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Delhi HC Dismisses Petition, Validates Eviction Due to Procedural Errors and Bona Fide Requirement

Case title : Yatti Dawar and Ors. vs. Ashok Kr. Gupta

Case No. RC.REV. 120/2022 & CM APPL.25011/2022.

Dated on: Reserved on May 17, 2024, and pronounced on May 22, 2024.

Quorum: Hon’ble Justice Girish Kathpalia.

FACTS OF THE CASE

Ashok Kr. Gupta owns shop no. 1126/2, Kucha Natwa, Chandni Chowk, Delhi, through a registered sale deed dated 23.08.2007. The shop was rented to Sh. Sunil Dawar, who passed away on 07.04.2018. His legal heirs, including petitioner no.1 (Yatti Dawar) and petitioners no.2-4, continued to occupy the premises. Ashok Kr. Gupta filed an eviction petition under Section 14(1)(e) of the Delhi Rent Control Act, 1958, claiming he needed the premises for his unemployed son, Shobhit Gupta, to start a business of readymade ladies garments. He stated the premises were ideally located in a market known for wholesale and retail business of clothes and mentioned no suitable alternate accommodation. Petitioners no.2-4 filed an application under Section 25B(5) seeking leave to contest the eviction but did not provide specific grounds and lacked the required supporting affidavit. The Additional Rent Controller dismissed their application and passed an eviction order against all petitioners since petitioner no.1 did not file any application for leave to contest. Petitioners claimed petitioner no.1 had filed an application for leave to contest, which was allegedly removed from the court record, but this application was identical to the insufficient application of petitioners no.2-4. Petitioners argued the eviction petition was not bona fide, asserting Shobhit Gupta was already engaged in the steel business. The respondent argued that the petitioners’ applications were without merit and reiterated the bona fide need for the premises for Shobhit Gupta’s new business, emphasising no legal restriction on changing business types.

ISSUES

  1. Whether Ashok Kr. Gupta’s claim that he needs the subject premises for his son Shobhit Gupta to start a new business of readymade ladies garments is genuine and constitutes a bona fide requirement under Section 14(1)(e) of the Delhi Rent Control Act, 1958.
  2. Whether the applications for leave to contest the eviction filed by petitioners no.2-4 were procedurally adequate, given that they did not specify any grounds for contesting the eviction and lacked the required supporting affidavit.
  3. Whether petitioner no.1’s application for leave to contest was filed and subsequently removed from the court’s record, as claimed by the petitioners, and the implications of this allegation on the eviction proceedings.

LEGAL PROVISIONS

  1. Delhi Rent Control Act, 1958
    • Section 14(1)(e): Provides grounds for eviction of a tenant by the landlord. It allows eviction if the premises are required bona fide by the landlord for occupation as a residence for himself or for any member of his family dependent on him, or for any purpose for which the premises were let out.
    • Section 25B(5): Special procedure for eviction on the ground of bona fide requirement. This section outlines the procedure for a tenant to seek leave to contest an eviction petition filed under Section 14(1)(e). The tenant must file an affidavit disclosing the grounds on which they seek to contest the eviction.
    • Section 25B(8): Provides the right to appeal. This section allows a tenant to appeal against an order passed by the Controller under Section 25B.

CONTENTIONS OF THE APPELLANT

Mr. Himalaya Gupta, Counsel of the appellant submitted that the case revolves around procedural irregularities and challenges to the bona fide requirement claimed by the respondent. Firstly, the appellant contends that there was a procedural error in the filing of the application for leave to contest. They argue that the application submitted by petitioners no.2-4 lacked specific grounds for contesting the eviction and did not include the necessary supporting affidavit as required by law. However, they assert that this deficiency stemmed from the negligence of their legal representative rather than any intentional oversight on their part. Additionally, the appellant raises the issue of a missing application allegedly filed by petitioner no.1 for leave to contest. They claim that despite filing the application, it was somehow removed from the court’s record. The appellant suggests that this missing application, if considered, could potentially provide additional grounds for contesting the eviction.

