TaxTMI 
TaxTMI 
2021 (2) TMI 1152
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....f notices, passed orders dated 1-11-2019 that, according to the petitioners, is barred by limitation by one day. Hence these writ petitions. 3. The submissions of the petitioners represented by Mr.Vohra and Mr.P.S.Raman, learned senior counsels and Mr.Sandeep Bagmar, Mr.S.P.Chidambaram, Mr.Vijayaraghavan, Mr.N.V.Balaji, Ms.P.Jayalakshmi and Mr.R.Sivaraman, learned counsels are as follows: 4. The provisions of Section 92CA(3A) require that an order be passed by the TPO before 60 days prior to the last day on which the period of limitation referred to in Section 153 for making assessment, expires. Assessments are to be completed within the limitation set out in Section 153, that is, within 21 months from the end of the assessment year in which the income was first assessable, ie., within 21 months from 31-3-2017 or rather, no order of assessment for the aforesaid period shall be passed after 31-12-2018. The assessments are to encompass income from international transactions as well, and for this purpose, a reference is to be made to the TPO who will, after hearing the assessee pass a transfer pricing order, in terms of Section 92CA(3A) extracted below: Reference to the Transfer P....
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....hich states that, if, for any reason the limitation available to a TPO for passing a transfer pricing order is less than 60 days, then the remaining period shall be extended to 60 days and the period of limitation would be reckoned accordingly. 8. Moreover, the second proviso after Section 153, specifically provides that where the period available to a TPO is extended to 60 days in line with the proviso to sub-section (3A) of Section 92CA and the period of limitation available to the Assessing Authority for passing an order of assessment/re- assessment/re-computation is less than 60 days, then such remaining period shall also stand extended to 60 days. 9. In addition, the provisions of the General Clauses Act are pressed into service, to indicate situations where different words have been used in the prescription for limitation, such as 'before' and 'upto'. Reference is made to Maxwell's Interpretation of Laws as well as Halsbury's Laws of England, in support of the submission that even though the word used in Section 92CA(3) is 'may' it should be read as 'shall' bearing in mind the context in which it has been used. 10. My attention is al....
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....12 a m of 1-1-2020. The period of 60 days would have to be computed including the 31st of December and ending on the 2nd of November, 2019. The passing of the impugned orders on the 1st of November is thus, perfectly in order. 14. Alternatively, the time frame under section 92CA(3A) is only directory, as the assessment at that point of time is only a work-in-progress. She points out that a transfer pricing audit would only be made in relation to those transactions where Arms Length Price (ALP) is to be determined and other issues arising from the return of income, both domestic and international, would be processed parallelly/simultaneously. Thus, it is not as though the Assessing Officer has to await completion of transfer pricing audit to complete the proceedings for assessment and pass an order of assessment. The period of sixty days, is, according to her, merely a guide to ensure that the transfer pricing audit is completed, roughly, within the period of sixty days and forwarded to the Assessing Officer for integration with, and completion of assessment within the overall time limit prescribed in Section 153. 15. She points out that the General Clauses Act relied upon by the ....
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....ns before the TPO. 19. The revenue relies on the amendment to Section 92CA(4) which requires the Assessing Officer to compute total income of an assessee after receipt of the transfer pricing order. Prior to 1-6-2007, it was mandatory for the Assessing Authority to accept the ALP determined by the TPO and the phrase used in the provision was 'having regard to'. Post amendment, the provision made it compulsory for the Assessing Authority to adopt the ALP as determined by the TPO and the phrase 'having regard to' was replaced by the phrase 'in conformity with'. Thus, according to the revenue, the AO hardly need apply his mind with respect to the ALP determined and the prescription of 60 days is merely for internal convenience of the different officers to facilitate step by step completion of assessment. 20. Much has been stated about the use of the words in the computation itself, such as 'may', 'shall', the absence of reference to 'month' as it may have led to an ambiguity of whether the period should be reckoned as 30 or 31 days and the absence of the phrase 'no order shall be made' as used in Section 153. This, according to....
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.... would normally indicate that the provision was not mandatory. But in the context of a particular statute, this word may connote a legislative imperative, particularly when its construction in a permissive sense would relegate it to the unenviable position, as it were, "of an ineffectual angel beating its wings in a luminous void in vain". If the choice is between two interpretations", said Viscount Simon L.C. in Nokes v. Doncaster Amalgamated Collieries, Ltd, the narrower of which would fail to achieve the manifest purpose of the legislation we should avoid a construction which would reduce the legislation to futility and should rather accept the bolder construction based on the view that Parliament would legislate only for the purpose of bringing about an effective result. 19. The provisions of Sections 63 and 64 of the Act are to be interpreted in the light of this principle. The language and scheme of the Excise Act, taken as a whole, show that the purpose of this legislation is not only to raise revenue but also to control and restrict the import, export, transport, manufacture and sale of intoxicants. Free and unrestricted use of intoxicants and illicit trade in contraban....
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....ord "shall" is not always decisive. Regard must be had to the context, subject matter and object of the statutory provision in question in determining whether the same is mandatory or directory. No universal principle of law could be laid in that behalf as to whether a particular provision or enactment shall be considered mandatory or directory. It is the duty of the Court to try to get at the real intention of the legislature by carefully analysing the whole scope of the statute or section or a phrase under Consideration. As stated earlier, the question as to whether the statute is mandatory or directory depends upon the language in which the intent is couched. The meaning and purpose the Act seeks to achieve. In "Suhtherland Statutory Construction" (3rd Edn.) Volume 1 at page 81 in paragraph 316, it is stated that although the problem of mandatory and directory legislation is a hazard to all governmental activity, it is peculiarly hazardous to administrative agencies because the validity of their action depends upon exercise of authority in accordance with their charter of existence the statute. If the directions of the statute are mandatory, then strict compliance with the statu....
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.... and may frequently result in hardship. But in construing such provisions, equitable considerations are out of place, and the strict grammatical meaning of the words is the only safe guide". (Sir Dinshaw Mulla in Nagendranath Dev v. Sureshchandra Dev [ILR 60 Cal 1 (PC)]. 27. In M.K.Srikanta Setty v. CIT (160 ITR 517 (Karn.)), the Bench was considering the provisions of Section 3 of the Voluntary Disclosure of Income and Wealth Act, 1976 (Central Act 8 of 1976) and states in that context, as follows: 7. Section 3 of the Act provides for making a declaration in accordance with the provisions of section 4 of the Act before January 1, 1976, or on or before December 31, 1975. The time specified in section 3 of the Act for making a declaration is an absolute period which cannot be extended or condoned by any one under any circumstance. 8. In the context, the words "make" and "made" occurring in sections 3 and 4 of the Act mean that a declaration under the Act should be filed or presented on or before December 31, 1975, and not beyond that date. 10. In Nagendra Nath Dey v. Suresh Chandra Dey, AIR 1932 PC 165, the Judicial Committee of the Privy Council stated the rule of construc....
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....power upon the authority may having regard to the context in which such power has been conferred and the purpose of its conferment as also the circumstances in which it is meant to be exercised carry with such power an obligation which compels its exercise. 12. The locus classicus on the subject is found in Julius v. Bishop of Oxford where Justice Cairns, L.C. observed: (AC pp. 222-23) "... The words 'it shall be lawful' are not equivocal. They are plain and unambiguous. They are words merely making that legal and possible which there would otherwise be no right or authority to do. They confer a faculty or power, and they do not of themselves do more than confer a faculty or power. But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so." Lord Blackburn in the same case observed: (AC p.241) "I....
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....context. Even then the facts must establish that the legal conditions are fulfilled. A power is exercised even when the court rejects an application to exercise it in the particular way in which the applicant desires it to be exercised. Where the power is wide enough to cover both an acceptance and a refusal of an application for its exercise, depending upon facts, it is directory or discretionary. It is not the conferment of a power which the word 'may' indicates that annexes any obligation to its exercise but the legal and factual context of it." 15.So also, this Court in N.D.Jayal v. Union of India interpreted the provisions of the Environment (Protection) Act, 1986 to mean that the power conferred under the Act was not a power simpliciter, but, was a power coupled with duty. Unless the Act was so interpreted, sustainable development and protection of life under Article 21 was not possible, observed the Court. In Mansukhlal Vihaldas Chauhan v. State of Gujarat this Court held that the scheme of the statute is determinative of the nature of duty or power conferred upon the authority while determining whether such power is obligatory, mandatory or directory and that even....
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.... mean may. May is a must for enabling compliance with provision but there are cases in which, for various reasons, as soon as a person who is within the statute is entrusted with the power, it becomes [his] duty to exercise [that power]. Where the language of statute creates a duty, the special remedy is prescribed for non-performance of the duty.' 20. If it appears to be the settled intention of the legislature to convey the sense of compulsion, as where an obligation is created, the use of the word 'may' will not prevent the court from giving it the effect of compulsion or obligation. Where the statute was passed purely in public interest and that rights of private citizens have been considerably modified and curtailed in the interests of the general development of an area or in the interests or removal of slums and unsanitary areas. Though the power is conferred upon the statutory body by the use of the word 'may' that power must be construed as a statutory duty. Conversely, the use of the term 'shall' may indicate the use in optional or permissive sense. Although in general sense 'may' is enabling or discretional and 'shall' is obli....
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....f an order of transfer pricing, is only directory or a rough and ready guideline. This argument is rejected. 30. Now, coming to the question of how the 60 day period is to be computed, the critical question would be whether the period of 60 days would be computed including the 31st of December or excluding it. Section 153 states that no order of assessment shall be made at any time after the expiry of 21 months from the end of the assessment year in which the income was first assessable. The submission of the revenue is to the effect that limitation expires only on 12 a m of 1-1-2020. However, this would mean that an order of assessment can be passed at 12 a m on 1-1-2020, whereas, in my view, such an order would be held to be barred by limitation as proceedings for assessment should be completed before 11.59.59 of 31-12-2019. The period of 21 months therefore, expires on 31-12-2019 that must stand excluded since Section 92CA(3A) states 'before 60 days prior to the date on which the period of limitation referred to Section 153 expires'. Excluding 31-12-2019, the period of 60 days would expire on 1-11-2019 and the transfer pricing orders thus ought to have been passed on 31....