Wp/20040/2019 Of Wipro Limited v. The Joint Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25 DAY OF AUGUST 2021 BEFORE THE HON’BLE MR. JUSTICE KRISHNA S.DIXIT -WRIT PETITION NO.20040/2019 (TIT) BETWEEN: WIPRO LIMITED, DODDAKANNELLI, SARJAAPUR ROAD, BANGALORE-560 035, REP. BY ITS VICE PRESIDENT – TAXATION, SRI BALASUBRAMANIAN K., SON OF SRI KRISHNAMURTHY, AGED ABOUT 39 YEARS. … PETITIONER (BY SHRI S.GANESH, SR. COUNSEL A/W. SHRI VENKATESH S. ARBATTI, ADVOCATE) AND: 1. THE JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE-7, 2 FLOOR, INCOME TAX OFFICE, BMTC BUILDING, 8 FEET ROAD, KORAMANGALA, BANGALORE-560 095. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7(1)(2), 7 FLOOR, INCOME TAX OFFICE, 8 FEET ROAD, KORAMANGALA, BANGALORE-560 095. CIRCLE-7(1)(2), 7 FLOOR, INCOME TAX OFFICE, 8 FEET ROAD, KORAMANGALA, BANGALORE-560 095. ... RESPONDENTS (BY SHRI K.V. ARAVIND, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE DIRECTION IN THE ORDER MARKED AS ANNEXURE-A PASSED BY RESPONDENT NO.2, DATED 29.03.2019 AND GRANTING ADDITIONAL INTEREST U/S.244A(1A) FROM THE EXPIRY OF TIME PRESCRIBED R/S.153(5) OF THE ACT. THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDER, THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: ORDER The tone for this judgment may be set by quoting what Richard Brinsley Sheridan, an acclaimed Irish dramatist of 18th century, on being asked by his tailor for at least the interest of his bill had retorted: "It is not my interest to pay the principal, "" nor my principle to pay the interest. 2. Petitioner Assessee inter alia engaged in the business of manufacture of computer software & providing IT enabled services, is knocking at the doors of Writ Court for assailing the order dated 29.03.2019, a copy whereof is at Annexure-A whereby the second respondent-DCIT having negatived its application dated 22.03.2019 filed u/s 244A(1A) of the Income Tax Act, 1961 (hereafter ‘1961 Act’) has denied additional 3% interest on the allegedly delayed refund of amount relatable to Assessment Year 2008-09. 3. The second respondent having contexted Section 244A(1A) of the Act has styled the operative portion of the impugned order as under: “In this case, the Hon’ble ITAT, Bengaluru has remitted back the issue of Transfer Pricing to the AO for fresh assessment/re-assessment as per Para No. 5 & 6 of the ITAT order. Further, fresh approval has been taken from the Hon’ble Prl. CIT-7, Bengaluru for reference to the Transfer Pricing Officer and the same has been referred. The TPO re-computed the adjustments, based on the directions of Hon’ble ITAT, and TP order was passed on 31.10.2017. As this is the case of fresh assessment/re-assessment, an additional interest u/s 244A(1A) will not be applicable in this case.” 4. After service of notice, the respondents having entered appearance through their Panel Counsel resisted the writ petition making submission in justification of the impugned order and the reasons on which it has been structured. 5. FACTS IN BRIEF: (a) Petitioner's return of income for the Assessment Year 2008-09 declaring a total income of Rs.588,08,04,584/- having been selected for scrutiny u/s 143(2) of the Act, a reference was made to the Transfer Pricing Officer (hereafter ‘TPO’) qua the international transactions; the TPO in exercise of power u/s 92C(A) carried out an aggregate adjustment of Rs.10,54,52,192/-; the first respondent-Joint Commissioner of Income Tax (hereafter 'JCIT') had proposed a Draft Assessment Order dated 28.12.2011 u/s 143(3) r/w 144C(1), to which petitioner filed his Objections before the Dispute Resolution Panel (hereafter 'DRP'); in terms of DRP order dated 17.09.2012, the JCIT assessed the income at Rs.2389,89,57,307/- against the original amount of Rs.588,08,04,584/- supra. 5. FACTS IN BRIEF: (a) Petitioner's return of income for the Assessment Year 2008-09 declaring a total income of Rs.588,08,04,584/- having been selected for scrutiny u/s 143(2) of the Act, a reference was made to the Transfer Pricing Officer (hereafter ‘TPO’) qua the international transactions; the TPO in exercise of power u/s 92C(A) carried out an aggregate adjustment of Rs.10,54,52,192/-; the first respondent-Joint Commissioner of Income Tax (hereafter 'JCIT') had proposed a Draft Assessment Order dated 28.12.2011 u/s 143(3) r/w 144C(1), to which petitioner filed his Objections before the Dispute Resolution Panel (hereafter 'DRP'); in terms of DRP order dated 17.09.2012, the JCIT assessed the income at Rs.2389,89,57,307/- against the original amount of Rs.588,08,04,584/- supra. (b) Both the Assessee and the Revenue having appealed against the above, the Income Tax Appellate Tribunal (hereafter 'ITAT') passed the order dated 4.1.2017 u/s 254 of the Act partly favouring the Assessee and remitted the case to TPO with a direction for re-computation of the Transfer Pricing Adjustment (hereafter 'TPA'); accordingly, the TPO re-computed the said adjustment in terms of direction of ITAT; the JCIT to give effect to the ITAT order, on 28.12.2017 determined the total income of the Assessee at Rs.693,88,05,177/- and the tax payable thereon was determined at Rs.206,69,34,730/-; however, the tax on book profit was higher at Rs.316,85,23,810/-; the above calculations eventually resulted in a refund of Rs.1057,45,30,057/- which included interest payable u/s 244A amounting to Rs.267,54,62,251/-. (c) The files of the Assessee were transferred to another Assessing Officer i.e., second respondent-DCIT before whom