Furthermore, the appellant questions the bona fide requirement asserted by the respondent for the premises in question. They argue that the respondent’s claim that the premises are needed for his son, Shobhit Gupta, to start a new business of readymade ladies garments lacks credibility. Specifically, the appellant points out that Shobhit Gupta is already engaged in the steel business, which raises doubts about the genuine need for the premises for a new business venture. Additionally, the appellant implies that the eviction petition may have been filed opportunistically following the death of the original tenant, Sh. Sunil Dawar. They suggest that the respondent’s claim of a bona fide requirement may be driven by ulterior motives rather than a genuine necessity for the premises. These contentions collectively form the basis of the appellant’s argument against the eviction proceedings initiated by the respondent and seek a reconsideration of the eviction order passed by the Additional Rent Controller.

CONTENTIONS OF THE RESPONDENT

The respondent, represented by Mr. Nitin Ahlawat and Mr. Kshitiz Ahlawat, Advocates, presents several contentions in response to the appellant’s claims. Firstly, they assert that the applications for leave to contest the eviction filed by petitioners no.2-4 were without merit, a point even acknowledged by the appellant’s counsel. The respondent argues that these applications lacked specific grounds for contesting the eviction and did not adhere to the procedural requirements outlined by law. Therefore, they contend that no further consideration is warranted regarding the procedural adequacy of these applications.

Regarding the missing application allegedly filed by petitioner no.1 for leave to contest, the respondent dismisses the appellant’s claim, arguing that there is no substantive evidence to support this assertion. They suggest that the alleged removal of the application from the court’s record lacks credibility and appears to be a diversionary tactic by the appellant. Thus, they maintain that the missing application should not factor into the court’s decision-making process.

Moreover, the respondent defends their claim of a bona fide requirement for the premises. They emphasise that the premises are genuinely needed for their son, Shobhit Gupta, to establish a new business of readymade ladies garments. They refute the appellant’s argument regarding Shobhit Gupta’s existing engagement in the steel business, asserting that there is no legal restriction preventing individuals from diversifying their business interests. Therefore, they assert that the respondent’s claim of a bona fide requirement remains valid and should be upheld by the court.

In conclusion, the respondent reaffirms the legitimacy of their eviction petition and the bona fide requirement asserted therein. They argue that the appellant’s contentions regarding procedural irregularities and the bona fide requirement lack merit and should not affect the outcome of the case.

COURT’S ANALYSIS AND JUDGEMENT

 After considering the arguments presented by both parties, the court proceeded with its analysis of the case. The court first addressed the procedural irregularities regarding the applications for leave to contest the eviction filed by the appellants. It noted that these applications, filed by petitioners no.2-4, lacked specific grounds for contesting the eviction and did not include the required supporting affidavit. The court acknowledged the appellant’s claim that these deficiencies were due to the negligence of their legal representative. However, it emphasised that procedural requirements must be adhered to, and the absence of grounds for contesting the eviction hindered the court’s ability to grant leave to contest.

Regarding the alleged missing application filed by petitioner no.1 for leave to contest, the court found the appellant’s claim lacking substantive evidence. It deemed the alleged removal of the application from the court’s record as not credible, stating that there was no material to support this assertion. Therefore, the court did not consider the missing application as a valid factor in its decision-making process.

Moving on to the respondent’s claim of a bona fide requirement for the premises, the court analysed the circumstances presented. It observed that the respondent genuinely required the premises for their son, Shobhit Gupta, to establish a new business of readymade ladies garments. Despite the appellant’s argument regarding Shobhit Gupta’s existing engagement in the steel business, the court noted that there was no legal impediment preventing individuals from diversifying their business interests. Thus, the court found the respondent’s claim of a bona fide requirement to be valid and upheld.

