Bombay High Court
Archroma International (India) ... vs Deputy Commissioner Of Income Tax ... on 22 December, 2025
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
5.OS.WP(L).11219.2025
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 11219 OF 2025
Archroma International (India) Private Limited .. Petitioner
Versus
Deputy Commissioner of Income Tax,
Circle 2(1)(1) & Ors. .. Respondents
Mr. J. D. Mistri, Senior Advocate a/w Mr. Paras S. Savla, Mr. Harsh R.
Shah, Mr. Pratik B. Poddar, Ms. Rajnandini Shukla, Advocates for the
Petitioner.
VINA
ARVIND Ms. Sushma Nagaraj (Through V.C.) a/w. Mr. Abhinav Palsikar,
KHADPE Advocates for the Respondents.
Digitally signed by
VINA ARVIND
KHADPE
Date: 2025.12.29
12:58:55 +0530
CORAM: B. P. COLABAWALLA &
AMIT S. JAMSANDEKAR, JJ.
DATE: December 22, 2025
P. C.
1. Rule. Rule made returnable forthwith. The Respondents waive service. With the consent of the parties, taken up for final hearing.
2. The Assessment Year in question is Assessment Year 2009-10. By the present Petition, filed under Article 226 of the Constitution of India, 1950, the Petitioner is challenging the inaction of the Respondents in:-
a) not disposing of the application dated 14 th June 2016 for Page 1 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 rectification of order dated 26 th February 2016 giving effect to the Tribunal's order, and
b) not giving effect to the directions dated 19 th March 2020 of the Dispute Resolution Panel ("DRP") under section 144C(5) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and consequently, not granting the refund claimed by the Petitioner.
3. We were informed during the hearing that during the pendency of this Writ petition, Respondent No. 1 has passed an order dated 15 th September 2025 disposing off the rectification application dated 14 th June 2016 which resulted into a refund of Rs.4,17,04,918/-, which has been credited to the bank account of the Petitioner on 18 th December 2025. The Petitioner claims that it was not able to verify the correctness or accuracy of the 1 st Respondent's computation of the refund amount of R.s.4,17,04,918/- or the correctness / accuracy of interest due to it, as in the computation, a sum of Rs.4,92,05,568/- is claimed to have been refunded. Respondent no. 1 has shared a screenshot as per which Rs.1,92,12,268/- is claimed to have been refunded on 25 February 2011 and Rs.2,99,93,300/- on 29 February 2016. The Petitioner also submits that the refund computed as per the order dated 15th September 2025 is credited on 18 th December 2025. Page 2 of 18
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5.OS.WP(L).11219.2025 The Petitioner claims that in any event it is also entitled to further interest under the Act, and that it will pursue all these matters in accordance with law.
4. We appreciate the conduct of the 1st Respondent in passing the said order dated 15th September 2025, giving effect to the order of the Tribunal, on the lines of, and in view of, our orders in the Petitioner's own case in WP No. 1458 of 2025 dated 14 th October 2025 and WP (L) No. 11226 of 2025 dated 10th October 2025, and re-iterate that the said order dated 15 th September 2025, be treated as pursuant to the directions of this Court.
5. Insofar as the requirement of giving effect to the directions of the DRP dated 19th March 2020 is concerned, it is submitted by the Petitioner that if the Assessing Officer fails to complete the assessment within the time frame as prescribed by Section 144C (13), the transfer pricing addition/adjustment proposed in the draft assessment order and the DRP's directions, ought to be treated as non-est on the ground that any final order in accordance therewith, is barred by limitation.
6. The facts and circumstances relating to this dispute, which is now the remaining subject matter of the present Petition, are as follows:- Page 3 of 18
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5.OS.WP(L).11219.2025
(i) The Petitioner filed its Return of Income for A.Y. 2009-2010 on 26th September, 2009. In the said Return of Income, the Petitioner declared a total income as Rs. 53,97,90,433.00. The Petitioner claimed a refund of Rs. 3,23,72,554.00 arising out of (a) tax deducted at source of Rs.53,47,322.00; and (b) advance tax paid of Rs.21,05,00,000.00. The Petitioner made additional claims vide letter dated 25th March 2010.
(ii) The Return of Income filed by the Petitioner was selected for a scrutiny assessment under Section 143(2) of the Act vide notice dated 30th August 2010.
