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The Tax Publishers Cut off time limit for 154(7) how reckoned - Disallowing Section 80-IA(12) via rectification proceedings with limitation time under Section 154(7) being read from assessee's suo moto rectification proceeding on an entirely different topic - *Facts:* Assessee was formed as an outcome of demerger of Grasim's cement division and they were eligible for deduction under Section 80-IA(12) on the power plants of erstwhile transferor Grasim. Original assessment for A.Y. 2010-11 (year of appeal) got completed under Section 143(3) on 26-3-2013. On a matter of lower TDS amounts, a suo moto rectification application was filed by assessee which was ordered/granted on 10-3-2014. Besides this suo moto rectification petition, certain additions made by AO was contested before CIT(A) separately on which appeals got concluded with an order from CIT(A) dated 21-4-2017. Subsequently revenue on 27-3-2018 passed a rectification order denial of deduction granted under Section 80-IA(12). Plea of the assessee were two fold -- (a) The time limit of 4 years under Section 154(7) stood expired on 31-3-2017 itself (assessment order was dated 26-3-2013) while the notice of rectification of revenue was on 13-2-2018 (with Order, dated 27-3-2018) thus non-est beyond limitation of law. (b) Since being a demerged entity they were eligible for Section 80-IA(12) benefits. Revenue's plea was the time limit for reckoning Section 154(7) would be from 10-3-2014 the completion of the erstwhile rectification (on a totally unrelated topic of granting of TDS credit) thus the time limitation as per Section 154(7) would be until 31-3-2018 accordingly their rectification denying Section 80-IA(12) benefits were valid. On appeal to ITAT - Held in favour of the assessee that the time limit of 4 year reckoning for Section 154(7) would be from the assessment Order, dated 26-3-2013 thus 31-3-2017 was the time limit granted as per law. The time reckoning of revenue from the erstwhile rectification on a totally unrelated topic of TDS credit cannot be counted into their convenience. Had the earlier rectification been on the same topic then the limitation would have stood extended until 31-3-2018 as held in Hind Wires Ltd. v. CIT (1995) 212 ITR 639 (SC) : 1995 TaxPub(DT) 0976 (SC). Since the assessee being the outcome of a de-merged entity was anyway eligible for Section 80-IA(12) benefits. *Applied:* Ashu Engineers and Plastics Pvt. Ltd. v. DCIT in ITA No. 3453/Mum/2010 for A.Y. 2001-02, dated 29-4-2011 "9. In view of the above discussions, the hyper technical plea of the learned Departmental Representative is only fit to be rejected. Learned Departmental Representative as indeed the authorities below have also relied on in the case of Hind Wire Industries Ltd. v. CIT (supra) but then it is a case in which the subject matter of first rectification was the same as the subject matter of second rectification was sought. In the present case, however, subject matter of two rectification proceedings is altogether different and, therefore, the ratio of Hon'ble Supreme Court's judgment in the case of Hind Wire Industries Ltd v. CIT (supra) does not come into play. When this proposition was put to learned D.R., he did not have much to say except placed his bland reliance of Hon'ble Supreme Court's judgment in the case of Hind Wire Industries Ltd. v. CIT (supra) and also the stand taken by the authorities below. We are unable to see any merits in learned Departmental Representative's reliance on Hind Wire Industries (supra) either. We are of the considered view that the ratio laid down in the case of Hind Wire Industries Ltd v. CIT (supra) remains confined to a case where subject matter of second rectification is the same as the first rectification and it was only in such a situation that the time limit of second rectification proceedings gets extended by the fact of first rectification proceedings. In a situation in which the subject matter of second rectification proceedings is wholly unrelated to the subject matter of first rectification proceedings as is the situation in the present case, the time limit for second rectification proceedings remains unaffected by the first rectification proceedings. In view of the these discussion, as also bearing in mind entirety of the case, we are of the considered view that the impugned rectification order, having been passed well after the end of four years from the end of financial year, in which, intimation under Section 143(1)(a) passed, is time barred. In any event, by no stretch of logic, a rectification of mistake almost after eight years of processing an intimation under Section 143(1)(a) can be said to have been made within a reasonable time limit. We, accordingly, quash the impugned rectification order." *Dissented:* Hind Wires Ltd. v. CIT (1995) 212 ITR 639 (SC) : 1995 TaxPub(DT) 0976 (SC) *Case:* Ultratech Cement Ltd. v. ACIT 2023 TaxPub(DT) 1168 (Mum-Trib)