Based on its analysis of the case, the court concluded that the procedural irregularities in the appellant’s applications for leave to contest and the lack of substantive evidence regarding the missing application for leave to contest filed by petitioner no.1 did not warrant a reconsideration of the eviction order. Additionally, the court found the respondent’s claim of a bona fide requirement for the premises to be genuine and upheld it. Therefore, the court upheld the impugned order and dismissed the appellant’s petition, along with any pending applications.

The court upheld the impugned order passed by the Additional Rent Controller and dismissed the appellant’s petition, along with any pending applications. The judgement was pronounced on May 22, 2024.

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 Judgement Reviewed by – Shruti Gattani

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Delhi HC rules abatement upon plaintiff’s death on religious accomodation dispute

Case title: Diocese of Delhi-CNI vs. Mr. Deepak Martin Caleb

Case No. C.R.P 46/2022

Dated on: 21st May, 2024

Quorum: Hon’ble Mr. Justice Dharmesh Sharma

FACTS OF THE CASE

The deceased plaintiff was appointed as a resident priest by the defendant No. 1 (referred to as petitioner) to perform religious services and duties in the Church. The petitioner allowed the deceased to reside in accommodation on the ground floor of the Church premises. Despite initially intending to retire in March 2001, the deceased’s services were extended at the request of the petitioner on an ad hoc basis until 2005.Claiming a crisis in the Church’s affairs, the deceased was given further extensions by defendant No. 3 to continue performing religious services and retain the accommodation until May 14, 2018.However, in May 2018, the petitioner informed the deceased that his services were no longer required, and a new Presbyter in-charge had been appointed. Subsequently, defendant No. 2 instructed the deceased to vacate the premises, declining his request for alternative accommodation in November 2018.In response, the deceased instituted a suit challenging the authority of the petitioner and defendant No. 2, alleging harassment and asserting his right to continue residing in the accommodation inside the Church. The deceased’s suit claimed relief against the termination of his services and challenged the authority of the defendants to manage the Church’s affairs, particularly regarding his accommodation rights. The petitioner argued that the deceased’s rights were personal and did not survive his death. They contended that the accommodation was provided as an incidental benefit for the performance of religious duties and that the right to retain it ended with the termination of services and the plaintiff’s death. The court noted that the deceased’s claim to the accommodation was not based on tenancy rights but on possessory rights. It emphasized that no hereditary rights were created, and the deceased’s successor could not continue the suit as a legal heir. Referencing legal precedents, including a case involving the appointment of priests in Hindu temples, the court concluded that the deceased’s personal rights terminated with his death and did not devolve onto his legal representatives. Additionally, the court addressed arguments made by the respondent’s counsel regarding a Supreme Court order granting temporary relief but clarified that it did not determine the survival of legal rights in the pending suit. After analyzing the arguments and legal principles, the court concluded that the deceased’s suit abated upon his death, and the previous order allowing its continuation was set aside. The court instructed that a copy of its order be sent to the trial court for information and compliance, effectively ending the proceedings related to the deceased’s suit.

ISSUES

  1.  Whether the deceased plaintiff’s legal rights continue beyond his death and can be pursued by his legal representatives.
  2. Examining the validity of the defendants’ actions in terminating the deceased’s services and demanding his eviction from the accommodation.
  3. Determining whether the deceased’s rights were personal and extinguished upon his death or if they could be inherited or transferred to his legal representatives.

LEGAL PROVISIONS

  1. Order 22, Rule 1 of the Code of Civil Procedure (CPC): This rule deals with the abatement of a suit in case of the death of a plaintiff or defendant and specifies the circumstances under which the suit may or may not abate.
  2. Principle of “actio personalis moritur cum persona”: This Latin maxim means “a personal action dies with the person.” It applies to certain actions ex delicto, such as defamation or personal injury, where the right to sue extinguishes upon the death of the person.
  3. Legal Precedents: Referring to past judgments like Puran Singh v. State of Punjab and Girja Nandini v. Bijendra Narain, which establishes when the right to sue survives the death of a party and when it does not.

