Wp/10810/2023 Of Kennametal India Limited v. Assistant Commissioner Of Income Tax

Digitally signedby VIJAYA PLocation: HighCourt ofKarnataka NC: 2023:KHC:24305WP No. 10810 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13 DAY OF JULY, 20235 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV'WRIT PETITION NO. 10810 OF 2023 (TIT) BETWEEN: KENNAMETAL INDIA LIMITED,A LIMITED COMPANYINCORPORATED UNDER THE |COMPANIES ACT, 1956 ANDHAVING ITS REGISTERED OFFICE AT8/9 MILE, TUMKUR ROAD,NAGASANDRA S.O.,BENGALURU NORTH, |BENGALURU - 560 0/73.| PAN: ]. REPRESENTED BY ITSCHIEF FINANCIAL OFFICER, MR. SURESH KUMAR K.V.,S/O VENKATARAMA A.REDDY,AGED ABOUT 52 YEARS,|OCCUPATION:SERVICE,|RESIDING AT #1434, 25 C CROSS,SECTOR —- 2, BENGALURU SOUTH, BENGALURU - 560 102.| PETITIONER (BY SRI. PAI DHUNGAT ANKUR DEEPAK AND|SRI. K.R.VASUDEVAN, ADVOCATES) AND: 1.ASSISTANT COMMISSIONER OF INCOME TAX/_JOINT COMMISSIONER OF INCOME TAX (OSD),CIRCLE 4(3)(1), 4 FLOOR, ©BMTC BUILDING (DEPOT), 80 FI ROAD,KORAMANGALA,BENGALURU - 560 O95.. 2D THE DEPUTY COMMISSIONER |OF INCOME TAX DC/ACIT TP 2(1)(1),BMTC BUILDING, 80 FI ROAD, 6 BLOCK,NEAR KHB GAMES VILLAGE,KORAMANGALA, BENGALURU —- 560 O95.OF INCOME TAX DC/ACIT TP 2(1)(1),BMTC BUILDING, 80 FI ROAD, 6 BLOCK,NEAR KHB GAMES VILLAGE,KORAMANGALA, BENGALURU —- 560 O95. 3.THE PRINCIPAL COMMISSIONEROF INCOME TAX RANGE 4,BENGALURU, BMTC BUILDING,8O FI ROAD, 6 BLOCK,NEAR KHB GAMES VILLAGE,KORAMANGALA, BENGALURU —- 560 O95. (BY SRI. E.ILSANMATHI, ADVOCATE) RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 2206AND 22/7 OF THE CONSTITUTION OF INDIA PRAYING TOQUASH THE IMPUGNED FINAL ASSESSMENT ORDER DATED.28/02/2023 IN F.NO.JCIT(OSD)/C-4(3 )(1)/AACCK4472B/202223 (ANNEXURE-H) PASSED BY THE R-1 UNDER SECTION)143(3) READ WITH SECTION 144C READ WITH SECTION 254|OF THE I[T ACT FOR THE AY 2014-15 ALONG WITH THEDEMAND NOTICE ISSUED UNDER SECTION 156 OF THE IT ACT.DATED|07/03/2023INDINAND|NOTICENO,|ITBA/COM/F/17/2022-23/1050490468(1) FOR THE AY 2014-15.(ANNEXURE - H1) ISSUED BY R2 AND ETC. THIS|PETITION,COMING|ON|FOR|PRELIMINARY|HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:| -3- NC: 2023:KHC:24305WP No. 10810 of 2023 ORDER The petitioner has sought for setting aside of theassessment order at Annexure-H dated 28.02.2023 passed by.respondent No.1 under Section 143(3) read with Section 144C.read with Section 254 of the Income Tax Act, 1961 (for short.‘tne Act’) for the Assessment Year 2014-15 and also sought for|setting aside of Demand Notice at Annexure-H1. 2.Learned counsel for the petitioner submits that|while passing the Assessment Order at Annexure-H, procedureunder Section 144C of the Act regarding forwarding the draft of|the proposed order of assessment nas not been followed. It is.SuDmMmitted tnat the matter was remanded in terms of order othe Tribunal at Annexure-F dated 19.02.2021 insofar as theaspect of fresn Arms Length Price of the_ internationaltransaction undertaken by the assessee. It is submitted that.upon sucn remand by the Authority, the Authority ougnt to.nave followed the procedure under Section 144C of the Act.afresh including forwarding the draft of the proposed order of assessment and only on this ground, the order at Annexure-HIS llable to be set aside. -4.- 3.Learned.counselfor.the|respondents-Revenuewould submit that consequent to order of the Tribunal, whicn|nas remanded the matter only insofar as Arms Length Price ofthe international transaction was concerned, the procedure.under Section 144C of the Act having been followed at anearlier stage, question of following the procedure under Section 144C of the Act does not arise once again. It is further|submitted that as entirety of the assessment was not set asideand order was set aside partially in terms of Para-7.1 of the.order of the Tribunal, the question of redoing the procedure as contemplated under Section 144C of the Act does not arise. 4Heard the learned counsel for the petitioner and|learned counsel for the respondents. -4.- 3.Learned.counselfor.the|respondents-Revenuewould submit that consequent to order of the Tribunal, whicn|nas remanded the matter only insofar as Arms Length Price ofthe international transaction was concerned, the procedure.under Section 144C of the Act having been followed at anearlier stage, question of following the procedure under Section 144C of the Act does not arise once again. It is further|submitted that as entirety of the assessment was not set asideand order was set aside partially in terms of Para-7.1 of the.order of the Tribunal, the question of redoing the procedure as contemplated under Section 144C of the Act does not arise. 4Heard the learned counsel for the petitioner and|learned counsel for the respondents. 5.It must be noted that the Tribunal had remanded|tne order back with the following observation at Para-7.1 of the order of Tribunal, which reads as follows: "7.1 In view of the above order of the Tribunal, theentire issue raised in this appeal are restored to the filesof the AO/TPO to arrive at fresh ALP of the internationaltransaction undertaken by the assessee with its AE. It tsordered accordingly." -5- NC: 2023:KHC:24305WP No. 10810 of 2023 6.It is clear that only a portion of the order of.assessment is set aside insofar as the fixation of Arms LengthPrice of the international transaction undertaken by the|assessee. No doubt, it is only a portion of the assessment.order, which has been set aside, however, if the aspect of Arms.Length Price of the _ international transaction is to bere-looked into after report of the TPO, procedure to be followed.as provided under Section 144C of the Act is required to be.extended for completion of the assessment proceedings. The|procedure under Section 144C of the Act would have to be.made available or followed even where assessment proceedings|are sougnt to be conciuded only on certain aspect of the matterafresh upon remand. That would be the only manner of.construing the mandate under Section 144C of the Act, which|confers rignt on the assessee to receive a draft of the proposed order of assessment. 7].Accordingly, assessment order at Annexure-H is set.aside; the matter is restored to the stage of post report of the|TPO and the assessment proceedings to be concluded by.following the procedure under Section 144C of the Act and draftof the proposed order of assessment is required to be. -6§- NC: 2023:KHC:24305WP No. 10810 of 2023 forwarded to the assessee, if the Assessing Officer proposes tomake any variation prejudicial to the interest of such assessee.Consequently, the Demand Notice at Annexure-H1 is set aside. In view of the above, petition is disposed off. All other contentions are Kept open. Sd/-.JUDGE|