IBS Software Services Pvt. Ltd. & Suntec Business Solutions v. Union of India

Income Tax Act, 1961 – Section 144C(13) – Time Limit for Assessment Order – Mandatory Compliance – Assessment Orders Issued Beyond Prescribed Time Limit – Validity – Dispute Resolution Panel (DRP) Directions – Binding Nature – Non-Adherence to Time Limit Vitiates Proceedings – Fast-Track Dispute Resolution Mechanism – Legislative Intent – Machinery vs. Substantive Provision – Writ Petitions Allowed – Assessment Orders Set Aside.

2025 KER 42465 : 2025 KLT OnLine 2132
High Court of Kerala; S. Manu, J.
W.P.(C) Nos. 9520 & 9521 of 2014, 16.06.2025

The petitioners, IBS Software Services Pvt. Ltd. and Suntec Business Solutions Pvt. Ltd., challenged assessment orders issued by the Income Tax Department, contending that they were passed beyond the one-month time limit stipulated under Section 144C(13) of the Income Tax Act, 1961, following directions from the Dispute Resolution Panel (DRP). The High Court of Kerala held that Section 144C, introduced via the Finance Act, 2009, establishes a fast-track alternative dispute resolution mechanism for transfer pricing disputes, with strict time limits to ensure expeditious resolution. Non-compliance with the time limit under Section 144C(13) is not a mere procedural irregularity but a substantive breach that invalidates the assessment orders. The court rejected the Revenue’s argument that Section 144C is a machinery provision, emphasizing that the legislative intent behind its incorporation was to facilitate speedy dispute resolution. Relying on precedents from the Bombay High Court in Vodafone Idea Ltd. v. Central Processing Centre [2023 SCC OnLine Bom 2464] and its own decision in Allianz Cornhill Information Services Pvt. Ltd. v. Union of India [2023 SCC OnLine Ker 11076], the court set aside the impugned assessment orders, holding them time-barred and unsustainable.

For Petitioners :