TaxTMI 
TaxTMI 
2023 (4) TMI 1154
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....me; 2. erred in making additions to the total taxable income without issuing a show cause notice (i.e. draft order of proposed additions) as per the provision of Section 144B(1)(xvi)(b) of the Act and thereby vitiating the process of law. Hence, the draft order (and consequent orders) are invalid and had in law. 3. erred in issuing two assessment orders (in the name of non-existing entity Le Panalpina India) under Section 143(3) of the Act for the same AY on the same day on conclusion of single assessment proceedings. 4. erred in issuing the transfer pricing order (dated 31 January 2021), the draft assessment order (dated 30 April 2021), the directions of the Hon'ble DRP (dated 28 January 2022), the subsequent first final assessment order (dated 30 April 20211, and the second final assessment order (dated 26 February 2022) in the name of non-existing entity is Panalpina India disregarding the fact that the merger had been already been intonated to the learned AO/Hon'ble DRP/ learned TPO, Thereby, the entire proceedings is invalid and bad in law. 5. erred in appreciating the fact that the first draft assessment order was issued on 30 April 2021 21:30 and a subseq....
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....; Introduction of additional comparables by the learned TPO 12. erred in considering Anil Mantra Logistix Pvt Ltd. Prudential Global Logistics (India) Pvt Ltd. Continental Carriers Pvt Ltd and CTA Logistics Ltd as comparables for benchmarking the international transaction of provision of freight forwarding services, disregarding the Fact that it is functionally different from the Appellant. Margin computation of tested party 13. erred in considering liabilities no longer required written back, gain on foreign exchange fluctuation", "provision for bad debts written back and miscellaneous income as non- operating in nature for the purpose of computing the operating margin of the Appellant, without appreciating that the same are operating in nature and related to the day to day business operations of the Appellant; 14 without prejudice to the above ground, the learned AO/TPO erred in not applying a consistent approach for treatment of 'liabilities no longer required written back', 'foreign exchange fluctuations', 'provisions for bad debts written back' and 'miscellaneous income as non- operating in nature, while computing the operating profitability of the comparable co....
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.... the issues at hand are : Panalpina India, the taxpayer now merged with DSV Air and Sea Private Ltd. (is an Indian Pvt. Ltd. Company) incorporated on 22.12.1986 under the Companies Act, 1986. The taxpayer is an asset freight company primarily engaged in the business of freight forwarding and logistic services specialising in international air and sea freight consignments and associated supply chain management services. During the year under consideration the taxpayer entered into international transactions with its Associate Enterprise (AE) as under: Sl. No. Nature of Transactions Method Applied Value (INR) 1. Trademark fees CUP 9,02,65,149 2. Freight Forwarding expenses 3,21,08,08,063 3. Freight Forwarding income 2,53,19,87,051 4. Internal Communication 23,10,293 5. IT Expenses 65,131 6. Personnel Income 1,24,90,009 7. Assignment Service fee 13,27,959 8. Business Support Cost allocation 38,39,33\351 9. Interest paid on loan 53,07,534 10. Claims (payable) -7,28,820 11. Recovery of travel expenses 6,36,361 12. Training/Conference and personnel expenses 39,45,414 13. Claims (receivable) 29,410 14. Recovery of Travel Expenses 23,9....
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....Revenue authorities; and that no prejudice has been caused to the taxpayer as he has been duly represented before the ld. Revenue authorities in passing the TP order/assessment order. 8. Keeping in view the settled principle of law that jurisdictional issue is a legal issue which can be taken by the aggrieved party at any stage of the proceedings before the judicial/quasi judicial bodies, particularly when assessee has come up with the pleading that TP order and consequent assessment order has been passed beyond the period of limitation. So, application raising additional ground by the taxpayer is allowed without prejudice to the merits of this case. 9. Since taxpayer has raised jurisdictional issue which goes to the roots of the case, we would decide the additional ground nos.18 & 19 first before going into the grounds raised on merits. 10. The Ld. A.R. for the taxpayer challenging the impugned order passed by the AO/DRP/TPO contended inter-alia that the order passed by the TPO dated 31.01.2021 was barred by limitation and as such consequent assessment order is also not sustainable being passed on the basis of time barred TP order; that the due date for passing the TP order und....
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....ment 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 01.01.2020. However, this would mean that an order of assessment can be passed at 12 a m on 01.01.2020, 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 01.11.2019 and the transfer pricing orders thus ought to have been passed on 31.10.2019 or any date prior thereto. Incidentally, the Board, in the Central Action Plan also indicates the date by which the Transfer Pricing orders are to be passed as 31.10.2019. The impugned orders are thus, held to be barred by limitation." 17. In the case at hand Ld. A.R. for the taxpayer computed the limitation period under section 92CA(3A) for the....
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....assing 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 Revenue's 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 92CA requiring the passing of the order by the TPO determining the ALP of the international transactions, came into being by the Finance Act, 2002. As per sub-section (3) of section 92C, the TPO is required to pass the order determining the ALP of the international transactions. No time limit was initially given for the passing of order by the TPO. It is only by the Finance Act, 2007, that sub-section (3A) was inserted providing time limit for the passing an order by the TPO. No amendment has been carried out in this provision thereafter. Sub-section (3A) of section 92CA containing the relevant time limit for the passing of the order by the TPO, reads as under : - `(3A) Where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under....
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....ficers (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'ble Bombay High Court has held that the word `may' in section 127 should be read as `shall' and hence the granting opportunity to the assessee is mandatory. 6.7. Section 16 of the Wealth-tax Act, 1957 deals with the assessment of wealth. Section 16A having marginal note of `Reference to Valuation Officer' provides through sub-section (1) that : `For the purpose of making an assessment (including an assessment in respect of any assessment year commencing before the date of coming into force of this section) under this Act, where under the provisions of section 7 read with the rules made under this Act or, as the case may be, the rules in Schedule III, the market value of any asset is to be taken into account in such assessment, the Assessing Officer may refer the valuation....
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....alani 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 (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 AO u/s 153. Despite the use of the word `may', the time limit for passing the order by the TPO is mandatory, as in the otherwise situation of the TPO having been allowed more time by implication, say of three months or more, could at that time have frustrated the provisions of section 153 for the passing of the assessment order by the AO. Thus we have no hesitation in holding that the use of the word `may' in sub-section (3A) of section 92CA is to be construed as `shall', thereby making this time limit as mandatory and not directory. As such, it is held that the TPO is bound by the given time limit for passing of his order. 6.9. Having....
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....me, 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 the assessment order was directly passed without routing through draft order or DRP. The Hon'ble Court held it to be a non- curable defect and resultantly the assessment was quashed. It was held that when there is an omission on the part of the AO to follow the mandatory procedure prescribed under the Act, such an omission cannot be termed as a mere procedural irregularity and it cannot be cured. Extantly, we are confronted with a situation in which the draft order has been passed in time but the lapse has come in the passing of the order by the TPO. The consequence of the above scenario is that the passing of a valid and properly timed draft order cannot lead to the setting aside of the final assessment order. However the passing of the time barred order by the TPO, which is again a mandatory procedure prescri....