CONTENTIONS OF THE APPELLANT

The appellant, representing the deceased plaintiff, contends that the deceased was initially appointed as a resident priest by the petitioner/defendant No.1. It is acknowledged that the petitioner allowed the deceased to reside in the accommodation on the church premises. Despite the acknowledgment of retirement, the deceased’s services were extended multiple times, indicating an ongoing engagement with the church. The appellant argues that the deceased, in his capacity as a resident priest, faced harassment from the defendants, particularly from petitioner/defendant No.1 and defendant No.2. The deceased challenged the authority of these defendants not only for the non-extension of his tenure but also for alleged harassment. The contention revolves around the termination of his services, which the deceased perceived as unlawful and unjustified. Another key contention is regarding the nature of the legal rights asserted by the deceased. The appellant argues that the rights claimed by the deceased, including the right to continue residing in the accommodation provided by the church, were personal in nature and not heritable. This implies that these rights did not transfer to the appellant upon the deceased’s death.The appellant further contends that the respondent, as the son of the deceased, does not inherit any rights to become a religious priest of the church or challenge the authority of the defendants. The appellant emphasises that the accommodation provided to the deceased was for the sole purpose of facilitating his religious duties and did not confer any hereditary rights upon his heirs. Additionally, the appellant distinguishes between possessory rights and hereditary rights. While acknowledging that the respondent seeks to protect possessory rights in the premises, the appellant asserts that no hereditary rights were created in favour of the respondent. Therefore, the appellant suggests that any claim to the premises should be pursued separately from the deceased’s lawsuit. These contentions collectively form the appellant’s argument against the respondent’s claim and serve as the basis for challenging the lower court’s decision.

CONTENTIONS OF THE RESPONDENT

The respondent contends that the deceased plaintiff challenged the authority of the petitioner/defendant No.1 and defendant No.2. This challenge is not solely based on the termination of his services but also involves allegations of harassment at the instance of defendants No.1 and 2. The respondent argues that such actions justify his right to maintain the suit and seek relief from the court. The respondent asserts that the deceased plaintiff was appointed as a religious priest in the Church in his individual and personal capacity by petitioner/defendant No.1. Moreover, he was allotted and allowed to retain accommodation in the suit premises inside the church premises solely to facilitate him in discharging religious duties. Therefore, the respondent argues that the plaintiff’s legal rights were personal to him and not heritable, which justifies his right to continue the suit.The respondent further contends that even if an extension was granted to the deceased plaintiff, the legal right, if any, available to him was a personal right of action that died with his death and was not transferable or heritable. Therefore, the respondent argues that the relief claimed by the deceased plaintiff challenging the authority of the petitioner/defendant No.1 and defendant No.2 essentially died with him and cannot be pursued further by his successor or legal heir.  The respondent emphasises that no hereditary rights are created in favour of the respondent to continue with the suit filed by the deceased plaintiff as his successor or legal heir. The respondent refers to an analogy regarding the right of a pujari to provide services in Hindu temples to support this argument, suggesting that continuity of service does not confer an independent right upon successors. These contentions form the basis of the respondent’s argument in the case, asserting the legitimacy of maintaining the suit despite the death of the original plaintiff.

COURT’S ANALYSIS AND JUDGEMENT

The court’s analysis and judgement in the case revolve around interpreting the legal rights and obligations concerning the deceased plaintiff’s tenure as a religious priest in the Church and his right to retain accommodation on the church premises. 

The court begins by examining whether the legal right to sue survives the death of the plaintiff, as per legal provisions outlined in Order 22 of the Code of Civil Procedure (CPC). It acknowledges the principle that a personal action dies with the death of the person, citing the maxim “actio personalis moritur cum persona.” However, it notes exceptions where the right to sue survives despite the death of the party, particularly in cases where the relief sought would not be rendered nugatory by the party’s death.

