Assessment order under Section 144C(13) ruled time-barred as passed beyond mandatory limitation period

ITAT Delhi held that the final assessment order under Section 144C(13) was passed beyond the limitation period and therefore time-barred. The tribunal determined that the relevant date for calculating limitation was when the DRP directions were received by the FAO in April 2022, not when they were uploaded to the JAO's case history on May 2, 2022 as contended by Revenue. Since the assessment order was passed on June 30, 2022, it exceeded the limitation period ending May 31, 2022. The tribunal emphasized that Section 144C(13) timelines are mandatory, allowing the assessee's appeal.

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Issues Involved:

1. Validity of the assessment order due to bar of limitation.
2. Characterization and categorization of AMP expenditure as an international transaction.
3. Application of Bright Line Test (BLT) for transfer pricing adjustment.
4. Errors in benchmarking AMP expenditure.
5. Non-consideration of economic adjustments in AMP expenditure.
6. Disallowance of bonus u/s 43B.
7. Levying of interest u/s 234B and 234C.

Summary of the Judgment:

1. Validity of the Assessment Order Due to Bar of Limitation:

The assessee challenged the final assessment order on the grounds of being barred by limitation u/s 144C(13) of the Act. The DRP directions were issued on March 17, 2022, and uploaded on the ITBA portal on March 30, 2022. The AO passed the final assessment order on June 30, 2022. The Tribunal noted that the assessment case was transferred on April 22, 2022, and the DRP directions were uploaded in the case history noting on May 2, 2022. The Tribunal concluded that the limitation period expired in May 2022, rendering the assessment order passed on June 30, 2022, as time-barred and void.

2. Characterization and Categorization of AMP Expenditure as an International Transaction:

The assessee contended that the AMP expenditure did not constitute an international transaction under Chapter X of the Act. The Tribunal did not delve into this issue, as the assessment order was already found to be barred by limitation.

3. Application of Bright Line Test (BLT) for Transfer Pricing Adjustment:

The assessee argued against the application of the BLT for making transfer pricing adjustments. The Tribunal did not address this issue due to the primary finding of the assessment order being time-barred.

4. Errors in Benchmarking AMP Expenditure:

The assessee claimed errors in the benchmarking process of AMP expenditure by the AO/TPO. This issue was not adjudicated by the Tribunal as the assessment order was declared void due to the limitation bar.

5. Non-Consideration of Economic Adjustments in AMP Expenditure:

The assessee argued that the AO/DRP/TPO did not grant quantitative/economic adjustments while quantifying the arm's length price of the AMP expenditure. The Tribunal did not address this issue due to the primary finding of the assessment order being time-barred.

6. Disallowance of Bonus u/s 43B:

The assessee contested the disallowance of bonus paid amounting to INR 10,44,363 u/s 43B of the Act. The Tribunal did not address this issue as the assessment order was declared void due to the limitation bar.

7. Levying of Interest u/s 234B and 234C:

The assessee challenged the levying of interest u/s 234B and 234C of the Act. The Tribunal did not address this issue due to the primary finding of the assessment order being time-barred.

Conclusion:

The Tribunal allowed the appeal of the assessee, declaring the assessment order passed on June 30, 2022, as barred by limitation and void. The other grounds of appeal were not adjudicated due to the primary finding on the issue of limitation.

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