The Supreme Court dismissed the Revenue’s special leave petition in Laqshya Media Limited’s tax dispute after stating it was “not inclined to interfere” with the Bombay High Court’s judgment. The High Court had held that the Assessing Officer missed the deadline to complete the assessment following an ITAT remand, calculated the deadline as 31 March 2023, and directed acceptance of the income Laqshya Media had returned. The Supreme Court’s short order left that result undisturbed; it did not separately explain or adopt the High Court’s Section 153 analysis.
What the Supreme Court decided
The reported order records three actions: delay was condoned, the Court was not inclined to interfere with the Bombay High Court’s judgment and order, and the special leave petition was dismissed. It also disposed of any pending applications. The order, as reproduced by TaxGuru, says: “We are not inclined to interfere with the impugned judgment and order of the High Court; hence, the special leave petition stands dismissed.”
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That is a concise disposition, not a new, reasoned Supreme Court ruling on how to calculate every deadline under Section 153. The 31 March 2023 calculation and the direction to accept the returned income were the Bombay High Court’s conclusions on Laqshya Media’s facts. The accessible report does not identify the Supreme Court order’s date or appeal number, so neither is stated here.
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The dispute concerned Laqshya Media Limited’s return for assessment year (AY) 2014–15. The original assessment was made on 29 October 2018 under Sections 143(3) and 144C(13). On 17 July 2020, the Income Tax Appellate Tribunal (ITAT) partly decided the company’s appeal and sent several matters back for further action.
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Issues the ITAT decided or remanded
- It restricted the arm’s-length fee for a corporate guarantee to 0.5% through July 2013, rather than the 1.50% the Transfer Pricing Officer (TPO) had applied for the full financial year.
- It remanded the interest adjustment on a loan to an associated enterprise.
- It deleted disallowances under Sections 36(1)(iii) and 14A read with Rule 8D.
- It remanded an unreconciled difference between Form 26AS and the company’s books for verification.
The TPO issued an order giving effect to the corporate-guarantee decision on 11 February 2021. Later, on 17 December 2021, the Assessing Officer referred the interest issue to the TPO under Section 92CA(1). The TPO issued an order proposing an adjustment on 28 September 2022. The Assessing Officer did not then pass a fresh assessment order.
Why the Bombay High Court found the assessment out of time
The Bombay High Court treated receipt of the ITAT order in financial year 2020–21 as the starting point for the relevant period. Applying a 12-month period under Section 153(3), followed by an additional 12 months under Section 153(4) because of the TPO reference, it calculated 31 March 2023 as the deadline. The parties did not dispute that no fresh assessment order had been made by then.
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The Revenue argued that the corporate-guarantee issue had already been determined and should remain effective separately. The High Court rejected that position because no assessment or appeal-effect order had been made within the applicable time limit. It held that the missed deadline barred a further demand and required the returned income to be accepted. In the court’s words, as reproduced in the case report, non-passing of the required order by 31 March 2023 “has barred any demand to be raised upon the Petitioner and therefore, the return of income filed by the Petitioner needs to be accepted as such.”
The High Court’s reasoning relied on CIT v. Shelly Products (Supreme Court), Plasticotes Investments (P.) Ltd. v. CCIT (Bombay High Court), and Aircom International India (P.) Ltd. v. DCIT (Delhi High Court), as described in its case report.
How to assess a Section 153 deadline after a remand
The Laqshya Media date is not a general deadline for every ITAT remand. Section 153 covers time limits for assessment, reassessment and recomputation, and its applicable wording and periods depend on the assessment year and procedural circumstances. The Income Tax Department’s Section 153 guidance describes Section 153(3) in connection with specified fresh assessments or fresh Section 92CA orders following orders that set aside or cancel an assessment, and Section 153(4) as providing an additional period where a reference is made to the TPO. The Department’s displayed timelines also reflect different periods and historical amendments.
For a particular case, the deadline analysis should establish:
- What order is required: Is the authority required to make a fresh assessment under Section 153(3), or an order giving effect to an appellate or tribunal decision under another part of Section 153?
- Which statutory text applies: Identify the version of the Act that governs the relevant assessment year and proceeding.
- When the clock starts: Check when the authority received the relevant order and how the applicable provision defines the starting point.
- Whether time is extended or excluded: Determine whether a qualifying Section 92CA reference or another statutory extension or exclusion affects the calculation.
- Whether the required order was made in time: Compare the actual order date with the deadline calculated under the applicable provision.
The precise result turns on these details, including the nature of the remand or direction. A Section 153(3) fresh-assessment period should not automatically be treated as the deadline for every order giving effect to an appellate decision.
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The case is relevant when an assessment following an ITAT remand may have been completed late, but it does not establish a universal 24-month rule or make 31 March 2023 a reusable deadline. The High Court’s calculation rested on the relevant assessment year, its treatment of the ITAT order’s receipt, the TPO reference and the statutory provisions it applied. The Supreme Court’s dismissal left the High Court’s case-specific result in place without adding a separate statutory explanation.
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