TaxTMI 
TaxTMI 
2022 (1) TMI 1033
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....ircumstances of the case and in law: 1. The learned AO, based on directions of the Hon'ble DRP, erred in assessing the total income at Rs. 4,89,94,919/- as against returned income of Rs. 70,62,944/- computed by the Appellant; Grounds of appeal relating to transfer pricing matters On the facts and in the circumstances of the case and in law: 2. The learned AO/Transfer Pricing Officer ('TPO') erred in making an addition of Rs. 4,18,86,975 to the total income of the Appellant on account of adjustment in the arm's length price of the Information Technology enabled Services ("ITeS") transaction entered by the Appellant with its associated enterprise; 3. The learned AO/TPO erred, in law and in facts, by not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Rules, and conducting a fresh economic analysis for the determination of the ALP in connection with the impugned international transaction and holding that the Appellant's international transaction is not at arm's length; 4. The learned AO/TPO erred, in law and in facts, by determining the a....
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....evying interest of Rs. 24,15,703 and Rs. 52,160 under section 234B & 234C of the Income Tax Act, 1961, respectively. 14. The learned AO erred, in law and in facts, in initiating penalty proceedings u/s. 271(1)(c) of the Act. The Appellant submits that each of the above grounds is independent and without prejudice to one another. The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide on the appeal in accordance with the law." The assessee has raised the following additional grounds vide application dated 12.07.2018, 31.07.2019 and 21.10.2021. "In addition to the grounds of objections raised in Form 36B before the Hon'ble Tribunal, after ground number 14, the Petitioner hereby wishes to introduce ground numbers 15-18 as under: 15. "The learned AO/TPO and DRP erred in including Accentia Technologies Ltd., Jeevan Scientific Technology Ltd., Acropetal Technologies Ltd., in the final set of comparable companies by applying unreasonable comparability criteria. 16....
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.... Hon'ble Tribunal, after ground number 18, the Petitioner hereby wishes to introduce ground number 19 as under: 19. The learned AO/TPO has erred in passing an order u/s. 92CA(3) of the Act, without appreciating the fact that, the order passed is invalid, consequently, all subsequent proceedings are invalid. The Petitioner submits that the above additional ground is being raised by way of abundant caution. The additional ground raises issues which are fundamental to the appeal. The Petitioner would like to press on the fact that the appeal involves adjudication only on the adjustment made u/s. 92CA and admission of the ground may lead to the order passed under the said section being null and void. In this regard, the Appellant would like to place reliance on the decisions of the Hon'ble Delhi Tribunal in the case of Honda Trading Corporation, Japan vs. DCIT (ITA No. 1132/Del/2015) and Asian Honda Motor Co. Ltd. Vs. DCIT (ITA No. 6143/Del/2015). Non-admission and non-adjudication of the ground would result in an incomplete appreciation and adjudication of the matter. The Petitioner submits that the failure to raise these grounds at an earlier stage is neithe....
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....acts needs to be investigated for adjudicating the issue raised in these grounds. He placed reliance on the decision of Hon'ble Supreme Court in the case of NTPC Ltd. vs. CIT reported in 229 ITR 383. On the contrary, the Ld. CIT.DR objected for admission of additional grounds. We have perused the submissions advanced by both sides in the light of records placed before us. Since the additional grounds 19 & 20 raised by assessee being a legal issue goes to the root of the matter, we are of the view that it is paramount to take up this issue for adjudication before addressing the other issues raised by assessee. Accordingly, we admit the additional grounds 19 & 20 raised by assessee vide application dated 31.07.2019 and 21.10.2021. Before us the Ld. Counsel contended that the order passed by the Ld. TPO is time barred under the provisions of section 153 rws 92CA(3) of the Act and hence it is liable to be quashed. He referred to the provisions of section 153(1) and submitted that reference u/s. 92CA (3) of the Act was received by the Ld. TPO on 03/07/2012 and therefore date of limitation for passing of the order by ld. TPO expired on 30/01/2014. Whereas the Ld. TPO p....
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....it for passing an order u/s. 143 (3) was as under:- Time limit for completion of assessments and reassessments. 153. 39[(1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of-- (a) two years from the end of the assessment year in which the income was first assessable; or (b) one year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under sub-section (4) or sub-section (5) of section 139, whichever is later :] Provided that in case the assessment year in which the income was first assessable is the assessment year commencing [on or after the 1st day of April, 2004 but before the 1st day of April, 2010], the provisions of clause (a) shall have effect as if for the words "two years", the words "twenty-one months" had been substituted :] [Provided further that in case the assessment year in which the income was first assessable is the assessment year commencing [on or after the 1st day of April, 2005 but before the 1st day of April, 2009] and dur....
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....to 7.06.2014 and the Ld. TPO passed his order on 31.05.2014 instead of on or before 08.04.2014, hence order passed by the Ld. TPO therein was held to be time barred. Hon'ble Delhi Tribunal further held that in such circumstances the final assessment order would be same but the addition on account of transfer pricing adjustment arising from the determination of the ALP of the international transaction by the TPO emanating from his time barred order passed u/s. 92CA(3) is unsustainable. Hon'ble Delhi Bench thus directed for deletion of addition of on account of transfer pricing adjustment made in the final assessment order. Hon'ble Delhi Tribunal held as under: "B. Time limit for passing of order by the TPO 6.1. The ld. AR also challenged the passing of the order by the TPO. It was submitted that the TPO passed order on 31.5.2014, which was time barred and, hence, the same should be annulled leading to the quashing of the final assessment order. In the opposition, the ld. DR supported the Revenues stand. 6.2. We have heard the rival submissions and perused the relevant material on record. It has been noticed above that the provisions of section ....