(iii) During the assessment proceedings, a reference was made to the 2nd Respondent, to determine the Arm's Length Price of the international transactions entered into by the Petitioner. The transfer pricing proceedings culminated in an order dated 23 rd January, 2013, under Section 92CA(3) of the Act. By the said order, the 2nd Respondent proposed a transfer pricing adjustment of Rs.11,44,72,502.00. This comprised of an adjustment of Rs.4,62,99,732 concerning 'Corporate Service Charges for Textile Effects Division' and an adjustment of Rs.6,81,72,770 concerning 'Adjustment in Manufacturing segment'.
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5.OS.WP(L).11219.2025
(iv) On 13th March 2013, the Petitioner filed a submission before the 1 st Respondent, by which the Petitioner claimed depreciation on intangibles i.e. material supply contract and distribution networks.
(v) Thereafter, on 22nd March 2013, the 1st Respondent issued a draft assessment order under Section 144C (1) of the Act. By the draft assessment order, the 1st Respondent computed the total income at Rs. 70,60,86,194.00 as against the Returned income of Rs. 53,97,90,433.00.
(vi) The Petitioner, being aggrieved by the draft assessment order dated 22nd March 2013, filed its objections before the DRP under Section 144C (2) of the Act.
(vii) On 24th December 2013, the DRP provided its directions in accordance with the provisions of Section 144C (5) of the Act.
(viii) Thereafter, the 1st Respondent, on 13th January 2014, passed the final assessment order, under Sections 143(3) read with 144C (13) of the Act and determined the Petitioner's income at Rs.72,51,75,838.00 against the returned Income of Rs. Page 5 of 18
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5.OS.WP(L).11219.2025 53,97,90,433.00.
(ix) Aggrieved by the final order, the Petitioner filed an Appeal before the Mumbai Bench of Income-Tax Appellate Tribunal, Mumbai, and challenged the final assessment order dated 13 th January 2014, passed by the 1st Respondent.
(x) The Tribunal decided the Appeal filed by the Petitioner on 31 st August 2015. Insofar as the transfer pricing adjustment of Rs.11,44,72,502.00 is concerned, the Tribunal remanded the matter back to the file of the DRP for fresh adjudication. The remand was ordered on the ground that the DRP had failed to consider the issue raised by Petitioner by filing additional evidences before it. The Tribunal also observed that the DRP order was non-speaking and had not given any reasons for the conclusions arrived at. The Tribunal thus directed the DRP to pass a speaking and a reasoned order after affording a reasonable opportunity of being heard to Petitioner. Thus, the Petitioner's grounds concerning the transfer pricing additions were treated by the Tribunal as allowed in part. The Tribunal further allowed the Petitioner's claim of depreciation on intangibles and goodwill. The Appeal of the Petitioner was accordingly partly allowed. Page 6 of 18
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5.OS.WP(L).11219.2025
(xi) The 1st Respondent, being aggrieved by the decision of the Tribunal dated 31st August 2015, filed ITXA(L) No. 173 of 2016 before this Court on 24th February 2016. The said appeal was dismissed by this Court on 17 th June 2016 for want of removal of office objections.
(xii) On 26th December 2016, Respondent No. 1 passed an order giving effect to the Tribunal's order dated 31 st August 2015. In the said order, Respondent No. 1 deleted the transfer pricing adjustment and further granted depreciation on material supply contract and distribution networks. Since there were certain errors in the said order the Petitioner had filed a rectification application dated 14 th June 2016.
(xiii) The DRP issued fresh directions to the Transfer Pricing Officer ("TPO") Assessing Officer on 19 th March 2020. These directions were issued in the remand proceedings, which were ordered by the Tribunal on 31st August 2015, in the Appeal filed by the Petitioner. The DRP directed the Assessing Officer to give effect to the direction as per the provisions of Section 144C (13) of the Act. Page 7 of 18
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(xiv) In its directions the DRP, directed the Assessing Officer / TPO to re-examine the corporate service charges on the lines of its directions for AY 2014-2015. Concerning transfer pricing adjustment towards 'Adjustment in Manufacturing segment", the DRP inter-alia directed the TPO to verify the record (of subsequent years) and same treatment was to be accorded for the present year as well. The operative part of the DRP directions dated 19th March, 2020, reads as follows:
"2.8 Since, the facts of the case are similar in nature, the A.O./T.P.O. is directed to re-examine the corporate service charges (Rs4,62,99,732/-) segment-wise on the same lines as above, and allow that part of the same which is found acceptable based on the applicability of arms's length principle. The objections are disposed off accordingly. ...