The Tax Publishers

Cut off time limit for 154(7) how reckoned - Disallowing Section 80-IA(12) via rectification proceedings with limitation time under Section 154(7) being read from assessee's suo moto rectification proceeding on an entirely different topic -

Facts:

Assessee was formed as an outcome of demerger of Grasim's cement division and they were eligible for deduction under Section 80-IA(12) on the power plants of erstwhile transferor Grasim. Original assessment for A.Y. 2010-11 (year of appeal) got completed under Section 143(3) on 26-3-2013. On a matter of lower TDS amounts, a suo moto rectification application was filed by assessee which was ordered/granted on 10-3-2014. Besides this suo moto rectification petition, certain additions made by AO was contested before CIT(A) separately on which appeals got concluded with an order from CIT(A) dated 21-4-2017. Subsequently revenue on 27-3-2018 passed a rectification order denial of deduction granted under Section 80-IA(12). Plea of the assessee were two fold --

(a) The time limit of 4 years under Section 154(7) stood expired on 31-3-2017 itself (assessment order was dated 26-3-2013) while the notice of rectification of revenue was on 13-2-2018 (with Order, dated 27-3-2018) thus non-est beyond limitation of law.

(b) Since being a demerged entity they were eligible for Section 80-IA(12) benefits.

Revenue's plea was the time limit for reckoning Section 154(7) would be from 10-3-2014 the completion of the erstwhile rectification (on a totally unrelated topic of granting of TDS credit) thus the time limitation as per Section 154(7) would be until 31-3-2018 accordingly their rectification denying Section 80-IA(12) benefits were valid.

On appeal to ITAT -

Held in favour of the assessee that the time limit of 4 year reckoning for Section 154(7) would be from the assessment Order, dated 26-3-2013 thus 31-3-2017 was the time limit granted as per law. The time reckoning of revenue from the erstwhile rectification on a totally unrelated topic of TDS credit cannot be counted into their convenience. Had the earlier rectification been on the same topic then the limitation would have stood extended until 31-3-2018 as held in Hind Wires Ltd. v. CIT (1995) 212 ITR 639 (SC) : 1995 TaxPub(DT) 0976 (SC).

Since the assessee being the outcome of a de-merged entity was anyway eligible for Section 80-IA(12) benefits.

Applied:

Ashu Engineers and Plastics Pvt. Ltd. v. DCIT in ITA No. 3453/Mum/2010 for A.Y. 2001-02, dated 29-4-2011

"9. In view of the above discussions, the hyper technical plea of the learned Departmental Representative is only fit to be rejected. Learned Departmental Representative as indeed the authorities below have also relied on in the case of Hind Wire Industries Ltd. v. CIT (supra) but then it is a case in which the subject matter of first rectification was the same as the subject matter of second rectification was sought. In the present case, however, subject matter of two rectification proceedings is altogether different and, therefore, the ratio of Hon'ble Supreme Court's judgment in the case of Hind Wire Industries Ltd v. CIT (supra) does not come into play. When this proposition was put to learned D.R., he did not have much to say except placed his bland reliance of Hon'ble Supreme Court's judgment in the case of Hind Wire Industries Ltd. v. CIT (supra) and also the stand taken by the authorities below. We are unable to see any merits in learned Departmental Representative's reliance on Hind Wire Industries (supra) either. We are of the considered view that the ratio laid down in the case of Hind Wire Industries Ltd v. CIT (supra) remains confined to a case where subject matter of second rectification is the same as the first rectification and it was only in such a situation that the time limit of second rectification proceedings gets extended by the fact of first rectification proceedings. In a situation in which the subject matter of second rectification proceedings is wholly unrelated to the subject matter of first rectification proceedings as is the situation in the present case, the time limit for second rectification proceedings remains unaffected by the first rectification proceedings. In view of the these discussion, as also bearing in mind entirety of the case, we are of the considered view that the impugned rectification order, having been passed well after the end of four years from the end of financial year, in which, intimation under Section 143(1)(a) passed, is time barred. In any event, by no stretch of logic, a rectification of mistake almost after eight years of processing an intimation under Section 143(1)(a) can be said to have been made within a reasonable time limit. We, accordingly, quash the impugned rectification order."

Dissented: Hind Wires Ltd. v. CIT (1995) 212 ITR 639 (SC) : 1995 TaxPub(DT) 0976 (SC)

Case: Ultratech Cement Ltd. v. ACIT 2023 TaxPub(DT) 1168 (Mum-Trib)