2026 (3) TMI 560 - HC - Income Tax

Transfer Pricing remand under 92CA(3) is governed by Section 153(3), so fresh orders are time barred after the statutory period.

A Tribunal remand directing a fresh order by the Transfer Pricing Officer under the transfer pricing provisions is governed by the statutory fresh order ... Limitation operating u/s 153(3), 153(4) or 153(5) - Limitation applicable where Tribunal remits matters to the TPO and whether the period is governed by Section 153(3)/(5) or by Section 153(4) - timeline for passing a fresh order u/s 92CA or fresh assessment, as the case would be - whether there has been a reference under Section 92CA(1) to the TPO or the matter being remitted to the Transfer Pricing Officer by the Tribunal to decide the issue under Section 92CA(3)? - right of the petitioner to receive refund under Section 244A(1A) Time-limit for giving effect to appellate remand under section 153 - HELD THAT: - The Court held that a remand by the Tribunal to the Transfer Pricing Officer is not the same as a reference initiated by the Assessing Officer under Section 92CA(1). A Tribunal remand calling for a fresh order under Section 92CA falls within the scope of Section 153(3) (and the proviso to it) and the related provisions governing orders giving effect under Section 153(5), rather than the extension mechanism in Section 153(4) which applies only to references made in the course of assessment/reassessment by the Assessing Officer. The Court relied on the reasoning in the coordinate decisions which distinguish references made by the AO from remands made by the Tribunal and concluded that the period for giving effect to the Tribunal's remand must be computed under Section 153(3)/(5). [Paras 6, 9, 10] Remand by the Tribunal to the TPO is distinct from an AO reference; limitation is governed by Section 153(3)/(5) and not by Section 153(4). Entitlement to refund and interest where order giving effect is barred by limitation - Whether the revenue is time-barred from giving effect to the Tribunal's remand and whether the assessee is entitled to refund with interest. - HELD THAT: - Applying the principle that limitation is jurisdictional, the Court found that the Tribunal's orders were received in the relevant financial year 2022-23 and that the statutory period to give effect expired on 31-03-2024. Since no order giving effect was passed by that date, the respondents were de hors jurisdiction to act thereafter. The Court therefore directed that the impugned communication rejecting refund be quashed and ordered the respondents to process and pay the refund due (tax paid in excess of returned income) with applicable interest, fixing procedural timelines and stipulating enhanced interest for non-compliance. [Paras 10, 13, 14] Final Conclusion: The writ petitions are allowed: the Court held that Tribunal remand to the TPO is distinct from an AO reference and limitation to give effect to the remand expired on 31-03-2024; the impugned communication is quashed and the respondents are directed to process and pay the refund with applicable interest within the time fixed, with enhanced interest for failure to comply. Issues: (i) Whether a matter remitted by the Income Tax Appellate Tribunal to the Transfer Pricing Officer under Section 92CA(3) is governed by the time-limit for fresh orders under Section 153(3) or by the extended time provided by Section 153(4) where a reference is made under Section 92CA(1); (ii) In the facts of the case, whether the limitation for giving effect to the Tribunal's remand is governed by Section 153(3), Section 153(4) or Section 153(5) and the date on which the limitation expired.Issue (i): Whether a remand by the Tribunal to the Transfer Pricing Officer is governed by Section 153(3) (fresh order) rather than a reference under Section 92CA(1) made during assessment and thus by Section 153(4).Analysis: Section 92CA distinguishes between a reference made by an Assessing Officer under sub-section (1) and an order made by the Transfer Pricing Officer under sub-section (3). Section 153(3) expressly contemplates fresh assessments or fresh orders under Section 92CA made pursuant to an order under Section 254 (Tribunal). Section 153(4) extends time where a reference under Section 92CA(1) is made during the course of assessment or reassessment. A Tribunal remand that directs a fresh order under Section 92CA(3) is therefore conceptually and legally different from an Assessing Officer's in-course reference under Section 92CA(1). Precedent of the High Court of Delhi and coordinate decisions support that a Tribunal remand to the Transfer Pricing Officer attracts Section 153(3) time-limits and is not to be treated as a Section 92CA(1) reference made during assessment for the purpose of Section 153(4).Conclusion: Issue (i) answered in favour of the assessee. A remand by the Tribunal to the Transfer Pricing Officer requiring a fresh order under Section 92CA is governed by Section 153(3) and not by the extension provision of Section 153(4) applicable to in-course references under Section 92CA(1).Issue (ii): Whether, on the facts, the applicable limitation for giving effect to the Tribunal's remand expired on 31-03-2024 (assessee's case) or on 31-03-2025 (revenue's case).Analysis: Section 153(3) prescribes the period for making a fresh assessment or a fresh order under Section 92CA in pursuance of a Tribunal order received by the Commissioner, calculated from the end of the financial year in which the Tribunal's order is received. The Tribunal's orders in the matters were received in the financial year 2022-23; therefore the nine/modified twelve months period under Section 153(3) runs from the end of the financial year 2022-23. The coordinate bench rulings relied upon apply the distinction between fresh orders under Section 153(3) and in-course references under Section 153(4), and compute limitation accordingly. Seeking documents or issuing notices after remand does not extend the Section 153(3) limitation simply because the Revenue sought further material; Section 153(5)'s shorter OGE timeline is inapplicable where a fresh order under Section 153(3) is mandated. Applying Section 153(3) to the dates on record yields expiry of the limitation on 31-03-2024.Conclusion: Issue (ii) answered in favour of the assessee. On the facts, the limitation for passing orders giving effect to the Tribunal remand expired on 31-03-2024; actions taken by the revenue after that date are time-barred.Final Conclusion: The petitions succeed on limitation grounds; the impugned communications rejecting refund claims are quashed and refund with applicable interest is directed to be processed and paid within a stipulated period, with specified consequences for non-compliance.Ratio Decidendi: Where the Income Tax Appellate Tribunal remits matters for a fresh order under Section 92CA(3), the time-limit for making that fresh order is governed by Section 153(3) of the Income-tax Act, 1961, computed from the end of the financial year in which the Tribunal's order is received; such remand is distinct from a reference under Section 92CA(1) made during assessment which attracts Section 153(4).