Rectification Application dated 18.01.2018 was moved u/s 154; on a similar application being moved, the TPO made rectification of the adjustment u/s 92C(A) of the Act; since the Rectification Application dated 18.01.2018 was still pending, further Rectification Applications were also filed, followed by their summarization vide letters dated 17.05.2018 & 22.03.2019; the second respondent having considered the same, passed the impugned order u/s 154 enhancing the refund to Rs.1380,13,00,740/- which included an interest amount of Rs.397,56,39,522/-; the Assessee grieves against denial of 3% addl. interest envisaged u/s 244A(1A) for the period between 28.12.2017 i.e., date of ITAT order and 4.5.2019 i.e., the date on which refund was finally granted; this period being seventeen months, the Assessee quantifies the interest amount at Rs.58.65 crore. 6. SUBMISSIONS CANVASSED ON BEHALF OF THE ASSESSEE: (a) Section 153(2A) of the Act prior to 2016 amendment encompassed within itself the power to make fresh Assessment Order in terms of orders made in appeal; if recomputation was required for giving effect to these appellate orders, no time limit was prescribed since that was covered by Section 153(6); however, a significant change was brought in by amendment vide Finance Act, 2016 that contemplates two scenarios viz., (i) making of fresh assessment orders pursuant to appellate orders that have set aside or cancelled the assessment, under sub-section (3) of section 153, & (ii) giving effect to appellate orders other than those covered by fresh assessment orders in terms of sub-section (5) of section 153; the 2016 Act amended section 244A by introducing sub-section (1A) providing for the grant of additional interest in cases falling u/s 153(5). providing for the grant of additional interest in cases falling u/s 153(5). (b) The orders of the kind made u/s 244A(1A) can be classified into two categories viz. (i) the ones where a fresh assessment/re-assessment needs to be made, & (ii) the others where only effect is to be given to the appellate orders straightway sans any fresh assessment/re-assessment; the direction of the ITAT to the TPO to re-compute the transfer pricing adjustment would not fall within the later category; even otherwise, effect had to be given expeditiously to rest of the ITAT order which has attained finality, regardless of contemplated transfer pricing assessment; (c) After all the transfer pricing adjustment would account for a refund of a paltry sum of Rs.3.88 crore compared to refund of Rs.978/- crore; to hold up the entire refund of such a huge amount on the pretext of deciding a small issue of TPA, offends the sense of fairness & proportionality; the transfer pricing adjustment actually was not determinative of the refund inasmuch as the tax amount was paid based on book profit, as provided u/s 115JB; the entitlement of the assessee for interest u/s 244A(1A) is intended to bring parity in the converse situation where the Revenue levies interest on delayed payment of taxes as provided u/s 234B. So arguing, learned Senior Counsel appearing for the assessee seeks allowing of the Writ Petition. 7. SUBMISSIONS MADE ON BEHALF OF REVENUE: (a) A plain reading of the provisions of section 244A(1A) makes it clear that an assessee is entitled to an additional interest only in cases where there is no requirement of fresh assessment or re-assessment in terms of appellate orders; assessment or re-assessment cannot by their very nature be done in piecemeal or in a truncated way; the total income of an assessee can be determined only after the fresh assessment or re-assessment is accomplished, consistently with section 4 of the Act r/w the extant CBDT Explanatory Notes dated 20.1.2017; an argument to the contrary amounts to asking the AO to undertake the exercise even after he becomes functus officioand therefore is unsustainable. (b) Section 240 contemplates refund, only after the accomplishment of the exercise mandated under the appellate order; where the assessment is set aside and a fresh assessment is directed, the question of granting interest at once would not arise till after the ascertainment of amount to be refunded, and that happens after the fresh assessment/re-assessment is done in terms of the ITAT order; the time limit of three months prescribed in Section 153(5) for passing ‘giving effect to’ orders is applicable only in cases where no fresh assessment or re-assessment is contemplated under the appellate orders; since the matter was remitted to the TPO for fresh assessment/re-assessment, case of the petitioner does not fit into section 244A(1A); (c) Section 240 provides that the refund on appeal would arise where an order in appeal on assessment is set aside or cancelled with a direction to undertake a fresh assessment/re-assessment and such a direction is accomplished; although, section 153(5) prescribes a time limit of three months for giving effect to the orders passed under any of the provisions i.e., Ss.250, 254, 260, 262, 263 or 264 of the Act by the Assessing Officer; however, an exception is carved out in cases where a fresh assessment/re-assessment is contemplated; the provisions of section 153(5) and section 244A(1A) employ the expression "wholly or partly" to mean a fresh assessment/re-assessment to be made "wholly or partly" and that the said expression does not qualify "the order to give effect to the order on appeal"; the matter having been remitted to the TPO and to the AO for a de novo consideration