NEW DELHI: A Supreme Court bench on Friday gave a split verdict on an appeal of the assistant commissioner of Income Tax, dealing with international taxation, against a 2023 Bombay High Court judgment. The case involved foreign drilling companies, including Shelf Drilling Ron Tappmeyer Ltd. The bench comprising Justices B V Nagarathna and Satish Chandra Sharma, delivered divergent opinions on the legal interpretation of Sections 144C and 153 of the Income Tax Act, 1961.
These provisions relate to the timelines and procedures for assessment in cases involving non-resident assessees. The dispute centred on whether the time period provided under Section 144C for the issuance of draft assessment orders should be treated independently or subsumed within the overall limitation period prescribed under Section 153 for completing assessments.
Justice Nagarathna rejected the appeal of the revenue department and concluded that the high court was correct in holding that assessment proceedings initiated under Section 144C in these cases were time-barred, as the final orders could not be passed within the extended deadline of September 30, 2021. However, Justice Sharma allowed the Revenue’s appeals, holding that Sections 144C and 153 operate in a coordinated manner and must be interpreted harmoniously.
He noted that rigid interpretation of timelines under Section 153 could result in a denial of fair opportunity to the assessees and breach the principles of natural justice. With the judges delivering conflicting decisions, the matter would now be placed before the Chief Justice of India on the administrative side for taking appropriate directions of listing the matter before a larger bench. The pleas arose from a batch of petitions filed by non-resident assessees before the Bombay High Court, which were allowed via a common judgment dated August 4, 2023.
