TPO order under section 92CA declared null and void due to limitation bar

The ITAT Mumbai held that the TPO's order under section 92CA was barred by limitation. The TPO must pass orders at least 60 days before the limitation period under section 153 expires. Since the assessment order limitation was 31/12/2019, the TPO's order should have been passed by 31/10/2019, but it expired on that date. The tribunal declared the transfer pricing order null and void due to limitation, consequently quashing the final assessment order and all additions. The assessee's appeal was allowed.

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Issues Involved:
1. Transfer pricing adjustment on advertisement, marketing, and promotion (AMP) expenses.
2. Treatment of domestic purchase of vehicles as an international transaction.
3. Adjustment on the distribution segment for purchases from Jaguar Land Rover Limited, UK.
4. Disallowance under Section 40(a)(ia).
5. Legal ground regarding the period of limitation for the TPO order under Section 92CA(3A).

Summary:

1. Transfer Pricing Adjustment on AMP Expenses:
The assessee challenged the transfer pricing adjustment amounting to Rs. 99,90,30,469/- on AMP expenses. The Tribunal found that the TPO order dated 01/11/2019 was passed beyond the period of limitation stipulated under Section 92CA(3A), which required it to be passed by 31/10/2019. Consequently, the Tribunal held that the transfer pricing order was barred by limitation and thus invalid.

2. Treatment of Domestic Purchase of Vehicles as an International Transaction:
The assessee contested the treatment of domestic purchases from M/s. Tata Motors Ltd. as an international transaction. The Tribunal did not specifically address this issue in the summary provided, as the primary focus was on the limitation aspect of the TPO order.

3. Adjustment on Distribution Segment:
The assessee also challenged the adjustment related to the purchase of CBUs, spare parts, and accessories from Jaguar Land Rover Limited, UK. Similar to the AMP expenses, the Tribunal's decision on the limitation of the TPO order rendered this adjustment invalid.

4. Disallowance under Section 40(a)(ia):
The assessee disputed the disallowance of Rs. 1,89,33,194/- under Section 40(a)(ia). The Tribunal quashed the final assessment order due to the TPO order being time-barred, which also nullified this disallowance.

5. Legal Ground on Period of Limitation:
The assessee argued that the TPO order was passed beyond the stipulated period under Section 92CA(3A), making the entire transfer pricing adjustment and the final assessment order invalid. The Tribunal agreed, referencing decisions from the Madras High Court in Pfizer Healthcare India Ltd. and Saint Gobain India Pvt. Ltd., which supported the interpretation that the TPO order must be passed within the specified period. The Tribunal concluded that the final assessment order dated 23/04/2021 was barred by limitation and thus invalid.

Conclusion:
The Tribunal quashed the final assessment order as it was barred by limitation. Consequently, all adjustments and disallowances made in the order were invalidated. The appeal of the assessee was allowed in full.

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