though in certain aspects, the assessee is not entitled to the grant of addl. interest u/s 244A(1A), till after consideration takes place. of three months for giving effect to the orders passed under any of the provisions i.e., Ss.250, 254, 260, 262, 263 or 264 of the Act by the Assessing Officer; however, an exception is carved out in cases where a fresh assessment/re-assessment is contemplated; the provisions of section 153(5) and section 244A(1A) employ the expression "wholly or partly" to mean a fresh assessment/re-assessment to be made "wholly or partly" and that the said expression does not qualify "the order to give effect to the order on appeal"; the matter having been remitted to the TPO and to the AO for a de novo consideration though in certain aspects, the assessee is not entitled to the grant of addl. interest u/s 244A(1A), till after consideration takes place. (d) The ITAT order is made by following the earlier order in the appeal of the assessee for the Assessment Years 2003-04 & 2004-05; accordingly, the matter has been remitted to the TPO to undertake a fresh exercise in terms of directions given in the earlier order; this exercise warrants a judicious approach since the matter merits re-examination of the issue in the light of the orders of the Tribunal and therefore, the case of the petitioner fits into second Proviso to section 153(5) of the Act, which makes a period of nine months availing to the AO. So contending, learned Panel Counsel for the Revenue seeks dismissal of Writ Petition. 8. Both the counsel for the Assessee and the Sr. Panel Counsel for the Revenue have filed their Written Submissions and have pressed into service a catena of decisions, relevant of which have been adverted to; having heard the learned counsel for the parties and having perused the Petition Papers, this Court is inclined to grant indulgence in the matter as under and for the following reasons: I. Some legal principles & morals which are to animate levy of tax and refund of un-taxable: (i) A great Indian poet Kalidasa (500 CE) in his epic poem "Raghuvamsham" (1-18) states: “The King Dilip collects from his subjects only 1/6[th] of their income as tax for the welfare of State, indeed like the sun taking earthly water drops, only to indemnify her with multiples of rain-drops…”Chanakya in his acclaimed work "Arthashastr" advises the Rulers: “Collect taxes from the citizens as honeybees collect nectar from the flowers, gently and without inflicting pain…”; (ii) A renowned jurist of yester-decades late Mr. Nani Palkhivala, in the concluding paragraph of Preface to the Eighth Edition of "The Law and Practice of Income Tax" said "Every Government has a right to levy taxes. But no Government has the right, in the process of extracting tax, to cause misery and harassment to the taxpayer and the gnawing feeling that he is made the victim of palpable injustice."; the function of the Assessing Officer is to administer the statute with solicitude for the Public Exchequer with an inbuilt idea of fairness to tax payers; this view finds expression in the decision of the Apex Court in ACIT vs. Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 (SC). (iii) Walton J. had observed in Vestey v. Inland Revenue Commissioners [1979] Ch 177 (197 – 198) “I conceive it to be in the national interest, in the interest not only of all individual tax payers – which includes most of the nation – but also in the interests of the Revenue authorities themselves, that the tax system should be fair… One should be taxed by law, and not be untaxed by concession … A tax system which enshrines obvious injustices is brought into disrepute with all tax-payers accordingly, whereas one in which injustices, when discovered, are put right (and with retrospective effect when necessary) will command respect and support...”. (iii) Walton J. had observed in Vestey v. Inland Revenue Commissioners [1979] Ch 177 (197 – 198) “I conceive it to be in the national interest, in the interest not only of all individual tax payers – which includes most of the nation – but also in the interests of the Revenue authorities themselves, that the tax system should be fair… One should be taxed by law, and not be untaxed by concession … A tax system which enshrines obvious injustices is brought into disrepute with all tax-payers accordingly, whereas one in which injustices, when discovered, are put right (and with retrospective effect when necessary) will command respect and support...”. (iv) A Welfare State like ours is constitutionally expected to be fair & reasonable in dealing with the subjects and it must avoid any harassment to the assessee public, without causing any loss to the Exchequer (see Nokia Corporation v. Director of Income-tax [2007] 292 ITR 22 (Delhi HC); the State as constitutionally ordained, needs to conduct itself as a virtuous litigant and should meet honest claims; this view finds resonance in the decision of the Apex Court in State of U.P. v. Manohar [2005] 2 SCC 126; the maxim actus curiae neminem gravabit, i.e., an act of court shall prejudice none, is equally applicable to the quasi-judicial functions of Tax Authorities, as well. (v) Article 265 of the Constitution of India mandates that no tax shall be levied or collected except by authority of law; if a tax has been paid in excess of the tax specified, the same has to be refunded; in Tata Chemicals 363 ITR 658 (SC), the Apex Court reasoned out why State should pay interest for holding tax payers' money; a “tax