TaxTMI 
TaxTMI 
2022 (4) TMI 808
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....r. R. Sandeep Bagmar in Writ Appeal Nos. 2036 & 2066 of 2021, Mr. Ajay Vohra, Sr.counsel for Mr. R. Sivaraman in Writ Appeal Nos. 1148 and 1149/2021, Mr. R. Sivaraman in Writ Appeal No. 2043/2021, Mr. N.V. Balaji in Writ Appeal No. 1115 of 2021, Mr.Sumit Mangal in Writ Appeal No.2035 of 2021 COMMON JUDGMENT R. MAHADEVAN, J. I. Introduction. These intra-court appeals arise from a common order dated 07.09.2020 passed by the learned Judge in W.P.No.32699 of 2019 etc. batch. 2. The respondents in these writ appeals filed the aforesaid WP No.32699 of 2019 etc. batch, questioning the validity of the orders dated 01.11.2019 passed by the first appellant herein under Section 92CA (3) of The Income Tax Act, 1961 (hereinafter referred to as The Act) on the ground of limitation as contemplated under Section 153 of the Act. The learned Judge allowed the writ petitions, which has given rise to the filing of the present intra-court appeals by the appellants herein. II. Facts. 3. At the outset, in order to understand the issue involved herein, the pleadings projected by the parties in one of the writ petitions, viz., WP.No.32699 of 2019, which was taken as a test case by the learned Judge,....
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....ipulated under Section 92CA(3A) read with Section 153 (1) of the Act. 4.3. Elaborating further, it was contended that the time limit for passing a Transfer Pricing Order is governed by sub-section 3A of Section 92CA. As per Section 92CA (3A), a Transfer Pricing Order has to be passed 60 days prior to the date on which the time limit provided under Section 153 of the Act expires. The word "prior to" mentioned in the Section indicates that it is referable to the date preceding 31.12.2019 i.e., 30.12.2019. 4.4. It was also submitted that after the reference was made by the second appellant on 13.03.2018, the office of the first appellant initiated the Transfer Pricing proceedings on 10.12.2018 and took nearly 19 months time for completion of the assessment under Section 92CA of the Act. The show cause notice dated 19.10.2019 was issued with only two weeks to complete the proceedings and the second show cause notice dated 26.10.2019 was issued, when five days were left for passing the order of assessment. In fact, the issuance of show cause notices itself was to comply with an empty formality, when the writ petitioner has already responded to the questionnaires issued by the first ap....
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....ficer will take one year time and only in the event of the writ petitioner being aggrieved by the final order passed by the Assessing Officer, they can approach the legal forum to ventilate their grievance. Thus, according to the appellants, the writ petition itself is not maintainable in law. 5.2. As regards the plea of limitation raised by the writ petitioner, it was submitted that the interpretation to Section 92CA (3) is depended on the interpretation to Section 153 of the Act. The order passed under Section 92CA(3) is a process initiated before passing the final order of assessment and as long as the order of assessment is passed in accordance with the period stipulated under Section 153 of the Act, an order under Section 92CA(3) will not be construed as a final order. As such, the assertion of the writ petitioner that the first appellant has to pass the order before 31.10.2019 as per Section 92CA(3) of the Act is untenable. 5.3. By referring to Section 153 (1) and (4) of the Act, the appellants pointed out before the learned Judge that when a reference is made under Section 92CA (1), the assessing officer is not empowered to pass an order of assessment after the expiry of t....
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....en if the order was passed after the period of 60 days, as contemplated under Section 153, still, it would be treated as having been passed within the time limit. 5.5. The counter affidavit also proceeds to state that the appellants can continue with the proceedings in respect of other issues involved in the assessment during the pendency of the proceedings relating to Arm's length Price determination. The incorporation of the order to be passed by the TPO is a mere formality and the assessee and the Assessing Officer had ample time to continue with the assessment order on other issues. After the receipt of the order passed by the TPO, the income of the assessee will be computed and it has nothing to do with the other issues. 5.6. It was further stated that sub-section 3A to Section 92CA3 was introduced by the Finance Act, 2007 from 01.06.2007 making it mandatory on the part of the Assessing Officer to comply with the Arm's length computation made by the TPO. Prior to this amendment, it was not mandatory for the Assessing Officer to wait for or accept the arm's length computation. Thus, the words "with regard to" were replaced by the amendment with the words "in confo....
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.... Aggrieved by the aforesaid common order passed by the learned Judge in the batch of writ petitions, the appellants / Revenue are before this court with these intra-court appeals. III. Contentions. 8.1.1. Mrs. Hema Muralikrishnan, learned Senior Standing Counsel appearing for the appellants in WA.Nos.1115, 1120, 1139, 1148 and 1149 of 2021 would contend that the learned Judge ought not to have entertained the writ petitions filed by the respective respondent herein especially when there is an alternative remedy of appeal available as against the orders dated 01.11.2019 passed by the first appellant. When an in-built statutory remedy is available, the learned Judge ought to have relegated the respondents herein to approach the appellate authority. To buttress this submission, the learned counsel placed reliance on the decision of this Court in the case of Intimate Fashions (India) Pvt Ltd. [(2010) 321 ITR 265 (Madras)] as well as the decision of the Delhi High Court in the case of Messe Dusseldorf India (P) Ltd. [(2010) 320 ITR 565 (Delhi)]. In those cases, it was held that there is an alternative remedy of appeal available under the Act and therefore, the writ petitions were dism....
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....ts in other writ appeals submitted that Section 144C of the Act comes to play only after the transfer pricing officer's order is received by the Assessing Officer and upon receipt of the order only, the assessing officer is bound to pass a draft assessment order. It is further submitted that the assessment order comprises of both international transaction comprising of computation of Arms length price and non-international transaction and therefore, there cannot be an interpretation that merely because the alleged delay of one day beyond the time line with regard to the TPO issue, the right of assessment is lost; on the other hand, the interpretation ought to have been taken to advance the cause of justice in order to protect the right of assessment; and hence, the outer limitation as provided in section 153 alone is the criteria and the in between time limits with regard to TPO is not limitation in stricto sensu as stated in section 153. Thus, according to the learned counsel, pursuant to the order dated 01.11.2019, which was impugned in the writ petitions, there is no demand for tax made by the Assessing Officer as the order dated 01.11.2019 is only a draft proposal and it wi....
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....he obligation are intended to be conferred and imposed. In the present case, it is in the context which is decisive. The whole purpose of R.4 (2) would be frustrated if the word "may" in the said rule receives the same construction as in sub-r.(1). It is because in regard to gazetted government servants, the discretion had already been given to the Governor to refer their cases to the Tribunal that the rule-making authority wanted to make a special provision in respect of them as distinguished from other government servants falling under R.4(1) and R.4(2) has been prescribed, otherwise R.4(2) would be wholly redundant. In other words, the plain and unambiguous object of enacting R. 4(2) is to provide an option to the gazetted government servants to request the Governor that their cases should be tried by a Tribunal and not otherwise. The rule-making authority presumably thought that having regard to the status of the gazetted government servants, it would be legitimate to give such an option to them. Therefore, we feel no difficulty in accepting the view taken by the High Court that R.4(2) imposes an obligation on the Governor to grant a request made by the gazetted government serv....
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....ers [(1997) 9 Supreme Court Cases 132], it was held as follows: "17. The distinction of mandatory compliance or directory effect of the language depends upon the language couched in the statute under consideration and its object, purpose and effect. The distinction reflected in the use of the word "shall" or "may" depends on conferment of power. In the present context, "may" does not always mean may. May is a must for enabling compliance of provision but there are cases in which, for various reasons, as soon as a person who is within the statute is entrusted with power, it becomes duty to exercise. Where the language of statute creates a duty, the special remedy is prescribed for non-performance of the duty. In "Craies on Statute Law" (7th Edn.), it is stated that the Court will, as a general rule, presume that the appropriate remedy by common law or mandamus for action was intended to apply. General rule of law is that where a general obligation is created by statute and statutory remedy is provided for violation, statutory remedy is mandatory. The scope and language of the statute and consideration of policy at times may, however, create exception showing that legislature did n....
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....e tenant, the said procedure has to be strictly followed in the matter of taking steps in the event of refusal of the landlord to receive the rent or to grant receipt to the tenant. It is well settled that whether the word "may" shall be used as "shall", would depend upon the intention of the Legislature. It is not to be taken that once the word "may" is used by the Legislature in Section 27 of the Act, would not (sic) mean that the intention of the Legislature was only to show that the provisions under Section 27 of the Act was directory but not mandatory. 29. In other words, taking into consideration the object of the Act and the intention of the Legislature and in view of the discussions made herein earlier, we are of the view that the word "may" occurring in Section 27 of the Act must be construed as a mandatory provision and not a directory provision as the word "may", in our view, was used by the Legislature to mean that the procedure given in those provisions must be strictly followed as the special protection has been given to the tenant from eviction. Such a cannon of construction is certainly warranted because otherwise intention of the Legislature would be defeated and....
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....draiah and another v. State of Karnataka and others [(1998) 3 Supreme Court Cases 23], the following observations have been made by the Hon'ble Supreme Court: "16. It is obvious that by deleting the provisions relating to the power to condone the delay for sufficient cause, the legislature had clearly intended to do away with the said power of condonation of the Tribunal. It was in fact so held by a learned Single Judge of the Karnataka High Court in Virupaxappa Basappa v. Land Tribunal [1980 (2) Kart L.J.428]. This view, in our opinion, is quite correct. If therefore the legislature wanted to make a deliberate departure and introduced an amendment to take away the power of condonation of delay, it is difficult to accept the contention that Section 48-A is capable of more than one interpretation - one leading to injustice and another permitting avoidance of such injustice to tenants and that the Court should opt for a liberal interpretation. Another reason for rejecting the appellant's contention is that we have also to give importance to the words `save as provided in the Act', occurring in Section 48-A. It is nowhere else provided in the Land Reforms Act, 1961 that ....
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.... the Commissioner. For this sub-section (2A) has been inserted in section 153. Under this sub-section the fresh assessment in the cases mentioned at (i) may be made at any time before the expiry of two years from the end of the financial year in which the original assessment was cancelled by the Income-tax Officer under section 146. In the cases mentioned at (ii) the fresh assessment may be made at any time before the expiry of two years from the end of the financial year in which the order of the Appellate Assistant Commissioner or the Appellate Tribunal is received by the Commissioner or, as the case may be, the order in revision is passed by the Commissioner. Such fresh assessments may be completed within the above-mentioned time limit even if the time limit specified in sub-section (1) or sub-section (2) of section 153 for the completion of assessment or reassessment has expired. Under the existing provisions of Section 153 (3), such fresh assessments are not subject to any time limit. The time limit laid down under new sub-section (2A) of Section 153 will be operative only in relation to assessments for the assessment year 1971-72 or any subsequent years." (emphasis supplied) ....
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....der upon remand where Section 153 (2A) would apply, the Assessing Officer would be bound to follow the time- limit imposed by sub-section (2A). Where the Assessing Officer was only giving effect to an appellate order, then Section 153 (3) (ii) of the Act would apply." Stating so, the learned senior counsel submitted that the order of the learned Judge does not call for any interference at the hands of this court. 9.2. Mr.R.Sivaraman, learned counsel appearing for the respondent in WA.No.2043 of 2021 has adopted the arguments of the learned senior counsel Mr.Ajay Vohra. 9.3. Repudiating the contentions raised on the side of the appellants, Mr.S.P.Chidambaram, learned counsel appearing for the respondents in W.A.Nos.1120, 1139 and 2039 of 2021, submitted that section 92CA of the Act was inserted by Finance Act, 2002, which did not contain sub section (3A). Later on, by Finance Act, 2007, sub section (3A) was introduced. While inserting the sub section in the Notes on Clauses forming part of the Finance Bill, 2007, it is mentioned as under: "Clause 25 of the Bill seeks to amend section 92CA of the Income-tax Act relating to reference to Transfer Pricing Officer. Under the existin....
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....ings; in order to make it mandatory for the transfer pricing officer to abide by the timeline, a strict timeline has been given to pass the transfer pricing order; and therefore, the Finance Act, 2007 inserted sub section (3A) carrying the time limit of sixty days for passing of the order by the TPO before the expiry of time limit for completion of assessment by the Assessing officer under section 153. Thus, according to the learned counsel, the exclusion of start date and inclusion of end date for computing the period of limitation by referring to General Clauses Act and Limitation Act, is incorrect and unsustainable and hence, the orders passed by the appellants are barred by limitation and are invalid. 9.4. Referring to para no.30 of the order impugned herein, Mr.Sandeep Bagmar, learned counsel for the respondents in WA.Nos.2036 and 2066 of 2021 submitted that 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. In the present case, the period of 21 months expires on 31.12.2019 that has to be excluded, since section 92CA(3A) states that 'before 60 ....
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....ntral Action Plan issued by the CBDT for providing guidance to the income tax authorities for efficient and effective tax administration and improving tax compliance, cannot be faulted with. Thus, the learned counsel prayed for dismissal of the writ appeals, as they are not maintainable. 10. By way of reply, the learned senior standing counsel appearing for the writ appeals, reiterated that the orders passed under section 92CA(3) of the Act, which were impugned in the writ petitions, do not have legs to stand to cause any hardship / damage to the respondents, since the first appellant in the said orders, proposed only a transfer pricing adjustment and the assessing officer has to pass draft assessment orders under section 144C(1); and hence, there would not be any demand on account of the draft assessment orders. The learned senior standing counsel further submitted that section 9 of the General Clauses Act, 1897 would also be applicable to interpret "to" appearing in the phrase "prior to" in section 92CA(3A) of the Act; and the use of word "to" would result in inclusion of the last date i.e., 31st December from which the 60 days period is worked backwards. Thus, according to the ....
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....is aspect in the present writ petition filed by the petitioner. We expect and hope that the Dispute Resolution Panel shall, positively, deal with the objections filed by the petitioner along with support evidence furnished by him to rebut the basis adopted by the Transfer Pricing Officer (TPO) to arrive at the arm's length price (ALP) and thereafter only it shall pass speaking orders." 12.2. It could be seen that the above decisions do not lay down any ratio and are only cases where the learned Judges refused to exercise the discretionary relief under Article 226 of the Constitution of India. It is settled law that the refusal to exercise the discretionary relief under Article 226 of the Constitution of India is a self-imposed restriction. We feel it unnecessary to refer to the plethora of judgments available on the subject, but necessary to reiterate the circumstances under which the writ petitions would be maintainable under Article 226 of the Constitution of India, dehors the availability of alternative remedy and the same are stated below: a. when the order is against the express statutory provisions or offends the constitutional safeguards, b. when the order passed is....
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.... Officer (2) Where a reference is made under sub-section (1), the Transfer Pricing Officer shall serve a notice on the assessee requiring him to produce or cause to be produced on a date to be specified therein, any evidence on which the assessee may rely in support of the computation made by him of the arm's length price in relation to the international transaction or specified domestic transaction referred to in sub-section (1). 2A. Where any other international transaction other than an international transaction referred under sub-section (1) comes to the notice of the Transfer Pricing Officer during the course of the proceedings before him, the provisions of this Chapter shall apply, as if such other international transaction is an international transaction referred to him under sub-section (1). 2B. Where in respect of an international transaction the assessee has not furnished the report under Section 92E and such transaction comes to the notice of the Transfer Pricing Officer during the course of the proceeding before him, the provisions of this Chapter shall apply as if such transaction is an international transaction referred to him under sub-section (1) 2C. Not....
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....cer may amend any order passed by him under subsection (3), and the provisions of section 154 shall, so far as may be, apply accordingly (6) Where any amendments is made by the Transfer Pricing Officer under sub-section (5), he shall send a copy of his order to the Assessing Officer who shall thereafter proceed to amend the order of assessment in conformity with such order of the Transfer Pricing Officer (7) The Transfer Pricing Officer may, for the purpose of determining the arm's length price under this section, exercise all or any of the powers specified in clauses (a) to (d) of sub-section (1) of section 131 or subsection (6) of section 133 or section 133A Explanation:- For the purposes of this section, Transfer Pricing Officer means a Joint Commissioner or Deputy Commissioner or Assistant Commissioner authorised by the Board to perform all or any of the functions of the Assessing Officer specified in sections 92C and 92D in respect of any person or class of persons." 13.3. Section 153 of the Income Tax Act, reads as follows: "Section 153. (1) No Order of assessment shall be made under Section 143 or Section 144 at any time after expiry of twenty one months from th....
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....ection 92CA and the period of limitation available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly." 13.4. Section 9 of the General Clauses Act reads as follows; "9. Commencement and termination of time.-(1) In any Central Act]or Regulation made after the commencement of this Act, it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time, to use the word "from", and, for the purpose of including the last in a series of days or any other period of time, to use the word "to". Provided that nothing in this section shall apply to any act or proceeding to which the "Indian Limitation Act, 1877 (15 of 1877)", applies (2) This section applies also to all Central Acts made after the third day of January, 1868, and to all Regulations made on or after the fourteenth day of January, 1887." 14. In the present cases, the Financial Year is 2015-16 and the assessment year is 2016-17. The period of 21 months would com....
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....f Independence as per the Indian Independence Act, 1947. 18. Also, it is not out of place to mention here that the new year eve of every year, through out the world is celebrated at 00.00 hours and it is regarded as the beginning of a new day and not as an extension of the previous day. 19. A reference can also be made to various insurance policies, wherein the beginning of the day is reckoned as 00.00 hours and the end of the day at 23:59:59 hours. 20. Even as per the contentions of the appellants, the assessing officer has time upto 23:59:59 hours on 31.12.2019 to pass assessment orders. However, according to them, the time limit expires at/on 00.00 hours of 01.01.2020. The fallacy in such contention is that 00.00 hours of 01.01.2020 denotes not only the beginning of the next day of the month, but also the fact that it comes after 23:59:59 hours on 31.12.2019 and by such time, the time limit had already expired. By resorting to such fallacious argument, the department wants to relate 00:00 hours of 01.01.2020 to 31.12.2019 and stretch it to 01.01.2020 to extend the period of limitation for the entire day of 01.01.2020, which cannot be permitted. Even as per Section 153, no ord....
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.... the further words used in the second expression in sub-section (7) must lead to a different conclusion. The construction of the first expression being unambiguous, the second expression must be construed harmoniously unless that is not a permissible construction of the expression "by the said date". 7.It does appear to us that the second expression, namely, "in which no award has been made by the said date" was further used in sub-section (7) ex abundante cautela to clarify the meaning of pending proceedings by indicating that only those arbitration proceedings in which the award also had been made "by the said date" were excluded from the operation of sub-section (7) and that every other arbitration proceeding including those in which the award alone remained to be made "by the said date" stood transferred to the Arbitration Tribunal. In other words, if the arbitration proceedings had been closed but the arbitrator had not made the award till the midnight between 25-3-1983 and 26-3-1983 when the Act came into force, it was a pending arbitration proceeding governed by subsection (7). Acceptance of the appellant's contention would amount to holding that even though the Act ha....
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....2.2018 and with extension on the matter being referred to TPO, the time limit to pass assessment order would lapse on 31.12.2019. What is not to be forgotten, while interpreting a taxing statute, is the explicit and clear language used by the parliament while enacting the law. If the language employed in any statute is clear and unambiguous from its plain and natural meaning, external aid for interpretation are unnecessary. In the present case, we are called upon to adjudicate the period of limitation applicable to TPO under Section 92CA(3A) and incidentally under Section 153. 23. On the applicability of the General Clauses Act, it is relevant to point out the ratio laid down in the Constitutional Bench Judgment of the Hon'ble Supreme Court in Commr. of Customs v. Dilip Kumar & Co., [(2018) 9 SCC 1 : 2018 SCC OnLine SC 747], which reads as under: "17. In doing so, the principles of interpretation have been evolved in common law. It has also been the practice for the appropriate legislative body to enact the Interpretation Acts or the General Clauses Act. In all the Acts and Regulations, made either by Parliament or Legislature, the words and phrases as defined in the General....
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....irection is to be gauged from the preceding word or words used, like "prior to" or "upto". Keeping the same in mind, if we look at the wording of Section 92CA (3A), we cannot accept the contention of the Revenue that the time to be reckoned is from 31.12.2019 and not 30.12.2019 as has been rightly done by the learned Judge. 28. The word "date" in section 92CA(3A) would indicate 31.12.2019. But the preceding words "prior to" would indicate that for the purpose of calculating the 60 days, 31.12.2019 must be excluded. The usage of the word "prior" is not without significance. It is not open to this court to just consider the word "to" by ignoring "prior". The word "prior" in the present context, not only denotes the flow of direction, but also actual date from which the period of 60 days is to be calculated. It is settled law that while interpreting a statute, it is not for the courts to treat any word(s) as redundant or superfluous and ignore the same. In this connection, it is pertinent to note the judgment of the Apex Court in Grasim Industries Ltd. v. Collector of Customs, [(2002) 4 SCC 297 : 2002 SCC OnLine SC 413], wherein, it was held as follows: "10. No words or expressions....
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....the words "prior to" and the TPO has to pass order before the 60th day. In the present case, the word "before" used before "60 days" would indicate that an order has to be passed before 1/11/2019 i.e on or before 31.10.2019 as rightly held by the Learned Judge. 30. Even considering for the purpose of alternate interpretation, the scope of Section 9 of the General Clauses Act, it is to be noted that an inverted calculation of the period of limitation takes place here. If the last date is taken to be the first date from which the period of 60 days is to be calculated, reading down the provision with the use of the word "from", which denotes the starting point or period of direction in general parlance, would mean that 60 days "from the last date". Even going by Section 9 of the General Clauses Act, when the word "from" is used, then, that date is to be excluded, implying here that 31.12.2019 must be excluded. After excluding 31.12.2019, if the period of 60 days is calculated, the 60th day would fall on 01.11.2019 and the TPO must have passed the order on or before 31.10.2019 as orders are to be passed before the 60th day. Therefore, either way the contention of the Revenue is a fall....
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....emaining period shall be extended to 60 days. This implies that not only is the time frame mandatory, but also that the TPO has to pass an order within 60 days. 34. Further, the extension in the proviso referred above, also automatically extends the period of assessment to 60 days as per the second proviso to Section 153. 35. Also, but for the reference to the TPO, the time limit for completing the assessment would only be 21 months from the end of the assessment year. It is only if a reference is pending, the department gets another 12 months. Once reference is made and after availing the benefit of the extended period to pass orders, the department cannot claim that the time limits are not mandatory. Hence, the contention raised in this regard is rejected. 36. As rightly pointed out by Mr.Ajay Vohra, learned senior counsel for the respondents in WA.Nos.1148 and 1149/2021, the word "may" has to be sometimes read as "shall" and vice versa depending upon the context in which it is used, the consequences of the performance or failure on the overall scheme and object of the provisions would have to be considered while determining whether it is mandatory or directory. 37. At this j....