HITACHI ASTEMO HARYANA PRIVATE LIMITED,FARIDABAD V. ASSISTANT COMMISSIONER OF INCOME TAX, DELHI

ITA 3353/DEL/2024

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Hitachi Astemo Haryana Pvt. Ltd. appealed against the final assessment order passed by the Assistant Commissioner of Income Tax, which was based on the directions of the Dispute Resolution Panel (DRP) following a remand by the Income Tax Appellate Tribunal (ITAT). The primary contention was that the final assessment order was issued beyond the statutory timeline prescribed under Section 153(5) of the Income Tax Act, 1961, making it invalid and time-barred. Additionally, the appellant contested the incorrect computation of tax demand and the rejection of their economic analysis for determining the arm's length price for royalty payments. The Tribunal found that the final assessment order was indeed passed beyond the permissible period, leading to the acceptance of the appellant's position and the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775022 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 18-07-2024
• Other Referred Cases: Huawei Telecommunications India Company Private Limited vs ACIT, Aircom International India Private Limited vs DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.K. JADHAV
• Assessee Lawyers: ANANYA KAPOOR
• Keywords: Set aside; Transfer pricing; International transaction; Depreciation; Period of limitation; Unabsorbed depreciation; Time period of passing order
• Section: 143(3); 244A

Judgement Text

"1 ITA No. 3353/Del/2024 Hitachi Astemo Haryana Pvt. Ltd. Vs. ACIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘H’ NEW DELHI BEFORE S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 3353/Del/2024 (A.Y. 2018-19) Hitachi Astemo Haryana Private Limited Plot No. 23-32, Sector-58, Behind JCB India Ltd, Faridabad, Haryana, India PAN: AABCE5725G Vs Assistant Commissioner of income Tax, Circle 10(1), C. R. Building, ITO, IP Estate, New Delhi Appellant Respondent Assessee by Ms. Ananya Kapoor, Adv Revenue by Sh. S. K. Jadhav, CIT- DR Date of Hearing 06/08/2025 Date of Pronouncement 03 /09/2025 ORDER PER YOGESH KUMAR, U.S. JM: This appeal is filed by the assessee pertaining to Assessment Year 2018-19 challenging the Final Assessment Order passed by Assistant Commissioner of Income Tax, Circle -10(1)-Delhi dated 23/05/2024 u/s 143(3) r.w. Section 254 of the Income Tax Act, 1961 ('Act' for short). 2. The grounds of Appeal are as under:- “GENERAL GROUNDS 1. On the facts and circumstances of the case and in law, the assessment order giving effect to Hon'ble ITAT's direction has been issued beyond the statutory timeline prescribed under Section 153(5) of the Act and consequently, the assessment order is invalid and time barred. Printed from counselvise.com 2 ITA No. 3353/Del/2024 Hitachi Astemo Haryana Pvt. Ltd. Vs. ACIT 2. Without prejudice to other grounds, the Ld. AO has erred in incorrectly computing a tax demand of INR 1,38,22,160 in the final assessment order by not allowing set off of brought forward losses and unabsorbed depreciation. GROUNDS PERTAINING TO PAYMENT OF ROYALTY 3. Without prejudice to any of the other grounds, the Ld. AO/TPO/DRP has erred in law and on facts and circumstances of the case by rejecting the economic analysis conducted by the Appellant in accordance with the provisions of the Act read with the Income Tax Rules, 1962, for determination of the arm's length price using Comparable Uncontrolled Price ('CUP') method as the most appropriate method. 4. Without prejudice to any of the grounds, the Ld. AO/TPO/DRP has erred in law and on facts by selecting comparable agreements based on inconsistent, inappropriate and unreasonable criteria. 