Court upholds dismissal of appeals, citing statutory time limit; clarifies computation rules

The court dismissed the intra-court appeals, upholding the learned Judge's order that the Transfer Pricing Officer's order dated 01.11.2019 was barred by limitation. The court held that the time limit prescribed under Section 92CA(3A) is mandatory, and the order should have been passed on or before 31.10.2019. The writ petitions were deemed maintainable as the issue of limitation is a pure question of law affecting the jurisdiction of the TPO. The court also clarified the interpretation of the statutory provisions related to the computation of time limits.

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Issues Involved:
1. Validity of the Transfer Pricing Officer's (TPO) order dated 01.11.2019 under Section 92CA(3) of the Income Tax Act, 1961, on the grounds of limitation.
2. Availability and necessity of alternative remedies.
3. Interpretation of statutory provisions related to the computation of time limits under Sections 92CA(3A) and 153 of the Income Tax Act.
4. The mandatory or directory nature of the time limit prescribed under Section 92CA(3A).

Issue-wise Detailed Analysis:

1. Validity of the TPO's Order on Grounds of Limitation:
The respondents challenged the TPO's order dated 01.11.2019, arguing it was beyond the period of limitation stipulated under Section 92CA(3A) of the Income Tax Act. They contended that the order should have been passed on or before 31.10.2019, as the time limit for the TPO to pass the order is 60 days prior to the date on which the period of limitation under Section 153 expires, which is 31.12.2019. The appellants argued that the order was within the time limit, interpreting the 60-day period to include 31.12.2019, making 01.11.2019 the last day for passing the order.

2. Availability and Necessity of Alternative Remedies:
The appellants contended that the writ petitions were not maintainable as the respondents had alternative remedies available under the Income Tax Act, such as filing objections before the Dispute Resolution Panel (DRP) or appealing to the appellate authority. The court, however, held that the writ petitions were maintainable as the issue of limitation goes to the root of the jurisdiction and authority of the TPO, making it a pure question of law suitable for adjudication under Article 226 of the Constitution of India.

3. Interpretation of Statutory Provisions Related to Time Limits:
The court examined the provisions of Sections 92CA(3A) and 153 of the Income Tax Act, along with Section 9 of the General Clauses Act. It held that the period of 21 months for passing the assessment order ends on 31.12.2019, not 01.01.2020. The court clarified that the last date for passing the order is 31.12.2019, which ends at 23:59:59 hours, and the next day begins at 00:00 hours. Therefore, the 60-day period for the TPO to pass the order should be calculated excluding 31.12.2019, making 01.11.2019 the 60th day, and the order should have been passed on or before 31.10.2019.

4. Mandatory or Directory Nature of the Time Limit:
The appellants argued that the word "may" in Section 92CA(3A) indicates that the time limit is directory and not mandatory. The court, however, held that the time limit is mandatory, as the language of the statute, the scheme of the Act, and the consequences of not adhering to the time limit indicate that the TPO must pass the order within the prescribed period. The court also noted that the proviso to Section 92CA(3A) extends the period if the remaining time is less than 60 days, further emphasizing the mandatory nature of the time limit.

Conclusion:
The court dismissed the intra-court appeals, upholding the learned Judge's order that the TPO's order dated 01.11.2019 was barred by limitation. The court held that the time limit prescribed under Section 92CA(3A) is mandatory, and the TPO should have passed the order on or before 31.10.2019. The writ petitions were maintainable as the issue of limitation is a pure question of law affecting the jurisdiction of the TPO. The court also clarified the interpretation of the statutory provisions related to the computation of time limits.

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