TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 1240
X X X X Extracts X X X X
X X X X Extracts X X X X
....surance company) and making a TP adjustment to the Appellant's reported taxable surplus, when the Act does not provide for such a mechanism as section 44 of the Income- tax Act, 1961 (the Act) overrides the provisions of section 28-438 of the Act. 2. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A)/AO / TPO erred in re-computing the arm's length price as NIL in respect of the international transactions pertaining to allocation of global e-mail charges, blackberry services and Internet and other network charges. This resulted in a transfer pricing adjustment of INR 8,67,68,740. The Appellant prays that the book value of the said transaction be held to be the arm's length and that the aforesaid adjustment be deleted. 3. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) / AO /TPO erred in re-computing the arm's length price of the international transaction with respect to allocation of costs for system maintenance and support services. This resulted in a transfer pricing adjustment of INR 26, 90,709 The Appellant therefore prays that the above adjustment be deleted. 4. On the facts and cir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ature of transaction Amount of adjustment 1. Allocation of costs for system maintenance & support services by China AE Rs.26,90,709/- 2. Allocation of costs for global e-mail charges by AIG Global Services Inc; AE Rs.7,62,42,044/- 3. Allocation of costs for blackberry services by AIG Global Services Inc. Rs.3,25,196/- 4. Allocation of costs for internet services and network services by AIG global Services Inc. Rs.1,02,01,500 Total adjustments Rs.8,94,59,449/- Accordingly, the AO has added the arm's length adjustment of Rs.8,94,59,449/- to the total income of the assessee. 3. During the course of assessment the A.O also observed that in the business of life insurance the profit and gains of any business or insurance as per Sec. 44 of the Income Tax Act shall be computed in accordance with the Rules contained in the first schedule. The A.O has referred rule 2 of first schedule for computing business income of life insurance business which is reproduced as under: "The profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed reliance on the following judicial pronouncements i.e (i) Strides Shasum Limited Vs. DCIT, Circle 15(3)(2) vide ITA No. 2877/Mum/2014 dated 28.02.2023 (ii) M/s Mondelez India Foods Private Limited Vs. Ad. CIT, Range 5(1) vide ITA Nos. 1492, 1576 & 2340/Mum/2015 dated 14.11.2022 and (iii) M/s Tubacex Prakash India Pvt. Ltd. Vs. The ACIT/JCIT/DCIT/ACIT-national Eassessment Centre, Delhi and DCIT, circle 14(1)(2), dated 24.03.2023. After referring the aforesaid decision of ITAT Mumbai the ld. Counsel contended that order passed by the Transfer Pricing Officer dated 30.01.2013 and the assessment order dated 26.04.2013 are time barred. The ld. Counsel submitted that additional ground is the legal grounds challenging the validity of the assessment order and the order of TPO on the ground of limitation and no further documentary evidence is required to adjudicate these ground. After considering the decision of Hon'ble Supreme Court of India in the case of National Thermal Power Company Vs. CIT (229 ITR 383) these ground of appeal are admitted and are taken up for adjudication. As per additional ground the order of the TPO is barred by limitation, therefore, the assessee does not becom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....23. On the other hand, the ld. D.R. has filed the written submission dated 24.01.2013 and submitted that the interpretation by the Hon'ble High Court regarding the time limit in Sec. 92CA (3A) is against the provisions of the General Clauses Act and the settled principles of interpretation of Laws. It is further submitted that as per Sec. 9 of the General Clauses Act in computation of the time limit the day referred to as "from" has to be excluded and the day referred to as 'to' has to be included. The ld. D.R also submitted that the period of limitation computed by the assessee in the additional ground is not as per the letter and spirit contained in the act. The ld. D.R also submitted that Sec. 92CA(3A) uses word may only and same cannot be construed as shall and equated to limitation especially when further proceedings are contemplated under the Act such as passing the draft assessment order and for the remedy before the dispute resolution panel and final assessment order. 7. Heard both the side and perused the material on record with regard to the limited issue of validity of order passed by the TPO u/s 92CA(3) of the Act and the subsequent proceedings arises therefrom.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment year commencing on the 1st day of April, 2009 or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference under sub-section(1) of section 92CA is made, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years" the words "three years" had been substituted." As per provision of Sec. 92CA(3A) the TPO is required to pass an order u/s 92CA(3) of the Act at any time before 60 days prior to the date on which the period of limitation referred to in Sec. 153 for making the assessment order on assessment or reassessment or re-computation or fresh assessment as the case may be expires. The decision of single bench of Hon'ble High Court of Madras in the case of Pfizer Healthcare Ltd Vs. JCIT as supra is reproduced 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 the expiry of 21 months from the end of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in which it is used. It is said that every statute is an edict of the legislature. The elementary principle of interpreting any word while considering a statute is to gather the mens or sententia legis of the legislature. Where the words are clear and there is no obscurity, and there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for the court to take upon itself the task of amending or alternating (sic altering) the statutory provisions. Wherever the language is clear the intention of the legislature is to be gathered from the language used. While doing so, what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results in rejection of words has to be avoided. As stated by the Privy Council in Crawford v. Spooner [(1846) 6 Moore PC 1 : 4 MIA 179] "we cannot aid the legislature's defective phrasing of an Act, we cannot add or mend and, by construction make up deficiencies which are left there". In case of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... us now examine the relevant procedures relating to Transfer Pricing. After an international transaction is noticed subject to satisfaction of section 92B, a reference is made to the TPO under sub-section (1) of section 92CA of the Act. The TPO after considering the documents submitted by the assessee is to pass an order under section 92CA (3) of the Act. As per section 92CA(3A), the order has to be passed before the expiry of 60 days prior to the date on which the period of limitation under section 153 expires. As per 92CA(4), the assessing officer has to pass an order in conformity with the order of the TPO. After receipt of the order from the TPO determining ALP, the assessing officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer. Subsection (5) of section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i.e. what the words mean and in another aspect, it conveys the concept of "purpose and object" or the "reason and spirit" pervading through the statute. The process of construction, therefore, combines both literal and purposive approaches. In other words the legislative intention i.e. the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. This formulation later received the approval of the Supreme Court and was called the "cardinal principle of construction".' 38. In case of assessments involving transfer pricing, fixing of time limits at various stages sets forth that the object of the provisions is to facilitate faster assessment involving such determination. In the present case, as rightly held by the learned Judge in paragraphs 22 to 29 of the order dated 7-9-2020, the order of the TPO or the failure to pass an order before 60 days will have an impact in the order to be passed by the Assessing Officer, for which an outer time limit has been prescribed under sections 144C and 153 and....