5. Without prejudice to any of the other grounds, an arm's length royalty rate of 3.37% was determined by the Competent Authorities under India-Japan Mutual Agreement Procedure (\"MAP\") Resolution dated 23 December 2021 in Appellant's own case for AY 2014-15 and the same should be considered as the arm's length rate for AY 2018-19 given that the terms and conditions of the agreement and the functional profile of entities remain the same. GROUNDS PERTAINING TO PENALTY PROCEEDINGS 6. That, on facts and in law, the Ld. AO/TPO/DRP erred in holding that the Appellant has furnished inaccurate particulars of income in respect of each item of disallowance/additions and in initiating penalty proceedings under Section 270A of the Act. The Appellant craves leave to add, alter, modify or delete such other objections before or during the course of hearing before the Hon'ble ITAT, so as to enable the Hon'ble ITAT to decide on the grounds raised by the Appellant, as per law.” Printed from counselvise.com 3 ITA No. 3353/Del/2024 Hitachi Astemo Haryana Pvt. Ltd. Vs. ACIT 3. Brief facts of the case are that, originally the TPO passed an order u/s 92CA(3) of the Act on 29/07/2021 by suggesting to make adjustment in the arm’s length Price of international transactions of the Assessee, wherein proposed for adjustment of Rs. 5,54,33,729/- in the manufacturing segment and Rs. 5,92,00,531/-on the payment of royalty. As against the order of the TPO dated 27/07/2021, Assessee filed objection before the Dispute Resolution Panel (DRP). The DRP granted relief to the Assessee in so far as manufacturing segment of Rs. 5,44,33,729/- and sustained the order of the TPO in so far as addition on account of payment of royalty of Rs. 5,92,00,531/-. A Final assessment order u/s 143(3) r.w. Section 144C(13) and 144B of the Act came to be passed on 30/03/2022, wherein the A.O. has not incorporated the DRP direction. 4. Aggrieved by the Final Assessment Order dated 30/03/2022, Assessee preferred an Appeal before this Tribunal in ITA No. 1005/Del/2022. The Co-ordinate Bench of the Tribunal vide order dated 23/11/2023, quashed the Final Assessment Order dated 30/03/2022 and remitted the issue to the file of the A.O. with a direction to pass an order incorporating the DRP’s direction. 5. In compliance with the order of the Tribunal made in ITA No. 1005/Del/2022 dated 23/11/2023, the Ld. A.O. passed the final assessment order on 23/05/2024 by incorporating the directions of Printed from counselvise.com 4 ITA No. 3353/Del/2024 Hitachi Astemo Haryana Pvt. Ltd. Vs. ACIT the DRP. Aggrieved by the Final Assessment Order dated 23/05/2024, the Assessee hereby preferred the present Appeal. 6. The Ld. Counsel for the Assessee vehemently submitted that the impugned order dated 23/05/2024 has been passed in violation of provision of Section 153(5) of the Act, wherein the A.O. should have passed the order on or before three months from the end of the month in which the order of the Tribunal has been received. Further submitted that the three months of the limitation period provided u/s 153(5) of the Act expires in March 2023, however, the impugned Final Assessment order has been passed on 23/05/2025, which is beyond the time frame provided under Section 153(5) of the Act, thus sought for allowing the Appeal. 7. Per contra, the Ld. Departmental Representative relying on the orders of the Lower Authorities, submitted that since the order has been passed after the remand order from the Tribunal, the limitation prescribed u/s 153(5) will not be applicable, thus sought for dismissal of the Appeal. 8. Heard the parties and perused the materials. During the first round of litigation before the Tribunal, the Assessee challenged the Final Assessment Order passed u/s 143(3) r.w. Section 144C(13) and 144B of the Act dated 30/03/2022 before the Tribunal in ITA No. Printed from counselvise.com 5 ITA No. 3353/Del/2024 Hitachi Astemo Haryana Pvt. Ltd. Vs. ACIT 1005/Del/2022. The Co-ordinate Bench of the Tribunal after hearing both the parties,vide order dated 23/11/2023 set aside the Final Assessment Order dated 30/03/2022 and remanded the matter to the file of the A.O. with a direction to pass afresh order incorporating the DRP’s direction. 