refund” is a refund of taxes when the tax liability is less than the tax paid; when the said amount is refunded, it should carry interest as a matter of course, since it is a kind of recompense for the ‘unauthorized use or retention’ of money; refund due & payable to an assessee is a debt owed; Parliament has enacted this principle in Section 244A of the 1961 Act; in Aluminium Corporation of India Ltd. v UOI 1978 (2) ELT 452 (SC) the Apex Court observed that a good government involves not only diligent collection of taxes, but also ready refunds of excess levies. II. As to meaning of "assessment"; difference between "assessment" & "assessment order" (i) The DCIT has stated in the impugned order "… As this is the case of fresh assessment/re-assessment, an additional interest u/s. 244A(1A) will not be applicable ... "; much has been argued on behalf of the assessee that his is not a case of fresh assessment/re-assessment, and therefore the impugned order is liable to be voided, whereas the Revenue has contended to the contrary; therefore, it becomes necessary to discuss these concepts. While juxtaposing contextual construction qua literal interpretation of statutes, Justice Krishna Iyer in CIT vs. ARAVIND REDDY, AIR 1980 SC 96 observed: “The significance of a word of a plural semantic shades may, in a given text depend on the pressure of the context or other indicia. Absent such compelling mutation of sense, the speech of the lay is also the language of the law …”; Keeping inter alia the above observation in mind, one has to ascertain the meaning of the above terms. (ii) The 1961 Act has a Dictionary Clause in Sec.2; Section 2(9) merely states that the assessment includes reassessment; this does not throw much light on the debated questions; in Sir Rajendranath Mukerjee v. CIT, (1934) 2 ITR 71 (PC), it has been held under the erstwhile Income Tax Act, 1922 that the word ‘assessment’ is not confined to the definite act of making an order of assessment; in C.A. Abraham v. ITO [1961] 41 ITR 425 (SC), in the context of section 44 of 1922 Act (similar to section 189 of the 1961 Act), it has been held that the term ‘assessment’ employed therein not only referred to computation of income but included the procedure for declaration & imposition of tax liability and the machinery for enforcement thereof; (ii) The 1961 Act has a Dictionary Clause in Sec.2; Section 2(9) merely states that the assessment includes reassessment; this does not throw much light on the debated questions; in Sir Rajendranath Mukerjee v. CIT, (1934) 2 ITR 71 (PC), it has been held under the erstwhile Income Tax Act, 1922 that the word ‘assessment’ is not confined to the definite act of making an order of assessment; in C.A. Abraham v. ITO [1961] 41 ITR 425 (SC), in the context of section 44 of 1922 Act (similar to section 189 of the 1961 Act), it has been held that the term ‘assessment’ employed therein not only referred to computation of income but included the procedure for declaration & imposition of tax liability and the machinery for enforcement thereof; (iii) It is pertinent to refer to what the Hon’ble Supreme Court observed in Auto & Metal Engineers v. Union of India [1998] 229 ITR 399 (SC): “7. In the Act the provisions regarding procedure for assessment are contained in Chapter XIV (sections 139 to 158). Under the said provisions, the process of assessment involves (i) filing of the return of income u/s. 139 or u/s. 142 in response to a notice issued u/s. 142(1); (ii) inquiry by the Assessing Officer in accordance with the provisions of sections 142 and 143; (iii) making of the order of assessment by the Assessing Officer u/s. 143(3) or section 144; and (iv) issuing of the notice of demand u/s. 156 on the basis of the order of assessment. The process of assessment, thus, commences with the filing of the return or where the return is not filed by the issuance by the Assessing Officer of notice to file the return u/s. 142(1) and it culminates with the issuance of the notice of demand u/s. 156. The making of the order of assessment is, therefore, an integral part of the process of assessment...” (iv) In CIT v. Purshottamdas T. Patel [1994] 209 ITR 52 (Guj), the Hon'ble High Court of Gujarat has observed that section 153 requires that the assessment should be completed within the prescribed time limit and unless the total income is ascertained & tax payable is determined, the process of assessment cannot be said to be complete; it also held that an ‘order of assessment’ is an order in writing whereby the total income of the assessee is assessed and the tax payable by him is determined; thus, the passing of an assessment order is only an integral part of the process of assessment and therefore, the word ‘assessment’ cannot be confined to the act of making an order of assessment; there is a certain legal difference between the terms ‘assessment’ & ‘assessment order’; it can be stated that the use of the word ‘assessment’ would mean the whole process of determination of income and the same should not be restricted to a mere passing of an assessment order. III.As to meaning of the term ‘setting aside or cancelling an assessment’ (i) Ordinarily, when an assessment is set aside or cancelled, a fresh assessment follows; a perusal of the following sections reveals that making of a fresh assessment invariably precedes setting aside or cancelling an assessment: Section 153(2A) prior to substitution by Finance Act, 2016 with effect from 01.06.2016. by Finance Act, 