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....se of the word 'shall signifies mandatory compliance, the word may signifies directory compliance. But at times, the word 'may can also be read as 'shall and vice versa. In fact, all depends upon the context and the background of the provision in which such a word is used. 6.6. Section 127 deals with the power to transfer cases. Sub-section (1) of this provision provides that : 'The Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. Dispute arose in Sahara Hospitality Ltd. vs. CIT (2013) 352 ITR 38 (Bom) as to whether or not giving the assessee a reasonable opportunity of being heard before the transfer of case by the Chief Commissioner, in the backdrop of the use of the word 'may in the provision, be considered as mandatory. The Hon'bl....
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....icer was must if the given contingencies did not exist. In this regard, the Hon'ble High Court observed that : 'There is no doubt about the fact that the use of expression "may" and "shall" to some extent serves an indicia to the intention of the legislature and helps in deciding as to whether the given requirement is directory or mandatory in character, but the use of expression "may" or "shall" is never considered decisive in that regard. It was thus held that the moment the estimated value exceeded the returned value of the asset by more than what is envisaged by r. 3B, then the WTO had no option, but to make a reference and he is not to wait for a request from the assessee to make a reference. Similar view has been expressed by the Hon'ble Delhi High Court in Sharbati Devi Jhalani vs. CWT & Ors. (1986) 159 ITR 549 (Del). It is vivid from the above discussion that the use of word 'may or 'shall in a provision is not conclusive of its mandatory or directory nature. One needs to go through the text of the provision and the context in which such a word has been used. 6.8. Reverting to section 92CA, we find that the Finance Act, 2007 inserted sub-section....
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....th the third proviso and clause (viii) of the Explanation to the section, comes at 7th June, 2014. Period of 60 days prior to such time limit coming as per section 153, available with the TPO for passing his order, comes to an end on 8th April, 2014. As against this, the order was actually passed by the TPO on 31st May, 2014. Thus, the order passed by the TPO is patently time barred. C. Consequences of valid draft order and TPO's time barred order 7. The ld. AR argued that since the draft order as well as the order of the TPO were time barred, the final assessment order passed by the AO was liable to be set aside. We have held above that the draft order was passed within time and only the order of the TPO is time-barred. When an order is passed without jurisdiction or beyond the permissible time, it is considered as null and void. The effect of passing a null and void order is that it is considered as non est, meaning thereby, that it entails all the consequences of not having been passed at all and is ignored for all practical purposes. The Hon'ble Madras High Court in Vijay Television (P.) Ltd. vs. DRP (2014) 369 ITR 113 (Mad) considered a case in which ....
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....ision on the above ground we do not find it necessary to deal with the contention raised before us on the merits of the addition on account of transfer pricing adjustment as they become infructuous. In view of this ground nos. 1 to 14 of the appeal are dismissed as infructuous. In the result, the appeal filed by the assessee stands allowed on the legal issue. The order passed u/s. 92CA has been held to be bad in law and the addition in respect of international transaction stands quashed. The appeal filed by the revenue becomes infructuous. Accordingly, the assessee's appeal is allowed and revenue's appeal is dismissed. In the result, the appeal filed by the assessee is allowed and the appeal of the revenue is dismissed. Order pronounced in open court on 30th December, 2021. ============= Document 1 à¤à¤¾à¤°à¤¤ सरकार/ GOVERNMENT OF INDIA à¤à¤¾à¤°à¤¤ सरकार GOVT. OF INDIA आयकर आयà¥à¤•à¥à¤¤ Commissioner of tcome Ta 6137 25 NOV 2021 amt TAT बेंगलूर / BENGALURU उà....
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....e 0/o. Addl./JCIT(TP)-III, Bangalore from the 0/o. the DIT(TP), Bangalore on 29.01.2014. (Copy of the approval letter is annexed.) Although the date of passing of the order is mentioned as 31.01.2014, the order is dispatched and left the jurisdiction of the TPO on 30.01.2014 itself. This can be seen from the dispatch stamp of the O/o. the Addl./Joint Commissioner of Income Tax (TP)- III, Bangalore. 05. From this fact, it can be inferred that the final order u/s. 92CA(3) of the Act was passed on 29.01.2014 or 30.01.2014 and was dispatched on 30.01.2014. The date mentioned as order date is a typographic error. Hence, the order cannot be said to be time barred as per the limitation prescribed in the Income Tax Act, 1961. Hence, the order may be treated as valid. (Copy of the front page of the order showing the dispatch stamp is annexed for reference.) The above has been held by the DRP as well and 60 days completion from 30.01.2014 has been explicitly provided by the DRP in the order. Hence the DRP has treated the order of the TPO as valid. (Copy of relevant portion of the DRP's order is annexed for reference.) 06. Hence, considering the above....