of “recovering lost tax”. 8.2 Supporting legislative intent is also clear from the Memorandum to the 2009 Bill which vide clause (55) introduced Section 144C in the Act. The Memorandum specifically noted that the 2009 Bill amended the Act, inter alia, with a view to ‘encouraging the growth of foreign investment in India by providing for a speedy dispute resolution mechanism.’ It was cautiously noted that flow of foreign investment is extremely sensitive to prolonged uncertainty in tax matters and the alternate dispute mechanism was being brought in precisely to usher in a regime of expeditious resolution of tax disputes. The note on clause (55) exhibits a similar intent. It is noted that the ‘subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view.’ The same note further explained that course correction from such

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a view took a very long time within the then existing appellate structure, and therefore Section 144C was inserted to ensure speedy disposal by the creation of the DRP as an ‘alternative dispute resolution mechanism within the income-tax department’. In my view, these notes reinforce the evident parliamentary intent. In particular, it is useful to emphasise that DRP was envisioned as an alternative dispute resolution mechanism ‘within the income-tax department’. This informs us that the procedure under Section 144C envisions the procedure to be completed between the Revenue and the assessee and within such procedure, the compartmentalised limitations for the DRP and Assessing Officer are outlined in the relevant sub-sections. The import of this conspectus approach is a stricter interpretation of the timelines of Section 144C. To read it otherwise, would only inflate the timelines for completion of assessment order of an eligible assessee which would be doing violence to the intent implicit from the text.

8.3 Bearing the above object of the Parliament as adumbrated by the Budget speeches of the Finance Ministers for the respective years the provision under consideration would have to be interpreted on the basis of the settled rules and principles of interpretation of statutes which I shall now discuss.

Principles of Statutory Interpretation:

9. Before proceeding further, it would be useful to discuss the relevant principles of statutory interpretation from authoritative sources.

9.1 A statute or any enacting provision therein must be so construed as to make it effective and operative. Thus, courts should lean against construction which reduces a provision to a futility. It has been observed by Lord Dunedin of the House of Lords that “A statute is designed to be workable, and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable.” vide Whitney vs. Inland Revenue Commissioner, (1926) A.C. 37 (“Whitney”). Therefore, any construction which would defeat the plain intention of the Legislature must be rejected by the courts. Hence, courts should avoid a construction which would reduce the provision

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to futility and rather accept a construction based on the view that Parliament or any Legislature would legislate only for the purpose of bringing about an effective result. It is in that context that purposive construction by court is gaining acceptance rather than holding that there is absurdity in the statute. The doctrine of purposive interpretation may be taken recourse to for the purpose of giving full effect to the statutory provisions and the courts must state what meaning the statue should bear rather than rendering the statute a nullity. 9.2 Another principle of statutory interpretation is that when the words of a statute are clear, plain or unambiguous, i.e., they are reasonably susceptible to only one meaning, courts are bound to give effect to that meaning irrespective of consequences. The results of the construction are then not a matter for the court, even though they may be strange or surprising, unreasonable or unjust or oppressive. Gajendragadkar, J. in Kanailal Sur vs. Paramnidhi Sadhu Khan , AIR 1957 SC 907 opined thus: “If the words used are capable for one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act.”

S.R. Das, J. in CIT, Agri vs. Keshab Chandra Mandal, AIR 1950 SC 265 observed thus: “Hardship or inconvenience cannot alter the meaning of the language employed by the Legislature if such meaning is clear on the face of the statute or the rules.” He further observed that: “The spirit of the law may well be an elusive and unsafe guide and the supposed spirit can certainly not be given effect to in opposition to the plain language of the sections of the Act”. Vide Rananjaya Singh vs. Baijnath Singh, AIR 1954 SC 749.” 9.3 Similarly, Subba Rao, J. observed that in interpretation of a statute, the primary test is – the language employed in the Act and when the words are clear and plain, the court is bound