2016 with effect from 01.06.2016. Section 153(3) post substitution by Finance Act, 2016 with effect from 01.06.2016. Finance Act, 2016 with effect from 01.06.2016. Proviso (a) to Section 240; Explanation 1(iii) to section 245A(b) Section 251(1)(a) – words as omitted by Finance Act, 2001 with effect from 01.06.2001. Finance Act, 2001 with effect from 01.06.2001. It may be noted that Section 153 which is the subject matter of interpretation herein, is entitled “Time limit for completion of assessment, reassessment and recomputation; therefore it is primarily concerned with laying down time limits which have to be adhered to by the assessing officers. Section 153(2A) prior to substitution by Finance Act, 2016 with effect from 01.06.2016. by Finance Act, 2016 with effect from 01.06.2016. Section 153(3) post substitution by Finance Act, 2016 with effect from 01.06.2016. Finance Act, 2016 with effect from 01.06.2016. Proviso (a) to Section 240; Explanation 1(iii) to section 245A(b) Section 251(1)(a) – words as omitted by Finance Act, 2001 with effect from 01.06.2001. Finance Act, 2001 with effect from 01.06.2001. It may be noted that Section 153 which is the subject matter of interpretation herein, is entitled “Time limit for completion of assessment, reassessment and recomputation; therefore it is primarily concerned with laying down time limits which have to be adhered to by the assessing officers. (ii) In the light of the above, a question arises as to whether the terms ‘setting aside' or 'cancelling' an assessment employed in the subject provisions, do mean setting aside or cancellation of the entire assessment order or would it include even setting aside or cancellation of only a part of the assessment order [as with respect to particular issues, rest having been left intact by the ITAT or the like]; the said provisions cautiously employ the word ‘assessment’ and not the term ‘assessment order’; however, one will have to see the setting in which these provisions actually occur. A summary of the said provision is set out hereunder: Sub-Nature of Proceedings Time limit Time limit Section Assessment under section[from the [from the end of the end of the assessment Financial year in Yearwhich income was first assessable]153(1) Regular To pass 21 months Assessment assessment From AY orders under 2018-19, section 143(1) time limit and 144. has been amended to 18 months From AY 2019-20, time limit has been further reduced to 12 months153(2) Income To assess/re-NA 12 months escapement assess/ from the end assessment recompute of FY in under section which notice 147 under section 148 was served. From 1[st]April 2019, the above time limit has been reduced to 9 months. Further, Explanation 1 below section 153 provides that in computing the period of limitation, time taken for specified processes, as listed therein, should be excluded. Section 153 lays down the time limit to make assessment, reassessment & recomputation under various scenarios; section 153 is substituted by Finance Act, 2016; the brief outline of this section is as under: Sub-section (1) deals with time-limit for making assessment order under sections 143 or 144. With the advancement of e-assessments, the time limits for doing an assessment are progressively going to be reduced. assessment order under sections 143 or 144. With the advancement of e-assessments, the time limits for doing an assessment are progressively going to be reduced. Sub-section (2) deals with time-limit for making assessment order under section 147, Section 147 deals with re assessment orders. assessment order under section 147, Section 147 deals with re assessment orders. Sub-section(3) deals with time-limit for making order of fresh assessment in pursuance of an order under section 254 or section 264, by virtue of which the original assessment is either set aside or cancelled. order of fresh assessment in pursuance of an order under section 254 or section 264, by virtue of which the original assessment is either set aside or cancelled. Sub-section (2) deals with time-limit for making assessment order under section 147, Section 147 deals with re assessment orders. assessment order under section 147, Section 147 deals with re assessment orders. Sub-section(3) deals with time-limit for making order of fresh assessment in pursuance of an order under section 254 or section 264, by virtue of which the original assessment is either set aside or cancelled. order of fresh assessment in pursuance of an order under section 254 or section 264, by virtue of which the original assessment is either set aside or cancelled. Sub-section (4) states that where a reference under section 92CA(1) 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),(2) and (3) shall be extended by twelve months. This would apply only when the reference is made in the course of proceeding for assessment or reassessment and not otherwise. under section 92CA(1) 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),(2) and (3) shall be extended by twelve months. This would apply only when the reference is made in the course of proceeding for assessment or reassessment and not otherwise. Sub-section (5) deals with time-limit to give effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264, wholly or partly, otherwise than by making a fresh assessment or reassessment. to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264, wholly or partly, otherwise than by making a fresh assessment or reassessment. Sub-section (6) deals with