3.5 The A.O./T.P.O. is accordingly directed to verify the record, and in case it is found that on similar facts, he had accepted the benchmarking of the segment "PU System House", same treatment may be accorded for the present year as well. ...
4. The Assessing officer shall give effect to the above directions Page 8 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 as per provisions of section 144C(13) of the Income-tax Act,1961."
(emphasis supplied)
7. In this background, Mr. Mistri, the Learned Senior Counsel appearing on behalf of the Petitioner, submitted that the 1 st Respondent was required to pass a final assessment order as mandated by the provisions of Section 144C (13) of the Act, in conformity with the directions issued by the DRP on 19th March, 2020. He further submitted that the requirements of Section 144C (13) is that the final assessment order ought to be passed within one month from the end of the month in which the 1 st Respondent receives such directions. Mr. Mistri further submitted that the 1 st Respondent did not follow the mandate of Section 144C (13), and therefore, the Petitioner, by its letter dated 5 th August, 2020, requested the 1 st Respondent to give effect to the directions of the DRP passed on 19 th March, 2020. Mr. Mistri submitted that after the letter dated 5 th August, 2020, the representative of the Petitioner constantly followed up the matter and visited the office of the 1st Respondent on several occasions to ascertain the status of the pending proceedings.
8. Mr. Mistri has drawn our attention to the statement made in paragraph 20 of the Petition, where the Petitioner has stated that during their visits to the office of the 1 st Respondent, the officer assured the Page 9 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 authorised representative of the Petitioner that the issues concerning the specific Assessment Year in question would soon be taken up for consideration. Mr. Mistri also took us through the dates, which are drawn on the basis of the internal records of the Petitioner, on which the representatives of the Petitioner visited the office of the 1 st Respondent. According to the Petitioner, there was no response from the 1 st Respondent. Therefore, on 12th August, 2024, the Petitioner, by its letter, requested the 1 st Respondent to dispose of the rectification application and further to declare the second round of proceedings for giving effect to the DRP's directions dated 19th March, 2020, as barred by limitation. On 5 th September, 2024, the Petitioner sent a reminder to the 1 st Respondent once again requesting him to dispose of the rectification application and that the proceedings that were to be undertaken as per the DRP's directions dated 19 th March, 2020, be declared as barred by limitation, and that the taxes paid in excess of the amount payable ought to be refunded to the Petitioner along with applicable interest. The Petitioner sent similar reminders on 24th December, 2024, 16th January, 2025, and 28th February 2025.
9. Mr. Mistri , the Learned Senior Counsel, submitted that Section 144C (13) of the Act has a strict timeline and the timeline stipulated in Section 144C (13) of the Act is mandatory. The 1st Respondent does not have Page 10 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 discretion to deviate from the strict timeline provided by the Section. The 1 st Respondent ought to complete the assessment, that too in conformity with the directions of the DRP, within one month from the end of the month in which such directions are received. He submitted that as per the scheme of the Act, the only step which remains after the DRP gives the directions under Section 144C (5) of the Act, is to give effect to the same within the time limit as provided by Section 144C (13) of the Act. Mr. Mistri further submitted that if this timeline, as provided by the Section, is not adhered to by the 1st Respondent, and if the directions of the DRP are not given effect to by the 1st Respondent, then the proceedings ought to be treated as barred by limitation and the legal consequences must follow. He submitted that in the present case, as a consequence, the Petitioner is entitled to a refund of the excess taxes paid by the Petitioner.
10. Mr. Mistri, Learned Senior Counsel, also submitted that by virtue of the scheme of Section 144C and the applicable provisions of Section 153, the proposed adjustments/additions proposed in the transfer pricing proceedings will stand vitiated.
