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Issues: (i) Whether the transfer pricing order passed by the TPO was barred by limitation under section 92CA(3A) read with section 153 of the Income-tax Act, 1961. (ii) Whether the assessee was entitled to foreign tax credit and TDS credit, and the matter required verification by the Assessing Officer.
Issue (i): Whether the transfer pricing order passed by the TPO was barred by limitation under section 92CA(3A) read with section 153 of the Income-tax Act, 1961.
Analysis: The statutory scheme required the TPO to pass the order before sixty days prior to the expiry of the limitation for completing the assessment. For the relevant assessment year, the assessment limitation expired on 31 March 2014, so the TPO had to pass the order on or before 29 January 2014. The order was passed on 30 January 2014. Applying the mandatory character of the time limit and following the binding interpretation that such delay renders the order invalid, the transfer pricing order could not survive in law.
Conclusion: The transfer pricing order was time-barred and was quashed, which was in favour of the assessee.
Issue (ii): Whether the assessee was entitled to foreign tax credit and TDS credit, and the matter required verification by the Assessing Officer.
Analysis: The claims for foreign tax credit and TDS credit depended on factual verification. The matter was therefore restored to the Assessing Officer for de novo consideration, with directions to examine the claims and grant credit in accordance with law after affording a reasonable opportunity of hearing. The related interest grounds were consequential and did not call for separate adjudication.
Conclusion: The credit claims were remitted for fresh verification, which was in favour of the assessee to the extent of restoration, though no final allowance was granted on merits at that stage.
Final Conclusion: The transfer pricing adjustment was annulled for limitation, while the remaining credit-related issues were sent back for fresh adjudication, leaving the appeal allowed only for statistical purposes.
Ratio Decidendi: Where the statute prescribes a specific outer time limit for the TPO to complete the transfer pricing order, the order passed beyond that limit is without jurisdiction and liable to be quashed.
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