 The court proceeds to analyse the nature of the deceased plaintiff’s rights and tenure as a religious priest in the Church. It observes that the plaintiff’s appointment and accommodation were facilitated by the petitioner/defendant No.1 to enable him to discharge religious duties. The court underscores that the plaintiff’s rights were personal and not heritable, emphasising that the accommodation was provided as an incidental benefit to his role as a priest.

Examining the contentions raised in the suit, the court considers the plaintiff’s challenge to the authority of the petitioner/defendant No.1 and defendant No.2, as well as allegations of harassment. It concludes that the relief sought by the plaintiff challenging his termination and authority essentially died with him, as it was a personal right of action.

Addressing the respondent’s contention that he, as the legal heir of the deceased plaintiff, should be allowed to continue the suit, the court rejects this argument. It emphasizes that no hereditary rights are created in favor of the respondent to pursue the suit, as the deceased plaintiff’s rights were personal and not transferable or heritable.

The court draws parallels with legal precedents related to the appointment of priests in Hindu temples to support its analysis. It highlights that continuity of service does not confer an independent right upon successors, further reinforcing its stance on the non-heritability of the plaintiff’s rights.

 Based on its analysis, the court concludes that the impugned order allowing the respondent’s application under Order 22 Rule 3 of the CPC suffers from patent illegality and constitutes an erroneous exercise of jurisdiction. Consequently, the court sets aside the order and declares that the suit filed by the deceased plaintiff abates, meaning it comes to an end and shall not be further proceeded with in the Trial Court.

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Judgement Reviewed by – Shruti Gattani

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Jurisdictional Limits of Magistrates in Restoring Dismissed Complaints: Vakamulla Chandrashekhar & Ors. V. ROC”

Case Title: VAKAMULLA CHANDRASHEKHAR & ORS. Versus REGISTRAR OF COMPANIES -THROGH ITS DEPUTY REGISTRAR NCT OF DELHI AND HARYANA

Case No: CRL.M.C. 2372/2022 & CRL.M.A. 10023/2022

Decided on: 15th May , 2024

Quorum: HON’BLE MR. JUSTICE NAVIN CHAWLA

Facts of the case

Under Sections 447/448 of the Companies Act, 2013, the respondent lodged a complaint, claiming that the accused firm had misappropriated IPO proceeds to several entities rather than using them for the intended uses specified in the prospectus. The Special Judge first rejected the complaint because the respondent did not show up. Following this, the Special Judge granted the complaint’s restoration, acknowledged the offenses, and sent summonses to the petitioners.

Issues

1. Did the Special Judge have the authority to reinstate the dismissed complaint?

 2. Was it lawful for the order to call the petitioners for violations of the Companies Act?

 3. Whether the 1973 Code of Criminal Procedure’s provisions were appropriately construed and utilized in this instance?

Legal Provisions

The Companies Act of 2013’s Sections 447 and 448 deal with offenses including the diversion of IPO profits. The High Court’s inherent authority to halt proceedings is outlined in Section 482 of the 1973 Code of Criminal Procedure. Section 362 of the 1973 Code of Criminal Procedure grants a judge the authority to rectify mathematical or clerical errors.

 Appellant Contentions

The Code of Criminal Procedure contains no clause allowing a magistrate to review or recall an order, hence the Special Judge lacked jurisdiction to reinstate the dismissed complaint. The complaint was dismissed, rendering the Special Judge functus officio, which prevented the restoration or summons from being issued. The Supreme Court was relied upon ruling in Maj. Gen. A.S. Gauraya v. S.N. Thakur, which highlighted that, in accordance with Section 482 of the Cr.P.C., only the High Court possesses inherent authority.

Respondent Contentions

Since the judgment of dismissal lacked merit, the Special Judge’s reinstatement of the complaint was appropriate. The respondent said that the Special Judge was empowered to recall the dismissing judgment since Section 362 of the Cr.P.C. permits corrections of errors in orders.