9. The provision of Section 153(3) of the Act provides for time limit for giving effect to the order passed by the authorities including the Tribunal. The provisions of Section 153(5)of the Act mandates to give effect of the order of the Tribunal within a period of 3 months from the end of the month in which order u/s 254 of the Act received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or as the case may be. In the present case, the Co-ordinate Bench of the Tribunal passed the order directing the A.O. to pass the assessment order incorporating the DRP’s direction on 23/11/2023. The said order of the Tribunal was received by the Principal Commissioner of the Income Tax on 28/12/2023 which is evident from para 4 of the order impugned. Further, impugned order came to be passed only on 23/05/2024, thus, the Ld. Principal Commissioner has not passed the Final Assessment order as per the direction of the Tribunal within the period of three months from the end of the month in which order u/s 254 of the Act received by the Principal Chief Commissioner of Income Tax. Printed from counselvise.com 6 ITA No. 3353/Del/2024 Hitachi Astemo Haryana Pvt. Ltd. Vs. ACIT 10. Hon'ble Delhi High Court in the case ofHuawei Telecommunications India Company Private Limited vs ACIT in W.P. (c) 7792/2024 and CM Appeal No. 32296/2024, in the similar circumstances, held that the order of the TPO/AO stand time barred under Section 153(5) of the Act. The relevant partition of the same are as under:- “13. Undisputedly, the learned ITAT had pronounced the order in open court on 24.02.2021 as is expressly set out in the said order. The order also indicates that the Revenue was duly represented by the departmental representative (Sh. Surender Pal, CIT). Thus, the timeline for passing an order under Section 153(5) of the Act commenced from 24.02.2021. 19. In view of the above settled position, there can be no dispute regarding the date of receipt of the order passed by the learned ITAT. Concededly, further proceedings by the TPO or by the AO pursuant to the remand by the learned ITAT are now barred as the time stipulated for passing an order under Section 153 of the Act has since expired. Consequently, the petitioner's return is required to be considered as accepted. 20. The petition is allowed in the aforesaid terms. The pending application is also disposed of.” 11. The Hon'ble Delhi High Court's in the case of Aircom International India Private Limited vs DCIT (WP(C) No 16153/2023), held that since the AO has not passed the assessment orders in accordance with the orders of remand passed by the ITAT within the time stipulated under Section 153(3) read with Section 153(4) and Section 153(5) of the Act, the returned position are directed to be accepted. Relevant extract of the ruling is provided hereunder: Printed from counselvise.com 7 ITA No. 3353/Del/2024 Hitachi Astemo Haryana Pvt. Ltd. Vs. ACIT 6. Accordingly, the present batch of matters is disposed of with a direction to the AO to pass appeal effect orders in accordance with law within eight weeks. In the event, the AO has not passed the assessment orders in accordance with the orders of remand passed by the ITAT within the time stipulated under Section 153(3) read with Section 153(4) and Section 153(5) of the Act, the returned assessments are directed to be accepted on the said issues. The AO shall also release the refunds, if any, alongwith applicable interest in accordance with Section 244A of the Act within a further period of eight weeks. This Court clarifies that it has passed this order, as it is settled law that assessment is complete only when the AO passes an assessment order determining the total income and the demand notice determining the tax payable by the assessee is issued.” 12. In view of the above facts and circumstances and also following the ratio laid down by the Jurisdictional High Court in the case of Huawei telecommunications India Company private limited (supra)and Aircom International India Private Limited (supra),we are of the opinion that the order impugned dated 23/05/2024 passed by Assistant Commissioner of Income Tax, Circle 10(1), Delhi is barred by limitation as prescribed u/s 153(5) of the Act. Accordingly the order impugned dated 23/05/2024 is hereby quashed. Since we have quashed the assessment order dated 23/05/2024 being barred by limitation, other grounds of Appeal requires no adjudication. 13. In the result, the Appeal of the Assessee is allowed. Order pronounced in the open court on 03rd September, 2025 Sd/- Sd/- - (S. RIFAUR RAHMAN) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 03.09.2025 R.N, Sr.P.S* Printed from counselvise.com 8 ITA No. 3353/Del/2024 Hitachi Astemo Haryana Pvt. Ltd. Vs. ACIT Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "