2023 (5) TMI 1203 - AT - Income Tax

Tribunal quashes Transfer Pricing adjustments as time-barred, directs verification of foreign tax credit.

The Tribunal allowed the assessee's appeal for statistical purposes, quashing the Transfer Pricing (TP) adjustments due to the TP order being time-barred. ... Validity of order passed u/s 92CA(3) - period of limitation - Whether TP order in this case has been passed by the TPO after the time limit prescribed u/s 92CA(3A) r.w.s. 153? - HELD THAT:- As in the present case the TPO has passed the order only on 30.01.2014 which was after the limitation period as prescribed u/s 92CA(3). We note the similar view has been taken by the Tribunal in the following cases Tata Power Solar Systems Ltd [2022 (3) TMI 1510 - ITAT BANGALORE], M/s.Swiss Re Global Business Solutions India Pvt. Ltd. [2022 (1) TMI 1033 - ITAT BANGALORE], ECL Finance Ltd. [2021 (9) TMI 1399 - ITAT MUMBAI] & M/s. Unisys India Pvt. Ltd. [2022 (6) TMI 1378 - ITAT BANGALORE]. Since the impugned order passed by the TPO u/s 92CA of the Act is beyond the period of limitation it is held to be bad in law. Therefore the addition in respect of TP adjustments stands quashed. Non-grant of Foreign Tax Credit under India-Singapore Treaty - HELD THAT:- Since issue requires factual verification the same is restored back to the file of the AO for de novo consideration. AO is directed to compute foreign tax credit that is due to the assessee in accordance to the law after affording a reasonable opportunity of hearing to the assessee. Assessee has claimed credit of tax deducted at source while computing the tax liability for the year, which also requires verification at the end of the AO and the AO to verify the same and grant credit of tax in accordance to the law after hearing the assessee. Ground allowed for statistical purposes. Issues Involved:1. Jurisdiction of the Transfer Pricing Officer (TPO) to pass the Transfer Pricing (TP) order beyond the time limit prescribed by the Income Tax Act, 1961.2. Non-grant of Foreign Tax Credit under the India-Singapore Tax Treaty.3. Non-grant of Tax Deducted at Source (TDS) credit.4. Levy of excess interest under section 234B of the Income Tax Act.5. Levy of interest under section 234C of the Income Tax Act on assessed income rather than returned income.Detailed Analysis:1. Jurisdiction of the TPO to Pass the TP Order Beyond the Time LimitThe assessee challenged the jurisdiction of the TPO to pass the TP order dated 30.01.2014, arguing it was beyond the time limit prescribed by section 92CA(3A) of the Income Tax Act. The assessee contended that the order should have been passed on or before 29.01.2014. The Tribunal agreed with the assessee, noting that the TPO passed the order on 30.01.2014, which was beyond the statutory time limit. The Tribunal relied on the judgment of the Hon'ble Madras High Court in DCIT v. M/s. Pfizer Healthcare India Pvt. Ltd. and other Tribunal orders to conclude that the TP order was time-barred and thus void. Consequently, the TP adjustments made by the TPO were quashed.2. Non-grant of Foreign Tax Credit under the India-Singapore Tax TreatyThe assessee claimed a foreign tax credit of Rs.41,063,711/- under Article 25(2) of the India-Singapore Tax Treaty, read with section 90 of the Act. The Tribunal noted that this issue required factual verification and thus restored it to the file of the AO for de novo consideration. The AO was directed to compute the foreign tax credit due to the assessee in accordance with the law after providing a reasonable opportunity of hearing.3. Non-grant of TDS CreditThe assessee also claimed a credit of TDS amounting to Rs.6,477,178/-. The Tribunal found that this issue also required verification by the AO. The AO was instructed to verify the TDS credit claimed and grant it in accordance with the law after hearing the assessee.4. Levy of Excess Interest under Section 234BThe assessee contended that the AO had levied excess interest under section 234B of the Act. The Tribunal did not specifically adjudicate this issue, as it was consequential to the other issues being resolved.5. Levy of Interest under Section 234C on Assessed IncomeThe assessee argued that interest under section 234C should be levied on the returned income rather than the assessed income. Similar to the issue under section 234B, the Tribunal did not specifically adjudicate this issue, as it was also consequential.ConclusionThe appeal of the assessee was allowed for statistical purposes, with the Tribunal quashing the TP adjustments due to the TP order being time-barred and directing the AO to verify and grant the foreign tax credit and TDS credit claimed by the assessee. The issues regarding the levy of interest under sections 234B and 234C were deemed consequential and did not require separate adjudication. The order was pronounced in the open court on 22/12/2022.