 Court Analysis and Judgement

The High Court ruled that because the Cr.P.C. does not allow magistrates to review or recall their orders, the Special Judge lacked power to reinstate the rejected case. The decree directing the petitioners to be summoned was set aside, highlighting the restrictions on the Special Judge’s authority following the complaint’s rejection. The respondent may pursue appropriate legal remedies to get the complaint restored in compliance with the law, the Court further stated. This case emphasizes how crucial it is to comprehend the extent of judicial authority and how laws should be correctly applied in criminal cases.

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Judgement Analysis Written by – K.Immey Grace

 

 

 

 

 

 

 

 

 

 

 

 

 

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The court stressed that judicial interference in expert-driven judgments is limited unless the criteria are perverse or unreasonable

Case Title: MANINI KAUSHIK Versus THE NATIONAL RIFLE ASSOCIATION OF INDIA & ORS.

Case No: W.P.(C) 5438/2024 & CM APPL. 22456/2024

Decided on: 15th May , 2024

Quorum: HON’BLE MR. JUSTICE SUBRAMONIUM PRASAD

Facts of the case

The appellant asked the court for permission to compete in the 50-meter Rifle 3 Position Women Category at the Paris Olympic Selection Trials. The dates of these trials were set for April and May of 2024, respectively, in New Delhi and Bhopal. The appellant had competed in the women’s 50-meter Rifle 3 Position competition both domestically and internationally. Interestingly, she competed for China in the 2022 Asian Games and was a member of the squad that earned a silver medal. In October 2022, the NRAI set the standards for choosing the Olympic Shooting Teams. The NRAI revised the eligibility requirements and added more constraints in November 2023. The appellant claimed to have met the initial 2022 requirements.

Issues

1. Whether the NRAI’s November 2023 adjustment to the selection criteria was fair and justified, given that the initial criteria had been established In October 2022?

2. Whether does the appellant now face unfair disadvantages as a result of the rule change?

Legal Provisions

The Indian Constitution’s Article 226 specifies the High Court’s writ authority.

Appellant Contentions

In the aforementioned case, the appellant, through her attorney, contended that the November 2023 amendment to the NRAI selection criteria was unjust and amounted to altering the rules of the game after it had already started. The appellant was disadvantaged by this change because it changed the eligibility requirement that she had initially sought to meet. The appellant underlined that, under the initial criteria, she should have been eligible for the selection trials because, as per the QROG points, she ranked fourth nationally, higher than some of the selected athletes like Nischal and Shriyanka Sadangi. The appellant claimed that she would have been one of the top five qualified shooters for the 2022 competition if the original 2022 criteria had been applied.

Respondent Contentions

In the aforementioned matter, the Respondent, via their legal representative, was satisfied that modifications to the ISSF calendar—which prolonged the qualifying event deadline and multiplied the chances for athletes to raise their rankings were the reason for the modification of the selection criteria. In order to choose the best athletes from a bigger group, the Respondent claimed that the altered criteria increased the pool of participants in the selection trials. The Respondent further claimed that this was done in good faith in an effort to improve the caliber of the squad.

Court Analysis and Judgement

After reviewing the Paris Olympic selection trials’ 2022 and 2023 requirements, the court concluded that the National Research and Analysis Institute (NRAI) had made the revisions In response to modifications to the ISSF timetable. The court stressed that judicial interference in expert-driven judgments is limited unless the criteria are perverse or unreasonable and found the 2023 criteria legitimate in their attempt to choose the top athletes from a wider pool. Despite the Appellant’s superior QROG ranking, the court decided that the athletes’ selection was warranted based on the national ranking as a whole. Both the Appellant’s application and any ongoing applications were dismissed by the court. The court reviewed the 2022 and 2023 criteria for the Paris Olympic selection trials, determining that the amendments were introduced by the National Research and Analysis Institute (NRAI) in response to changes in the ISSF calendar. The court deemed the 2023 criteria reasonable, aiming to select the best athletes from a larger pool, and emphasized that judicial intervention in expert-driven decisions is limited unless the criteria are perverse or unreasonable. The court acknowledged the Appellant’s higher QROG ranking but ruled that the overall national ranking justified the selection of those athletes. The court dismissed the Appellant’s application and any pending applications.

