The Tax Publishers2020 TaxPub(DT) 0044 (Mad-HC) : (2020) 422 ITR 0262 : (2020) 315 CTR 0832

INCOME TAX ACT, 1961

Section 144C

Provisions of section 144C inserted by Finance (No. 2) Act, 2009 set out a new and distinct scheme of assessment, separate from regular assessment. The Dispute Resolution Panel (DRP) was constituted as an alternate dispute resolution mechanism, to provide a specialized forum for expeditious disposal of disputes. An assessment involving transfer pricing disputes, was thus taken out of regular track and a fast track dispute mechanism evolved before a panel of three Senior Commissioners. Accordingly, there was a change in the form of assessment itself, such change was not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured to parties by virtue of introduction of section 144C, and in view of settled position that law applicable on first day of assessment year be reckoned as applicable law for assessment for that year, leads to the inescapable conclusion that provisions of section 144C could be held to be applicable only prospectively.

Transfer pricing - Assessment - Under section 144C - Applicability of section 144C--Whether retrospectively or prospectively

Question arose for consideration was whether provisions of section 144C inserted vide Finance (No. 2) Act, 2009, with effect from 1-4-2009 could be made applicable retrospectively to all proceedings pending as on 1-4-2009.Held: Provisions of section 144C inserted by Finance (No. 2) Act, 2009 set out a new and distinct scheme of assessment separate from regular assessment. The Dispute Resolution Panel (DRP) was constituted as an alternate dispute resolution mechanism, to provide a specialized forum for expeditious disposal of disputes. An assessment involving transfer pricing disputes, was thus taken out of regular track and a fast track dispute mechanism evolved before a panel of three Senior Commissioners. Accordingly, there was a change in the form of assessment itself, such change was not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured to parties by virtue of introduction of section 144C, and in view of settled position that law applicable on first day of assessment year be reckoned as applicable law for assessment for that year, leads to the inescapable conclusion that provisions of section 144C could be held to be applicable only prospectively.

REFERRED : CCE v. Ratan Melting & Wire Industries (2008) 231 ELT 22 (SC) : 2008 TaxPub(EX) 2507 (SC), CIT v. Smt. R. Sharadamma (1996) 8 SCC 388, CIT v. Dhadi Sahu (1993) 199 ITR 610 (SC) : 1993 TaxPub(DT) 890 (SC), J.K. Synthetics Ltd. & Ors. v. Central Board of Direct Taxes & Ors. (1972) 83 ITR 335 (SC) : 1972 TaxPub(DT) 323 (SC), Karimtharuvi Tea Estates Ltd. v. State of Kerala (1966) 60 ITR 262 (SC) : 1966 TaxPub(DT) 296 (SC), CIT v. C-Sam (India) (P) Ltd. (2017) 398 ITR 182 (Guj) : 2017 TaxPub(DT) 3986 (Guj-HC), Sterilite Industries (India) Ltd. v. Asstt. CIT [W.P. Nos. 24476 to 24478 of 2009 M.P. Nos. 1, 1 & 1 of 2009, dt. 19-12-2011] : 2013 TaxPub(DT) 1387 (Mad-HC), CIT v. Nestor Pharmaceuticals Ltd. (2010) 322 ITR 0631 (Del) : 2010 TaxPub(DT) 1239 (Del-HC), CIT v. Elgi Finance Ltd. (2006) 286 ITR 674 (Mad) : 2006 TaxPub(DT) 1482 (Mad-HC), CIT v. Prasad Productions (P) Ltd. (1989) 179 ITR 147 (Mad) : 1989 TaxPub(DT) 0886 (Mad-HC), Addl. CIT v. Southern Structurals Ltd. (1977) 110 ITR 164 (Mad) : 1977 TaxPub(DT) 0885 (Mad-HC), ALA Firm v. CIT (1976) 102 ITR 622 (Mad) : 1976 TaxPub(DT) 340 (Mad-HC), and CIT v. Hindustan Antibiotics Ltd. (1974) 93 ITR 548 (Bom) : 1974 TaxPub(DT) 0251 (Bom-HC).

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