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to accept the expressed intention of the Legislature, vide MV Joshi vs. MU Shimpi, AIR 1961 SC 1494. 9.4 This means that mere hardship cannot be a ground for not giving effective and grammatical meaning to every word of the provisions of a statute if the language used therein is unequivocal. Thus, an unambiguous and plain statute must be given its full interpretation. It has been observed that unambiguous means “unambiguous in context”. The expression “context” in this connection is used in a wide sense as including not only other enacting provisions of the same statute, but its preamble, the existing state of the law, other statutes in pari materia and the mischief which by those and other legitimate means can be discerned that the statute was intended to remedy. In this context, it would be useful to recall the words of Grover, J. in VO Tractoroexport vs. Tarapore and Co., AIR 1971 SC 1, which are as follows:- “We are aware of no rule of interpretation by which rank ambiguity can be first introduced by giving certain expressions a particular meaning and then an attempt can be made to emerge out of semantic confusion and obscurity by having resort to presumed intention of the Legislature to give effect to international obligations.” 9.5 On the other hand, plain meaning rule applies at the stage when the words have been construed in their context and the conclusion has been reached that they are susceptible to only one meaning. In that event, the meaning so derived is to be given effect to irrespective of consequences. 9.6 Further, while interpreting a statute it must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make out a consistent enactment of the whole statutes. Such a construction has a merit of avoiding any inconsistency or repugnancy either within a Section or between a Section and other parts of the statutes. It is the duty of the courts to avoid a clash between two Sections of the same Act and “whenever it is possible to do so, to construe provisions which appear to conflict so that they harmonise”. While doing so the edges have to be ironed out so as to read the provisions of an Act

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in consonance with the object of the Act. Thus, the provisions of one Section of a statute cannot be used to defeat another section of the same statute. The same rule applies to a sub- section of a Section. In Venkataramana Devaru vs. State of Mysore AIR 1958 SC 255, Venkatarama Aiyar, J. said that “the rule of construction is well settled that when there are in an enactment two provisions which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is what is known as the rule of harmonious construction.” 9.7 Therefore, effect should be given to both provisions. Thus, a construction which reduces one of the provisions to a “useless lumber” or ‘dead letter’ is to be avoided. One of the ways in dealing with such a situation is to find out which of the two apparently conflicting provisions is more general and which is more specific and to construe the same accordingly. However, if a specific provision has to be read within the mandate of a general provision then the same has to be accordingly construed so as to give effect to the mandate of the general provision. However, if a situation arises where two Sections of the Act cannot be reconciled, as there is an absolute contradiction between them, it is often said that the latter must prevail. Another way of looking at such a situation is to ascertain which is the leading provision and which is the subordinate provision and which must give way to the other, but only if a harmonious construction of two apparently contradictory provisions is possible which will not lead to any absurdity or give rise to practical inconvenience or make well-established provision of existing law nugatory, then the same should be resorted to. In other words, an interpretation which would dilute the intention of the Parliament or give rise to an absurdity or lead to any provision of law being rendered nugatory has to be eschewed.

(Source: GP Singh – Principles of Statutory Interpretation, 15th Ed. LexisNexis).

Non-Obstante Clause:

10. A non-obstante clause is generally incorporated in a statute to give an overriding effect to a particular section or the statute as a whole.

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While interpreting a non-obstante clause, the court is required to find out the extent to which the legislature intended to do so and the context in which the non-obstante clause is used. This rule of interpretation has been applied in several decisions. 10.1 In R.S. Raghunath vs. State of Karnataka, (1992) 1 SCC 335, a three-Judge Bench of this Court referred to the earlier judgments and observed as under: “11. … the non obstante clause is appended to a provision with a view to give the enacting part of the provision an overriding effect in case of a conflict. But the non obstante clause need not necessarily and always be coextensive with the operative part so as to have the effect of cutting down the clear terms of an enactment and if the words of the enactment are clear and are capable of a clear interpretation on a plain and grammatical construction of the words the non obstante clause cannot cut down the construction and restrict the scope of its operation. In such cases the non obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the legislature by way of abundant caution and not by way of limiting the ambit and scope of the Special Rules.” 10.2 In A.G. Varadarajulu vs. State of T.N., (1998) 4 SCC 231 (“A.G. Varadarajulu “) this Court relied on the judgment in Aswini Kumar Ghose vs. Arabinda Bose, (1952) 2 SCC