11. Mr. Mistri drew our attention to the decisions of the Madras High Court in Roca Bathroom Products (P) Ltd. Vs. Dispute Resolution Page 11 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 Panel-2, Bangalore [2021] 127 Taxman.com 332 , and Commissioner of Income Tax Vs. Roca Bathroom Products (P.) Ltd, [2022] 140 Taxman.com
304. Senior Counsel also pointed out that this Court had passed an order in the matter of Shelf Drilling Ron Tappmeyer Ltd. Vs. Assistant Commissioner of Income Tax (International Taxation), [2023 SCC Online Bom 1589] and the fact that in an SLP filed by the Department, the Supreme Court had passed an interim order dated 22 nd September 2023 holding that Shelf Drilling Ron Tappmeyer Ltd. judgement shall not be cited as a precedent in subsequent matters until further orders. Mr. Mistri also pointed out that the decision of this court in Shelf Drilling Ron Tappmeyer Ltd. was subsequently heard by the Supreme Court in the case of Asst. Commissioner of Income Tax Vs. Shelf Drilling Ron Tappmeyer Ltd. [SLP/20569 - 20572/2023 dated 8/8/2025] on the interpretation of Section 144C and 153 of the Act and the timelines provided therein. The Bench of two Hon'ble Judges of the Supreme Court have delivered a split verdict in Shelf Drilling Ron Tappmeyer Ltd. on the above issue. The larger bench to decide the issue has not yet been constituted, and therefore, the issue is still pending before the Hon'ble Supreme Court.
12. Mr Mistri, submitted that all these Judgments and issues considered therein are pending before the Hon'ble Supreme Court but these Page 12 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 are larger questions about the interpretation of Sections 144C and 153 of the Act and the timelines provided therein. He submitted that in the present case, a decision on the larger interpretation of Sections 144C and 153 of the Act may not be required. Accordingly, he submitted that his contentions relating to the larger issue of interpretation of Section 144C and that of Section 153 of the Act be kept open, and his submissions on the mandate of Section 144C (13) of the Act, and more particularly the timeline set out in the Section, may be sufficient for deciding the present matter.
13. On the other hand, Ms. Nagaraj, appearing on behalf of the Revenue, submitted that the timelines under Section 144C (13) of the Act would not be applicable in the facts and circumstances of the present case. According to the Revenue, if the DRP passes directions in a matter that was the subject of remand, and if the directions are passed in the second round, then the timelines provided under Section 144C (13) of the Act are not applicable. Therefore, according to the revenue, the 1 st Respondent is not bound to complete the assessment within one month from the end of the month in which such directions are received. She further submitted that the 1st Respondent has already passed a rectification order on 15 th September 2025 disposing off the rectification application dated 14 th June 2016. According to the revenue, not passing the final assessment order within the Page 13 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 time frame provided by the Section, does not vitiate the proceedings, and the same cannot be treated as time barred. Ms. Nagaraj further submitted that the larger issue of interpretation of Section 144C and that of Section 153 of the Act relating to the timelines, is pending before the Hon'ble supreme Court in Asst. Commissioner of Income Tax Vs. Shelf Drilling Ron Tappmeyer Ltd. [SLP/20569 - 20572/2023 dated 8/8/2025]. Therefore, reliance ought not to be placed on the decisions of this Court in Shelf Drilling Ron Tappmeyer Ltd. (Supra) or that of the Madras High Court in Roca Bathroom Products (P) Ltd. (Supra) . In any case, Ms. Nagaraj submitted that the 1st Respondent has already passed the rectification order to the order giving effect to the Tribunal order. Hence she submitted that the Writ Petition be dismissed.
14. We have considered the above submissions made on behalf of the Petitioner and the Revenue.
15. The core issue for decision is whether the transfer pricing addition of Rs. 11,44,72,502.00 should be treated as non-est on the ground that the proceedings to give effect to the DRP's directions dated 19 th March, 2020, are now barred by limitation. We are of the view that we can dispose of this Petition by deciding the limited issue of Section 144C (13), viz Page 14 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 whether the timeline provided by the Section is applicable, and if so, what is the consequence of not giving effect to the DRP's directions within a period of one month from the end of the month in which such direction is received. Accordingly, it is not necessary to consider the abovementioned judgments of the learned Single Judge or the Division bench of the Madras High Court, or the judgment of this Court in Shelf Drilling (supra) which are the subject matter of the split judgment in Asst. Commissioner of Income Tax Vs. Shelf Drilling Ron Tappmeyer Ltd. [SLP/20569 - 20572/2023 dated 8/8/2025]. The issue being only one of interpretation of Section 144C (13), we have independently analysed and interpreted the same and kept the arguments of Mr. Mistri on the larger issue of the timelines arising out of Section 153 and 144 C of the Act and its interpretation, expressly open. We have confined our analysis and findings only to the interpretation of Section 144C (13) of the Act for the purpose of deciding the present matter.
