TPO order invalid for exceeding mandatory 60-day time limit under section 92CA(3A) read with section 153

ITAT Mumbai held that the TPO's order dated 01.11.2019 was invalid as it exceeded the mandatory time limit under section 92CA(3A) read with section 153 of the Act. The TPO was required to pass the transfer pricing order on or before 31.10.2019, being 60 days prior to the limitation period expiry. Despite section 92CA(3A) appearing directory, courts have consistently held the time limit is mandatory and must be strictly adhered to. The assessee's appeal was allowed due to this procedural violation.

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Issues Involved:
1. Validity of the order passed by the Transfer Pricing Officer (TPO) as being barred by limitation.
2. Merits of the case related to transfer pricing and other corporate tax grounds.

Summary:

Issue 1: Validity of the TPO's Order as Time-Barred

The assessee challenged the order dated 01.11.2019 passed u/s 92CA(3) of the Income Tax Act, 1961, by the TPO, arguing it was time-barred. The assessee contended that the TPO's order should have been passed before 60 days prior to the limitation for passing the assessment order, which was 31.10.2019. Since the TPO's order was dated 01.11.2019, it was beyond the stipulated time limit u/s 92CA(3A) r.w.s. 153 of the Act. The assessee relied on several judicial precedents, including the case of Johnson & Johnson Private Ltd., which supported the contention that the time limit prescribed for passing the TPO's order is mandatory.

The Departmental Representative argued that the provision of section 92CA(3A) is directory and not mandatory, relying on the interpretation of the word "may" in the statute.

The Tribunal, after considering the submissions and relevant judicial precedents, held that the time limit prescribed u/s 92CA(3A) is mandatory. The TPO's order dated 01.11.2019 was quashed as it was passed beyond the statutory time limit. Consequently, the final assessment order dated 23.04.2021 was also deemed time-barred.

Issue 2: Merits of the Case

Since the order of the TPO was quashed on the grounds of being time-barred, the other grounds raised by the assessee related to transfer pricing and other corporate tax issues became academic and required no separate adjudication.

Conclusion:

The appeal filed by the assessee was allowed, and the order passed by the TPO was quashed as time-barred. The other grounds raised by the assessee were not adjudicated due to the quashing of the TPO's order. The decision was pronounced in the open court on 01.12.2023.

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