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Judgement Analysis Written by – K.Immey Grace

 

 

 

 

 

 

 

 

 

 

 

 

 

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Delhi High Court Affirms ITAT’s Authority to Directly Remit Cases to TPO, Renders AO’s Second Reference Redundant

 Case Name: New Delhi Television Ltd. v. Dispute Resolution Panel 2 & Anr 

Case No.: W.P.(C) 2322/2021 

Dated: May20, 2024 

Quorum: Justice Yashwanth Varma and Justice Purushaindra Kumar Kaurav 

 

FACTS OF THE CASE: 

The writ petitioner challenges the Dispute Resolution panel’s ruling. Panel from January 29, 2021, which has refuted its concerns about the preliminary evaluation order formulated on March 31, 2013. That particular draft the evaluation order was created in response to a directive issued by the Officer of Transfer Pricing on October 29, 2019. It appears that the petitioner to have argued before the DRP that, in essence, the reference to the TPO on December 27, 2018, was a follow-up reference to allegedly implement the Income Tax Appellate Court’s ruling tribunal on July 14, 2017.  

Despite having framed an order on October 17, 2017, the record would show that no equivalent order as required by Income Tax Act, 1961 Section 92CA(4) was framed. In order to give effect to the original ITAT order dated July 14, 2017, the petitioner had urged the DRP to consider that the reference made on December 27, 2018, as well as the consequential order dated October 29, 2019, framed by the TPO, were manifestly barred by the statute of limitations as embodied in Section 153(3) of the Act. 

Nevertheless, the DRP declined to consider the restriction challenge, pointing out that Section 144C(8) limits its authority to verifying, modifying, or improving the changes suggested in the draft order. It seems to have essentially adopted the stance that it could not consider a jurisdictional challenge brought forth as an objection under Section 144C(2) of the Act. It is offended by the aforementioned action, which led to the current writ petition being filed.  

According to the Special Bench’s previously stated opinion, it seems that the appeal itself was instructed to be presented before the suitable ITAT Bench for resolution with regard to the findings as produced. It would be relevant to remember that on July 14, the ITAT when discussing the topic of corporate guarantees in 2017, returned the matter with the warning for the TPO’s consideration. That the aforementioned query will be held until the decision was made by the Particular Bench in the ongoing case.  

 LEGAL PROVISIONS:  

  • Section 92CA(4) of the Income Tax Act, 1961- After receiving the order under sub-section (3), the Assessing Officer will calculate the assessee’s total income under section 92C, sub-section (4), taking into account the arm’s length price that the Transfer Pricing Officer determined under sub-section (3). 
  • Section 153(3) of the Income Tax Act– An order under section 254 or section 263 or section 264, setting aside or cancelling an assessment or an order under section 92CA, as the case may be, may be made at any time before the end of the nine-month period following the end of the fiscal year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner. 

CONTENTIONS OF THE APPELLANTS: 

The learned counsel for the appellants fiercely and strongly argued that a reading of the ITAT’s order dated July 14, 2017, makes it clear that the parties’ permission was obtained before the TPO was mentioned. Mr Jolly emphasised that the respondents had not contested the order dated July 14, 2017, insofar as it related to the referral to the TPO. As a result, they were ineligible to criticise or raise doubts about the propriety of the process used by the ITAT to make that referral. 

It was also emphasised that while the respondents filed appeals on January 02, 2018, against the ITAT’s order dated July 14, 2017, those appeals are limited to the merits of the several issues that were ultimately decided. Even in those appeals, which The learned counsel filed, the respondents do not criticise or cast doubt on the propriety of the ITAT’s decision to forward the case to the TPO.  

The learned counsel went on to say that a simple reading of the TPO’s first ruling, dated October 17, 2017, would prove beyond a reasonable doubt that the aforementioned authority had acted in accordance with the ITAT’s instructions and to give effect to and carry out the order dated July 14, 2017.  

The TPO’s reference and assumption of jurisdiction were subsequently challenged on the basis of limitation as outlined in Section 153 of the Act. The learned counsel contended that the time frame within which the AO or the TPO could have concluded that exercise would be governed by Section 153(3) of the Act, unquestionably in terms of the order of July 14, 2017, and which would clearly be liable to be read as requiring a fresh assessment to be undertaken.  

When considering this, skilled counsel argued that the deadline for creating a draft appeal effect order would have ended on December 31, 2018. The learned counsel stated that this would logically follow from the Act’s Section 153(3)’s straightforward language.   

CONTENTIONS OF THE RESPONDENTS: 

The arguments put forward by the learned counsel for the appellants were sharply and passionately rejected by the learned counsel for originally filed a preliminary objection, arguing that the writ petition should not be granted in defiance of the DRP’s directives. According to The learned counsel’s submission, Section 144C of the Act establishes a unique method to address situations in which alterations in transfer pricing may lead to variances. According to The learned counsel’s submission, qualified assessees are provided with a draft assessment order in all circumstances whereby they are entitled to file objections with the DRP under the Act. It was mentioned that after the DRP rejects those objections, the issue is brought before the AO, who would then decide whether to issue an assessment order.  

As per the advice of knowledgeable legal counsel, an assessee’s entitlement to challenge the respondents’ actions or pursue legal remedies will only be acknowledged upon the drafting of a final assessment decision that follows the DRP’s directives. The learned counsel argued that the DRP’s resolution of objections does not create a liability and is merely a step towards assessment in the event that the assessee is eligible. According to knowledgeable counsel, a tax liability wouldn’t materialise until after a final assessment decision was approved and was subject to an ITAT appeal.  

Subsequently, it was argued that the challenge to the DRP’s recommendations is misguided because it is evident that the aforementioned authority lacks the authority to consider any potential jurisdictional issues, including objections to limitations. It was argued that the DRP’s authority is limited to “confirming, reducing or enhancing the variations proposed,” as would be clear from Section 144C(8) of the Act. The learned counsel argues that this authority cannot be seen as equivalent to or similar to the authority to set aside.  

 COURT’S ANALYSIS AND JUDGMENT: 

First, the court noted that the provisions included in the Finance Act, 2016 were the first to introduce and structure the “nine” and “twelve” month window governing assessments to be made post remit by the ITAT and in cases where a reference under Section 92CA(1) of the Act may be made during an ongoing assessment. Section 153 of the Finance Act, 2014 fully acknowledged and established provisions regarding assessments that may need to be made in compliance with the method outlined under Section 92CA of the Act. This is the second aspect of some relevance.  

After outlining the main points of contention, we believe it is fair to take a closer look at Mr. Hossain’s preliminary objection. Recall that Mr. Hossain had argued that the petitioner was only contesting a DRP order, which in any event carries no legal consequences. The main argument of the submission was that this Court would not be able to use the Article 226 of the Constitution’s jurisdiction if no corresponding order of assessment had been framed. For the following reasons, we are unable to support that objection.  

The court also noted that the Act’s Section 92CA(1) specifies that the concerned AO alone may refer to the TPO. Nonetheless, we see no reason to question the ITAT’s authority to make such a reference while reviewing an appeal that might be brought before it, given the stature and position that have been bestowed upon it. This is because, according to Section 253 of the Act, an assessee has the right to contest a directive that the DRP issued and that may have been converted into a real assessment order.  

The court also discovered that the ITAT’s order referring the case to the “Assessing Officer/Transfer Pricing Officer/Dispute Resolution Panel” was at issue in the ruling made by a knowledgeable single judge of the Karnataka High Court in the TE Connectivity case.  

In any event, the High Court finally ruled in favour of the assessee in that particular case. We are unable to find any observation or conclusion in that decision that might be interpreted as supporting the arguments made by the respondents in this particular process.  

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Judgment reviewed by Riddhi S Bhora. 

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