Does the DRP route under s.144C buy the Assessing Officer extra time, or must the whole assessment still finish within the s.153 limitation?
Non-resident assessees argued that the overall limitation in s.153 continued to govern even where the DRP route was taken, so that a final order passed long after that date was time-barred. The Bombay High Court agreed, holding that s.153 is not excluded by s.144C and that the non obstante clause operates only to the limited extent of the one-month window for passing the final order after the Panel's directions.
Decided by the High Court on 2023-08-04, reported as (2023) 457 ITR 161 (Bom); [2023] 153 taxmann.com 162 (Bom); 295 Taxman 85; 334 CTR 11; Writ Petition No. 2340 of 2021. It bears on section 153, section 144C of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioners were non-residents assessed in connection with activities taxed under s.44BB. Draft assessment orders proposing variations were passed and objections were filed before the Dispute Resolution Panel. The Panel's directions and the consequent final assessment orders came after the outer date computed under s.153. The Revenue contended that s.144C is a self-contained code with its own timelines that displace s.153 altogether. The assessees filed writ petitions contending the final orders were time-barred.
Section 153 of the Act is not excluded by the operation of s.144C. The general time limit for completing an assessment continues to apply, and the non obstante language in s.144C serves only the limited purpose of ensuring that the final order founded on the Panel's directions is passed within the one-month window measured from the end of the month in which the directions are received. The overall limitation has not been given a go by, and final orders passed beyond it are without jurisdiction.
Section 153 is the general provision fixing the outer life of an assessment proceeding, and an express exclusion would have been necessary to displace it. Section 144C(13) is drafted to compel promptness after the Panel speaks; it is a floor on delay, not a grant of open-ended additional time. Reading it the Revenue's way would allow assessments to remain alive indefinitely, which is the mischief limitation provisions exist to prevent. The Court followed the Madras High Court Division Bench in CIT v Roca Bathroom Products, which had rejected the argument that DRP proceedings are unfettered by limitation.
Section 153 of the Act is not excluded by the operation of Section 144C
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Handle my notice → Ask a CA on WhatsAppNon-resident assessees argued that the overall limitation in s.153 continued to govern even where the DRP route was taken, so that a final order passed long after that date was time-barred. The Bombay High Court agreed, holding that s.153 is not excluded by s.144C and that the non obstante clause operates only to the limited extent of the one-month window for passing the final order after the Panel's directions. This was decided by the High Court and bears on section 153, section 144C of the Income Tax Act 1961. It is reported as (2023) 457 ITR 161 (Bom); [2023] 153 taxmann.com 162 (Bom); 295 Taxman 85; 334 CTR 11; Writ Petition No. 2340 of 2021. If it applies to you, the first step is this: Compute the s.153 outer date for the year independently of the s.144C timeline before advising on limitation.
The petitioners were non-residents assessed in connection with activities taxed under s.44BB. Draft assessment orders proposing variations were passed and objections were filed before the Dispute Resolution Panel. The Panel's directions and the consequent final assessment orders came after the outer date computed under s.153. The Revenue contended that s.144C is a self-contained code with its own timelines that displace s.153 altogether. The assessees filed writ petitions contending the final orders were time-barred. The matter was decided on 2023-08-04 by the High Court. On those facts the High Court held as follows. Section 153 of the Act is not excluded by the operation of s.144C. The general time limit for completing an assessment continues to apply, and the non obstante language in s.144C serves only the limited purpose of ensuring that the final order founded on the Panel's directions is passed within the one-month window measured from the end of the month in which the directions are received. The overall limitation has not been given a go by, and final orders passed beyond it are without jurisdiction.
Section 153 is the general provision fixing the outer life of an assessment proceeding, and an express exclusion would have been necessary to displace it. Section 144C(13) is drafted to compel promptness after the Panel speaks; it is a floor on delay, not a grant of open-ended additional time. Reading it the Revenue's way would allow assessments to remain alive indefinitely, which is the mischief limitation provisions exist to prevent. The Court followed the Madras High Court Division Bench in CIT v Roca Bathroom Products, which had rejected the argument that DRP proceedings are unfettered by limitation. In the words reproduced by the source cited on this page: "Section 153 of the Act is not excluded by the operation of Section 144C"
It was decided by the High Court on 2023-08-04 and is reported as (2023) 457 ITR 161 (Bom); [2023] 153 taxmann.com 162 (Bom); 295 Taxman 85; 334 CTR 11; Writ Petition No. 2340 of 2021. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 153, section 144C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Section 153 of the Act is not excluded by the operation of s.144C. The general time limit for completing an assessment continues to apply, and the non obstante language in s.144C serves only the limited purpose of ensuring that the final order founded on the Panel's directions is passed within the one-month window measured from the end of the month in which the directions are received. The overall limitation has not been given a go by, and final orders passed beyond it are without jurisdiction. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 153, section 144C of the Income Tax Act 1961. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Diarise the date the DRP directions are received, because the one-month window runs from the end of that month. Where the final order is beyond the s.153 date, take the limitation ground at the earliest stage and keep it alive. Track the pending Supreme Court reference before relying on this decision as settled, and plead it in the alternative. For AYs where the TPO order comes close to the deadline, flag the compression problem in writing during the assessment.
Still good law. Separate check: the Revenue's appeal reached the Supreme Court, which on 8 August 2025 delivered a split verdict (2025 INSC 946) and referred the question to a larger bench, so the point is presently unsettled at the apex level even though the Bombay judgment stands. That finding was checked against a published source, which is linked on this page, on 2026-08-19. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Section 153 of the Act is not excluded by the operation of s.144C. The general time limit for completing an assessment continues to apply, and the non obstante language in s.144C serves only the limited purpose of ensuring that the final order founded on the Panel's directions is passed within the one-month window measured from the end of the month in which the directions are received. The overall limitation has not been given a go by, and final orders passed beyond it are without jurisdiction.
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