237. This Court while interpreting the non-obstante clause contained in Section 21-A of the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 held: “16. It is well settled that while dealing with a non obstante clause under which the legislature wants to give overriding effect to a section, the court must try to find out the extent to which the legislature had intended to give one provision overriding effect over another provision. Such intention of the legislature in this behalf is to be gathered from the enacting part of the section. In Aswini Kumar Ghose v. Arabinda

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Bose [(1952) 2 SCC 237 : AIR 1952 SC 369] Patanjali Sastri, J. observed: (AIR p. 377, para 27) ‘27. … The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously’;’” 10.3 In Interplay Between Arbitration Agreements under A&C Act, 1996 and Stamp Act, 1899, (2024) 6 SCC 1, a sevenJudge bench of this Court observed in Paragraphs 83-84 as under: “83. …. A clause beginning with the expression ‘notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract’ is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of the Act or the contract mentioned in the non obstante clause. It is equivalent to saying that in spite of the provision of the Act or any other Act mentioned in the non obstante clause or any contract or document mentioned the enactment following it will have its full operation or that the provisions embraced in the non obstante clause would not be an impediment for an operation of the enactment.’ [As observed in Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, (1986) 4 SCC 447, at pp. 477-78, para 67.]

84. Although a non obstante clause must be allowed to operate with full vigour, its effect is limited to the extent intended by the legislature. In Icici Bank Ltd. v. Sidco Leathers Ltd. [Icici Bank Ltd. v. Sidco Leathers Ltd., (2006) 10 SCC 452] a two-Judge Bench of this Court held that a non obstante clause must be interpreted by confining it to the legislative policy. Thus, even if a non obstante clause has wide amplitude, the extent of its impact has to be measured in view of the legislative intention and legislative policy.

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[JIK Industries Ltd. v. Amarlal V. Jumani, (2012) 3 SCC 255 : (2012) 2 SCC (Civ) 82 : (2012) 2 SCC (Cri) 125] In view of this settled legal position, the issue that arises for our consideration is the scope of the non obstante clause contained in Section 5 of the Arbitration Act.” The seven-Judge Bench was considering the non-obstante clause in Section 5 of the Arbitration Act, which for immediate reference, is extracted as under: “Section 5. Extent of judicial intervention.— Notwithstanding in any other law for the time being in force, in matters governed by this part, no judicial authority shall intervene except where so provided in this part.” 10.4 It was further observed in reference to ICICI Bank Ltd. vs. Sidco Leathers Ltd., (2006) 10 SCC 452 : (2006) 131 Comp Cas 451, that even if a non-obstante clause has wide amplitude, the extent of its impact has to be measured in view of the legislative intention and legislative policy. Further, the utility of non-obstante clause is where there is a conflict between what is stated in a provision and any other law for the time being in force, or anything else contained in the said enactment. As already noted, only in the case of a conflict, the object is to give the enacting or operative portion of the section an overriding effect, not otherwise. In other words, only in a case of a conflict, a provision in an enactment containing a non-obstante clause, would be given its full operation and what is stated in the non-obstante clause will not be an impediment for the operation of the particular provision in the enactment. This would mean that what is stated in the non-obstante clause would not take away the effect of any provision of the Act which follows the same. 10.5 In Aswini Kumar Ghose vs. Arabinda Bose, (1952) 2 SCC 237 : AIR 1952 SC 369, this Court speaking through Patanjali Sastri, C.J. observed that only when there is any inconsistency between what is contained in a provision of an enactment and a non-obstante clause would make the latter

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in what is to yield to what is stated in the provision following the same. In other words, it is only when the enacting part of the statute cannot be read harmoniously with what is stated in the non-obstante clause, would the non-obstante clause result in yielding to what is stated in the enacting part. Similarly, in Municipal Corpn., Indore vs. Ratnaprabha, (1976) 4 SCC 622 : AIR 1977 SC 308, it was observed that there should be a clear inconsistency between a special enactment or rules and a general enactment. 10.6 In the matter of interpretation of a non-obstante clause, paragraphs 82 and 83, in the judgment authored by me in Muhammad Abdul Samad vs. State of Telangana, (2025) 2 SCC 49 can be usefully extracted as under: “82. A non obstante clause is usually appended to a section in the beginning with a view to give the enacting part of the section, in case of a conflict, an overriding effect over the provision or the Act mentioned in the non obstante clause. In other words, in spite of the provision or the Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment. Thus, a non obstante clause is a legislative device used by a Parliament or legislature sometimes to give an overriding effect to what has been specified in the enacting part of a section in case of a conflict with what is contained in the non obstante clause as stated above.

83. Further, a non obstante clause has to be distinguished from the expression “subject to” where the latter would convey the idea of a provision yielding place to another provision or other provisions to which it is made subject to. Also, the expression “notwithstanding anything in any other law” in a section of an Act has to be contrasted with the use of the expression “notwithstanding anything contained in this Act”, which has to be construed to take away

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the effect of any provision of that particular Act in which the section occurs but it cannot take away the effect of any other law. [Source : Principles of Statutory Interpretation by Justice G.P. Singh, 15th Edn., Chapter 5.4, p. 284.]” In the above case, this Court was considering the non-obstante clause in Section 3 of the Muslim Women (Protection of Rights of Divorce), Act 1986 vis-à-vis Section 125 of the Code of Criminal Procedure, 1973 in the matter of the entitlement of a divorced Muslim woman to maintenance. 10.7 Recently, a two-Judge Bench of this Court speaking through Oka, J. in Chief Commissioner of Central Goods and Service Tax vs. Safari Retreats Private Limited, (2025) 2 SCC 523 dealt on rules regarding the interpretation of taxing statutes in paragraph 27 which can be usefully extracted as under: “27. Regarding the interpretation of taxation statutes, the parties have relied on several decisions. The law laid down on this aspect is fairly well settled. The principles governing the interpretation of the taxation statutes can be summarised as follows: 27.1. A taxing statute must be read as it is with no additions and no subtractions on the grounds of legislative intendment or otherwise; 27.2. If the language of a taxing provision is plain, the consequence of giving effect to it may lead to some absurd result is not a factor to be considered when interpreting the provisions. It is for the legislature to step in and remove the absurdity; 27.3. While dealing with a taxing provision, the principle of strict interpretation should be applied; 27.4. If two interpretations of a statutory provision are possible, the Court ordinarily would interpret the provision in favour of a taxpayer and against the Revenue; 27.5. In interpreting a taxing statute, equitable considerations are entirely out of place;

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27.6. A taxing provision cannot be interpreted on any presumption or assumption; 27.7. A taxing statute has to be interpreted in the light of what is clearly expressed. The Court cannot imply anything which is not expressed. Moreover, the Court cannot import provisions in the statute to supply any deficiency; 27.8. There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislature’s failure to express itself clearly; 27.9. If literal interpretation is manifestly unjust, which produces a result not intended by the legislature, only in such a case can the Court modify the language; 27.10. Equity and taxation are strangers. But if construction results in equity rather than injustice, such construction should be preferred; 27.11. It is not a function of the Court in the fiscal arena to compel Parliament to go further and do more; 27.12. When a word used in a taxing statute is to be construed and has not been specifically defined, it should not be interpreted in accordance with its definition in another statute that does not deal with a cognate subject. It should be understood in its commercial sense. Unless defined in the statute itself, the words and expressions in a taxing statute have to be construed in the sense in which the persons dealing with them understand, that is, as per the trade understanding, commercial and technical practice and usage.” (underlining by me)

That was a case concerning interpretation of the expression “plant and machinery” and “plant or machinery” in Sections 17(5)(c) and 17(5)(d) of the Central Goods and Services Tax Act, 2017.

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Paragraph 36 of the said judgment also observed on the use of non-obstante clause as under: “36…..A non obstante clause is a device used by the legislature that is usually employed to give an overriding effect to certain provisions over some contrary provisions that may be found in the same or some other enactments. Such a clause is used to indicate that the said provision should prevail despite anything to the contrary in the provisions mentioned in the non obstante clause. ...” 10.8 Further, in RBI vs. Peerless General Finance and Investment Co. Ltd., (1987) 1 SCC 424, this Court observed, that interpretation is best which makes the textual interpretation match the contextual. Chinnappa Reddy, J. speaking for the Bench stressed on the importance of rule of contextual interpretation and observed as under: “33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed