AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1094
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....ome-tax Act, 1961 (hereinafter referred to as the 'Act') in respect of the order passed by the Deputy Commissioner of Income-tax-Range 5(2), Mumbai (hereinafter referred to as the 'AO') under section 143(3) r.w.s. 144C of the Act, on the following grounds which are independent and without prejudice to each other: General ground 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in partially confirming the action of TPO/AO in making transfer pricing adjustment on account of alleged interest on loan given to various subsidiaries, transaction of corporate guarantee and disallowance u/s 14A of the Act. Non applicability of transfer pricing regulations 2. On the facts and in the circumstances of the case and in law, the Learned AO/CIT(A) failed to appreciate that the transfer pricing regulations does not apply to the since the Appellant is a company registered under the Tonnage Tax Scheme (TTS) of the Act and its income is computed as per the said scheme. Transfer pricing adjustments Interest on loans/ quasi equity given by the Appellant to its Associated Enterprises ('AEs') On facts and circumstances of the case, ....
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.... Pte Ltd, Singapore and Vidya Marine Pte Ltd, Singapore to third parties which was LIBOR plus 0.95 percent as the appropriate rate for the purpose of adjustment; 11. Without prejudice to the above, erred in not considering the rate of interest paid by Appellant on Foreign Currency Convertible Bonds ('FCCB') which was 1.5% as the appropriate rate for the purpose of adjustment; 12. Without prejudice to the above, erred in not considering the rate of interest payable by MLS on syndicate loan from ICICI Bank, Singapore, BNP Paribas, Singapore etc which was 3 months LIBOR plus 0.95 percent ie effective interest rate of 1.44 percent, as the appropriate rate for the purpose of adjustment; 13. Without prejudice to the above, erred in not considering the average rate of interest on the aforesaid loans i.e. 1.57 percent as the appropriate rate for the purpose of adjustment; 14. Without prejudice to the above, erred in not considering the rate of interest paid by MLS on loan availed from DBS bank which was 1 year LIBOR plus 1 percent ie effective interest rate of 2.41 percent, as the appropriate rate for the purpose of adjustment; 15. Without prejudice to the above, err....
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....E visa- vis the guarantee given by the Appellant; 24. Without prejudice to the above, erred in not restricting the adjustment to the extent of the unsecured portion of loan taken by the AE vis-à-vis the guarantee given by the Appellant. Corporate tax additions On facts and circumstances of the case, the learned CIT(A): 25. erred in upholding disallowance under section 14A of the Act, without appreciating that no addition under section 14A of the Act can be made to the income of the Appellant since the Appellant is covered under the TTS under the Act; 26. Without prejudice to the above, erred in upholding the disallowance under section 14A of the Act of Rs 2,54,56,000 as against Rs 1,36,34,299 computed by the Appellant; Levy of Interest under section 234C of the Act 27. erred in upholding interest under section 234C of the Act; Levy of Interest under section 234D of the Act 28. erred in upholding interest under section 234D of the Act; Penalty proceedings 29. erred in initiating penalty proceedings under section 274 rws 271(1)(c) of the Act The Appellant further prays that any other relief as your Honour may deem fit be granted. Each of the....
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.... to transfer pricing issues and ground no 25 and 26 are corporate tax additions on disallowance u/s 14A of the Act and ground no 27 and 28 are in respect of levy of interest u/s 234C and 234D of the Act and ground of appeal no 29 with regard to initiating penalty u/s 274 r.w.s 271(1)(c) of the Act which is premature. 3. The Ld AR has made submissions on the application of admission of additional grounds of appeal being a legal issue and further mentioned that the assessment order passed by the AO is barred by the limitation as the time limit for passing the assessment order of impugned assessment year does not get extended by the application u/s 144C of the Act. The Ld. AR emphasized that the TPO has passed the transfer pricing order on 30.01.2014 and therefore it is barred by limitation and prayed for admission of the legal grounds of appeal. Per Contra, the Ld.DR has objected to the admission of additional grounds of appeal. We consider submissions of the both parties and the legal issue aspects of the grounds of appeal raised and admit the additional grounds of appeal and heard the matter. 4. The brief facts of the case that the assessee is a Limited company engaged in the bus....