16. The very issue falling for our consideration has arisen in the Petitioner's own case which was decided by this Court in WP(L) No. 11226 of 2025 for AY 2010-11 vide order dated 10 October 2025 and WP No. 1458 of 2025 for AY 2011-12 vide order dated 14 October 2025. The operative part of the order dated 14th October 2025 in WP No.1458 of 2025, i.e. Archroma International (India) Pvt. Ltd. vs. Dy. CIT, Circle 2(1)(1) & Ors., reads thus; Page 15 of 18
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5.OS.WP(L).11219.2025 " ....
26. Therefore, by the clear language of Section 144C (13) of the Act, the 1st Respondent ought to have passed the assessment order within a period of one month from the end of the month in which such direction of the DRP was received. We agree with the submissions of Mr. Mistri that the Assessing Officer does not have any discretion after the DRP issues directions under Section 144C (5), and he cannot deviate from the procedure envisaged under the Section. In the present case, despite repeated reminders, the 1 st Respondent has not completed the assessment in conformity with the directions of the DRP, as passed on 19th March 2020.
....
30. The scheme of the Section clearly provides that the Assessing Officer is bound by the directions and he has to complete the assessment within the timelines provided by the Section. The reason for imposing a strict timeline in the Section is that the Assessing Officer must follow the directions issued by the DRP, which are provided for his guidance in completing the assessment. It is a settled principle of law that where a statute requires something to be done in a particular manner, it has to be done in that manner. The statutory provisions cannot be waived or deviated from. If the argument of the Revenue is accepted, then we will have to ignore the mandatory nature of the provisions of Section 144C (13) while reading the Section. Such a route of interpretation is not permissible. All the words in the statute will have to be read and given a meaning.
31. Therefore, we reject the submission of the Revenue that in case of remand proceedings, the timelines provided by Section 144C (13) are not applicable and the assessment can be completed beyond the time limits provided by the said section.
32. In view thereof, it is clear that the proceedings pending before the 1st Respondent concerning the transfer pricing addition of Rs.6,34,11,803.00 are barred by limitation and now outside the purview of Section 144C (13) of the Act. The 1 st Respondents cannot now invoke the provisions of Section 144C (13) of the Act and complete the assessment because the time frame mandated by the Section has already expired. It is accordingly so declared.
33. Consequently, the transfer pricing adjustment of Rs.6,34,11,803.00 is treated as non est and it is ordered accordingly. The 1st Respondent is ordered and directed to recompute the Petitioner's total income for the AY 2011-2012 by excluding the transfer pricing adjustment of Rs.6,34,11,803.00. The refund, along with the statutory interest under Section 244(A) of the Act, if any, Page 16 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 shall be paid to the Petitioner within eight weeks from the date of uploading of this order on the High Court's Website. ......."
17. In view of the well settled legal position as laid down by this Court, we hold that the transfer pricing adjustment of Rs.11,44,72,502.00 is to be treated as non-est and it is ordered accordingly. The 1st Respondent is ordered and directed to recompute the Petitioner's total income for the AY 2009-2010 by excluding the transfer pricing adjustment of Rs.11,44,72,502.00. In view of the fact that Respondent No 1 has on 15 th September 2025 passed a rectification order, as mentioned in paragraph 3 hereinabove, we need not deal with the other grounds in the Petition, save and except that:-
i) After verifying, it will be open to the Petitioner to contest the correctness of the amount of Rs.4,17,04,918, which has been refunded to it, in accordance with law,
ii) It will be open to the Petitioner to pursue claims for interest under Section 244A of the Act in accordance with law.
The resulting further refund, along with the statutory interest under Section Page 17 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::
5.OS.WP(L).11219.2025 244(A) of the Act, shall be paid to the Petitioner within six weeks from the date of uploading of this order on the High Court's Website.
18. Rule is made absolute in the above terms and the Writ Petition is also disposed of in the terms thereof. However, there shall be no order as to costs.
19. Though we have disposed of the Writ Petition, we place it on Board for reporting compliance on 2nd February, 2026.
20. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. [AMIT S. JAMSANDEKAR, J.] [B. P. COLABAWALLA, J.] Page 18 of 18 December 22, 2025 Sufiyan Syed - P.A. ::: Uploaded on - 29/12/2025 ::: Downloaded on - 02/01/2026 21:32:19 :::