time-limit for making assessment, reassessment or recomputation in consequence of or to give effect to any 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 the Act. The said sub section is subject to subsection (3) and (5). assessment, reassessment or recomputation in consequence of or to give effect to any 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 the Act. The said sub section is subject to subsection (3) and (5). Sub-sections 7 and 9 deal with transition provisions as section 153 is substituted. provisions as section 153 is substituted. Sub –section 8 deals with time-limit in case of search based assessments. search based assessments. A second proviso is added to sub-section (5) of section 153 by the Finance Act, 2017. The said proviso states 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 u/s.250 or sec.254 or sec.260 or sec.262 or sec.263 or sec.264 shall be made within the time specified in sub-section (3). The dates specified in the Table above shown as B would be relevant for this purpose. IV. As to Order Giving Effect (OGE): (i) The following general principles have relevance in considering the Orders Giving Effect in the light of Parliamentary amendments to the 1961 Act: It is a fundamental principle that income tax is payable on real income, vide Apex Court decision in Poona Electric Co. Vs. CIT (1965) 57 ITR 521. in Poona Electric Co. Vs. CIT (1965) 57 ITR 521. This real income can be brought to tax through assessment contemplated under the Act. IV. As to Order Giving Effect (OGE): (i) The following general principles have relevance in considering the Orders Giving Effect in the light of Parliamentary amendments to the 1961 Act: It is a fundamental principle that income tax is payable on real income, vide Apex Court decision in Poona Electric Co. Vs. CIT (1965) 57 ITR 521. in Poona Electric Co. Vs. CIT (1965) 57 ITR 521. This real income can be brought to tax through assessment contemplated under the Act. The basic principle is that ordinarily assessments cannot be done piecemeal. There are a few exceptions to the rule of “no piecemeal assessment’ as in the case where income has escaped assessment where re-assessment powers do avail, as discussed by income has escaped assessment where re-assessment powers do avail, as discussed by Calcutta High Court in Karan Chand Thapar vs. ACIT (2005) 276 ITR 105 para 13. (ii) OGE is not a regular assessment as held in the case of Sundaram Finance 417 ITR 679 Mad; passing an Appeal Effect Order is an implied obligation of every authority to comply with the directions of his superior in the hierarchy; this is an inherent aspect of adherence to judicial discipline; OGE to an order on appeal or on revision has to be passed in order to compute the total income and to determine the tax payable by or refundable to the assessee for the assessment year concerned, in the light of additions/disallowances affirmed or varied at every such stage; it may be noted that such OGE could either be adverse or beneficial as it may either result in a tax payable by or refundable to the assessee, as illustrated by the following: Cross Appeals before Tribunal u/s. 254 4 issuesRevenue Appeal in Assessee’s appeal respect of 1 issue on three issues held against clearly held in assesseeefavour of assessee OGE to be passed u/s. 153(5) within 3 months from the end of the month in which the order of Tribunal u/s. 254 is received by PCCIT or CCIT or PCIT or CIT. Where the order is passed beyond such time limit, additional interest u/s. 244A(1A) would be applicable for the period beginning from the date following the date of expiry of the time allowed u/s. 153(5) to the date on which the refund is granted. (iii) It may be important to note that even before such amendments were made, binding appellate orders used to be given effect to by the Writ Courts on being moved by the assesses grieving against denying or delaying of refund of tax, The Parliament presumably having taken cognizance of the difficulties faced by the prudent assesses has through the amendment has obviated the principle of judicial discipline in a hierarchical structure that, orders of the higher ups in the hierarchy have to be unreservedly followed by the lower authorities, as has been explained by the Apex Court in UOI vs. KAMALAKSHI FINANCE CORPORATION, 1991 (55) ELT 433; the Parliament by the subject amendments has prescribed a time limit for making refund of tax and has also provided for the payment of interest on the delayed refunds. V. Difference between ‘assessment', 'reassessment' or 'recomputation’ and ‘fresh assessment’ (i) The words ‘assessment, ‘reassessment’ or ‘recomputation’ have been used in the following sections of the 1961 Act: �Section 147 (prior to substitution vide Finance Act, 2021 with effect from 01.04.2021) and section 147 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Explanation to section 147 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) vide Finance Act, 2021 with effect from 01.04.2021) Section 148 (prior to substitution vide Finance Act, 2021 with effect from 01.04.2021) and section 148 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Finance Act, 2021 with effect from 01.04.2021) and section 148 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Section 150 (i) The words ‘assessment, ‘reassessment’ or ‘recomputation’ have been used in the following sections of the 1961 Act: �Section 147 (prior to substitution vide Finance Act, 2021 with effect from 01.04.2021) and section 147 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Explanation to section 147 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) vide Finance Act, 2021 with effect from 01.04.2021) Section 148 (prior to substitution vide Finance Act, 2021 with effect from 01.04.2021) and section 148 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Finance Act, 2021 with effect from 01.04.2021) and section 148 (post substitution vide Finance Act, 2021 with effect from 01.04.2021) Section 150 Section 153(3)(ii) [prior to substitution vide Finance Act, 2016 with effect from 01.06.2016] Finance Act, 2016 with effect from 01.06.2016] �Section 153(6)(i) [post substitution vide Finance Act, 2016 with effect from 01.06.2016] Finance Act, 2016 with effect from 01.06.2016] From the above, it can be safely assumed that the word ‘reassessment’ has been used in cases where income has escaped assessment. (ii) On the other hand, the phrase ‘fresh assessment’ has been used in the following sections: Proviso (a) to Section 240; Section 251(1)(a) –words omitted by Finance Act, 2001 with effect from 01.06.2001. Finance Act, 2001 with effect from 01.06.2001. Explanation 1(iii) to section 245A(b). Section 153(2A) prior to substitution by Finance Act, 2016 with effect from 01.06.2016. by Finance Act, 2016 with effect from 01.06.2016. Section 153(3) post substitution by Finance Act, 2016 with effect from 01.06.2016. Finance Act, 2016 with effect from 01.06.2016. The term ‘fresh assessment’ as employed in the above sections is accompanied by the term ‘setting aside or cancelling an assessment’; it may further be noted that section 153(6) is subject to the provisions of sections 153(3) & 153(5); therefore, the ‘assessment, reassessment or recomputation’ as referred to in sections 153(6) would not include the ‘fresh assessment’ as contemplated in sections 153(3) & 153(5); the following table is illustrative: Words used (iii) The word ‘reassessment’ is used next to the term 'fresh assessment' in section 153(5), Proviso (a) to section 240 & section 244A(1A); the definition of the term ‘assessment’ as contained in section 2(8) which merely provides that assessment includes reassessment, shall not ipso facto be applicable in all situations governed by various provisions of the 1961 Act; if the fresh assessment included a fresh reassessment, there was no need for the Parliament to employ the two terms, simultaneously; Lord Hewart C.J. in Spillers Limited Vs. Caradix Assessment Committee & Pritchard, (1931) All E.R. 524 stated: “It ought to be the rule… that words are used in an Act of Parliament correctly and exactly and not loosely and not inexactly…”; section 2 i.e., the Dictionary Clause of the Act employs the usual expression ‘unless the context otherwise requires’ and this itself indicates that the words used in various provisions of the Act may take their colour from their context and at times, in variance with the statutory definitions; The maxim expressio unius exclusio alterius with all its arguable limitations also lends support to the above view to some extent; Maxwell on "The Interpretation of Statutes" 12th Edition, LexisNexis at page 293 explains this maxim as under: "By the rule usually known in the form of this Latin maxim, mention of one or more things of a particular class may be regarded as silently excluding all other members of the class: expressum facit cessare tacitum. Further, where a statute uses two words or expressions, one of which generally includes the other, the more general term is taken in a sense excluding the less general one: otherwise there would have been little point in using the latter as well as the former." "The Interpretation of Statutes" 12th Edition, LexisNexis at page 293 explains this maxim as under: "By the rule usually known in the form of this Latin maxim, mention of one or more things of a particular class may be regarded as silently excluding all other members of the class: expressum facit cessare tacitum. Further, where a statute uses two words or expressions, one of which generally includes the other, the more general term is taken in a sense excluding the less general one: otherwise there would have been little point in using the latter as well as the former." (iv) It is pertinent to note that section 153(3) [post substitution vide Finance Act, 2016 w.e.f. 01.06.2016] does not use the word ‘reassessment’ alongside ‘fresh assessment’; however, the said word has been used alongside ‘fresh assessment’ in section 153(5) [post substitution vide Finance Act, 2016; accordingly, reassessment is not envisaged u/s 153(3); such reassessment can only come u/s 153(2) or Section 153(6) which deals with assessment, reassessment or recomputation to give effect to any finding or direction contained in the order of superior authority or court; thus if an order of assessment is set aside in appeal with a direction that a fresh reassessment be made, the same would be covered by section 153(3); One may also note that section 2(40) of the Income Tax Act, 1961, Act defines the term “regular assessment” to mean assessment under sub section 3 of section 143 or section 144; therefore these terminologies have different import in different sections. In the light of this discussion, it is clear that the term “assessment” is used in section 153(1) to mean the entire process of assessment; section 153(2) uses the words, ‘assessment’, ‘reassessment’ or ‘recomputation’ but in respect of section 147 which deals with income escaping assessment; section 153(3) uses the term “fresh assessment” in pursuance of the orders passed setting aside or cancelling an assessment; therefore, this term “fresh assessment”, though not defined, contemplates a new assessment consequent to the higher authorities cancelling or setting aside the assessment; Section 153(5), talks of giving effect to an order passed by the higher authorities, wholly or partly, otherwise than by making a fresh assessment or reassessment. The words “wholly or partly” obviously pertain to giving effect to the order of the higher authorities which would be done by the lower authority either in part or in whole depending on the issues that are settled by the higher authorities. However, such an exercise cannot be done within the time limits specified in Section 153(5), where there is a fresh assessment or reassessment and in such cases the longer time limits specified in Section 153(3) would apply; a harmonious construction of these provisions would mean as under : a.That in order to give effect to the order of the superior authorities, either wholly or partly in terms of Section 153(5), it should not be a case of reassessment or fresh assessment, which if they are, would otherwise fall into Section 153(3); authorities, either wholly or partly in terms of Section 153(5), it should not be a case of reassessment or fresh assessment, which if they are, would otherwise fall into Section 153(3); the time limits specified in Section 153(5), where there is a fresh assessment or reassessment and in such cases the longer time limits specified in Section 153(3) would apply; a harmonious construction of these provisions would mean as under : a.That in order to give effect to the order of the superior authorities, either wholly or partly in terms of Section 153(5), it should not be a case of reassessment or fresh assessment, which if they are, would otherwise fall into Section 153(3); authorities, either wholly or partly in terms of Section 153(5), it should not be a case of reassessment or fresh assessment, which if they are, would otherwise fall into Section 153(3); b.That Section 153(3), when it uses the term ‘fresh assessment’, would mean that the entire exercise of assessment is to be done afresh as it is used along with the terminology “setting aside or cancelling” which would mean the whole order of assessment being set at naught and not some issues comprised in the assessment order; when the assessment order is set aside on some issues only and confirmed on other, it is not a case of ‘setting aside or cancelling the assessment’. assessment’, would mean that the entire exercise of assessment is to be done afresh as it is used along with the terminology “setting aside or cancelling” which would mean the whole order of assessment being set at naught and not some issues comprised in the assessment order; when the assessment order is set aside on some issues only and confirmed on other, it is not a case of ‘setting aside or cancelling the assessment’. c.That Section 153(5) would apply where the assessing officer has to give effect to the order of the higher authorities in whole or in part provided that no fresh assessment i u/s.153(3) or a reassessment u/s. 153(2) relating to income escaping assessment, is to be undertaken. officer has to give effect to the order of the higher authorities in whole or in part provided that no fresh assessment i u/s.153(3) or a reassessment u/s. 153(2) relating to income escaping assessment, is to be undertaken. d.Therefore, if the orders to be given effect to are to be made by following the principles already laid down by the higher forum, it would not be a case pf fresh assessment in terms of Section 153(3) or a reassessment in terms of Section 153(2); it would simply mean that the orders of the higher forum are to be applied & followed by the assessing officer; . it may be borne in mind that longer time limits are provided in Section 153(3) & second proviso to Section 153(5) because it may entail doing the entire process once over or where detailed evidences may be required for accomplishing the task; however where a shorter time limit is prescribed u/s. 153(5), the legislative mandate is to subserve the objectives of ensuring timely compliance with the orders of the superior authorities. made by following the principles already laid down by the higher forum, it would not be a case pf fresh assessment in terms of Section 153(3) or a reassessment in terms of Section 153(2); it would simply mean that the orders of the higher forum are to be applied & followed by the assessing officer; . it may be borne in mind that longer time limits are provided in Section 153(3) & second proviso to Section 153(5) because it may entail doing the entire process once over or where detailed evidences may be required for accomplishing the task; however where a shorter time limit is prescribed u/s. 153(5), the legislative mandate is to subserve the objectives of ensuring timely compliance with the orders of the superior authorities. (v) One more aspect needs to be stated here: instructions were issued by the CBTD long before Sec.244A(1A) was loaded to the statute book making the right to interest on delayed refund a substantive right; the relevant portion of instruction 7 of F.No.279/MISC/M-42/2011-ITJ dated 24.05.2011 reads as under: (v) One more aspect needs to be stated here: instructions were issued by the CBTD long before Sec.244A(1A) was loaded to the statute book making the right to inter