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.... reasonable basis. After considering the facts of percentage of qualifying income and non qualifying income dealt at Para 6 of the order, the AO has made disallowance of administrative and general expenses of Rs.1,55,04,863/- and finally assessed the total income of Rs.67,69,22,090/- and passed the order u/s 143(3) r.w.s 144C of the Act dated 03.01.2014. 6. Aggrieved by the order the assessee has filed an appeal with the CIT(A), whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee and findings of the A.O and has confirmed the disallowance u/s 14A of the Act and granted relief in other grounds of appeal and partly allowed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee and the revenue has filed an appeal before the Hon'ble Tribunal. 7. At the time of hearing the Ld. AR submitted that though the assessee has raised the various grounds of appeal on the transfer pricing issues as discussed and referred in the above paragraphs, the assessee is now pressing only the additional grounds of appeal which is covered in favour of the assessee and the Ld.AR has substantiated the submissions on the validity of passing of the T P order and....
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....h 2022 (Madras HC) Accenture Solutions Pvt Ltd (ITA No. 8008/M/2019 dated 7 July 2022 (Mumbai Tribunal) ECL Finance Ltd (ITA No. 899/M/2018) dated 22 September 2021 (Mumbai Tribunal) Hon'ble Madras High Court in case of Saint Gobain India (P) Ltd (444 ITR 636) Hon'ble Delhi ITAT in case of Louis Dreyfus Commodities India (Private) Limited [2022] 138 Hon'ble jurisdictional Mumbai ITAT in case of ECL Finance Limited (ITA 899/Mum/2018 taxmann.com 556) dated 22 September 2021) Emerson Electric (Company) India Pvt Ltd (ITA No 933/M/2021) dated 18 May 2022 Further, as per provisions of section 144C of the Act, 'eligible assessee' refers to any person in whose case the variation referred to in section 144C(1) of the Act arises as a consequence of the order of the Transfer Pricing Officer passed under Section 92CA(3) of the Act. However, since the transfer pricing order passed in the case of the Appellant is invalid and thus, no variation could be said to arise from the transfer pricing order passed under section 92CA(3) of the Act. Accordingly, the Appellant does not meet the definition of 'eligible assessee' as per section 144C of the Act and thus, the....
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....ings, final orders are to be passed within time limit prescribed in Section 153 of the Act. Similar view has also been upheld by Hon'ble Delhi Tribunal in case of Super Brands Ltd. (UK) (ITA No. 3115/Del/2009) dated 20 September 2022 and Hon'ble Ahmadabad Tribunal in case of Cadila Healthcare Ltd. (ITA No. 710/Ahd/2019) dated 9 September 2022 Thus, considering the aforesaid, it is clear that the assessment order passed by Ld. AO on 2 April 2014 is time barred as per Section 153 of the Act and needs to be quashed 9. We found that the facts and submissions envisaged by the Ld. AR cannot be overlooked and are realistic. Further on the identical disputed issue, the Ld.AR has relied on the judicial decisions on the validity of TPO order as under: (i) Honble High Court Of Madras decision in DCIT Vs Saint Gobain Ind Pvt Ltd, (444 ITR 636 )(Madras ) held as under: I .Section 92CA, read with section 153, of the Income-tax Act, 1961 Transfer pricing- Reference to TPO (sub-section (3A)) - Assessment year 2016-17 In relevant assessment year, petitioner-company entered into international transaction and filed its income tax return on 30-11-2016 Assessing Office made reference to TP....
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....e Solutions Pvt ltd Vs DCIT (ITA No. 8008/M/2019 dated 7.07.2002 (Mum Trib) has observed at Page 7 Para 7 to 17 of the order read as under: 7. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 8. At the very outset, the Ld. A.R. for the assessee challenged the impugned order passed by the AO/DRP to the extent of making adjustment on account of ALP, on the legal ground that "the TP order in this case is passed by the Ld. TPO beyond the time limit prescribed under section 92CA(3A) read with section 153 of the Act rendering the TP order and consequential assessment order illegal, null and void ab-initio and liable to be quashed. So we would first decide this legal issue before going into the merits of the case. 9. The Ld. A.R. for the assessee challenging the impugned order passed by the Ld. TPO contended that the order passed by the Ld. TPO is passed beyond the time limit prescribed under section 92CA(3A) read with section 153 of the Act and consequent assessment order,....
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....t. Ltd. (supra) while dealing with the issue held that for computing the period of 60 days, the last date as per section 153 should be excluded. Operative part of the judgment is extracted for ready perusal as under :- Particulars Relevant dates Assessment Year 2015-16 End of A.Y 31.03.2016 Due date for completion of assessment under Sec.1 53(1) i.e 21 months from end of A.Y 31.12.2017 Extension of 12 months in case of transfer pricing reference as per sec 153(4) of the Act 31.12.2018 Time limit for passing the order u/s 92CA(3A) i.e 60 days prior to the date prescribed under 153 Less date on which limitaitn expires u/s 153 i.e 31.12.2018 1 day Less Remaining days of December 30 days Less Number of days of November 30 days Due date for passing the order u/s 92CA(3) 31.10.2018 Date of passing TP order u/s 92CA(3) 01.11.2018 "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 af ter time expiry of 21 months from the end of the asses....
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.... period of limitation because the same was required to be passed 60 days before the date of which limitation expires under section 153 of the Act i.e. o. 31.10.2018, hence barred by limitation. (iii) Similarly The Honble Tribunal in the case of M/s Emerson Electric (Company) Pvt Ltd ltd Vs DCIT (ITA No. 933/M/2021 dated 18.05.2002 (Mum Trib) has observed at Page 5 Para 5 to 17 of the order read as under: 5. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 6. Assessee has filed the present appeal raising grounds challenging the arms length price of the international transactions by way of transfer pricing grounds and no corporate tax issue is there in the present appeal. 7. At the very outset, the Ld. A.R. for the assessee challenged the impugned order passed by the AO/DRP on the legal ground that "the transfer pricing order passed in this case under section 92CA of the Act is passed beyond the time limit prescribed under section 92CA(3A) read with section 153 of th....
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....reas the Ld. TPO was required to pass the order within 60 days prior to the date of which period of limitation referred to in section 153 of the Act expires. 14. Now the question arises as to how the period of 60 days prior to the date of transfer pricing order i.e. 01.11.2019 is to be computed. Hon'ble Madras High Court in case of M/s. Pfizer Healthcare India Pvt. Ltd. (supra) while dealing with the issue held that for computing the period of 60 days, the last date as per section 153 should be excluded. Operative part of the judgment is extracted for ready perusal as under :- "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 time 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 am of 01.01.2020. However, this would mean that an order of assessment can be passed at 12 am on 01.01.2020, whereas, in my view, such an ....
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....ings returned by the Bench on legal issue we deem it not necessary to go into the grounds raised by the assessee on merit. Consequently, appeal filed by the assessee is allowed. 10. We considering the facts, circumstances and the ratio of the judicial decisions discussed above found that the order passed by the TPO is barred by the limitation is illegal and void ab-initio and is quashed. Consequently assessment order passed after transfer pricing adjustment is without jurisdiction. Since the additional grounds of appeal are allowed in favour of the assessee the original grounds of appeal in respect of transfer pricing issues are not adjudicated and are left open. 11. Whereas in the original grounds of appeal nos 25 and 26, the asssesssee has challenged the disallowance u/s 14A of the Act. The Ld. AR referred to the submissions filed in the asssessement proceedings dealt at Para 5 of the assessment order. The Ld.AR emphasized that the assessee has substantial own funds in comparison to the investments and referred to the Audited financial statements and contended that the investments are made out of own funds which are more than the size of the investments, and hence no disallowa....