TaxTMI 
TaxTMI 
2023 (8) TMI 715
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....missioner of Income-tax II(8), Mumbai (learned TPO) under Section 92CA(1) of the Act, without satisfying the conditions specified therein, A. Transfer Pricing Grounds 3. erred in upholding the learned TPO's contentions for making a transfer pricing adjustment of Rs. 11,91,65,955 under Section 92C(4) of the Act to the total income of the Appellant on the premise that the international transactions entered by the Appellant with its associated enterprises (AEs) were not at arm's length: Rejection of benchmarking analysis undertaken by the Appellant 4. erred in upholding the learned TPO's action of rejecting the benchmarking analysis undertaken by the Appellant for the provision of consultancy services, Rejection of the Comparable Uncontrolled Price (CUP) method as the most appropriate method 5. erred in accepting the learned TPO's contention of rejecting the CUP method applied by the Appellant as the most appropriate method, without giving cogent reasons, for benchmarking the international transactions with AEs of provision of consultancy services, Application of the Transactional Net Margin Method (TNMM) a....
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....ount aggregating to Rs 4,00,99,212) to its AEs, to be Nil, 13. erred in not adjudicating on the error highlighted by the Appellant as regards the amount disclosed in the Form 3CEB in respect of international transaction pertaining to payment of regional allocated cost, value of the said transaction was inadvertently reported as an expense of Rs. 1,29,00,270 (Rs. 82.70,094 plus Rs. 46,30,174) instead of income of Rs. 36,39,920 Payment made towards reimbursement of expenses (paid) 14. erred in upholding the learned TPO's action of determining the arm's length price of the international transaction of reimbursements amounting to Rs. 41,98,151 to AEs to be Nil, disregarding the documentation submitted by the Appellant; Cost incurred to AFs towards various services is recovered with mark-up 15. erred in not appreciating the fact that the payment made by the Appellant towards services with respect to provision of consultancy services availed, reimbursements expenses and cost allocation is eventually recovered with a mark-up of 10%, in the form of a subsidy received from AEs as per the existing inter-co agreement; Effect of mis....
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....ef is that return of income declaring total income of Rs. 2,17,30,848/- was filed on 30.09.2009. The case was subject to scrutiny assessment. The assessee company is engaged in the business of Consultancy Services in the areas of Human Resources Development, compensation benefit, employee benefits, actuarial services, remuneration data collection and other HR Consultancy services. During the year under consideration the assessee has reported the international transaction with its associate enterprise in form no. 3CEB, therefore, the A.O u/s 92CA(1) referred the international transaction entered by the assessee to the Transfer Pricing Officer after obtaining prior approval of the Commissioner of Income Tax -8, Mumbai vide order dated 24.01.2011. Thereafter the Transfer Pricing Officer has made an upward adjustment to the Arm's length Price by Rs. 11,91,65,955/- vide order passed u/s 92CA(3) dated 30.01.2013. Accordingly, the AO has added the arm's length adjustment of Rs. 11,91,65,955/- to the total income of the assessee vide order u/s 143(3) dated 26.04.2013 and also disallowed prior period expenses Rs. 74,52,345/- disallowance u/s 40A(ia) Rs. 1,50,000/-, mismatch of AIR Rs. 20,77....
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....unsel further submitted that as per provision of Sec. 92CA(3A) of the Act in a case where the reference is made to the TPO, the TPO is required to pass order u/s 92CA(3A) of the Act on any time before 60 days prior to the date on which the period of limitation referred u/s 153 of the Act expires. The ld. Counsel further submitted that since proviso employer words 'prior to date' the day on which limitation expires is required to be included while computing the period of 60 days and the period of 60 days is required to be seen including the last date on which the limitation expires. The ld. Counsel also submitted that the period of limitation for making of order for assessment as per Sec. 53 of the Act is two year and where a case is referred u/s 92CA of the Act to the TPO the period of limitation shall be 3 years from the end of the assessment year in which the income was first assessable. As per the computation shown by the ld. Counsel the order u/s 92CA(3) of the Act ought to be passed on or before 29.01.2013, however, the TPO has passed the same order on 30.01.2013. Therefore, the impugned order passed u/s 92CA(3) is time barred by 1 day. The ld. Counsel has also paced reliance ....
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....ng to the assessment year commencing on the 1^st 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 xxxxxxxxxxx Provided further xxxxxxxxxx Provided also that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1^st 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. JCI....
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.... : "10. No words or expressions used in any statute can be said to be redundant or superfluous. In matters of interpretation one should not concentrate too much on one word and pay too little attention to other words. No provision in the statute and no word in any section can be construed in isolation. Every provision and every word must be looked at generally and in the context 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 wo....
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....fore, either way the contention of the Revenue is a fallacy and has no legs to stand. Mandatory or Directory 31. The next contention that has been raised by the learned senior standing counsel for the appellants is that the usage of the word "may" in section 92CA (3A) indicates that the time fixed is only directory, a guideline, not mandatory and is for the sake of internal proceedings. 32. Let 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 eithe....
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....the provisions would have to be considered while determining whether it is mandatory or directory. 37. At this juncture, it is noteworthy to mention the commentary of Justice G. P. Singh on the interpretation of statutes, Principles of Statutory Interpretation (1st Edn., Lexis Nexis 2015), which is quoted below for ready reference: ' The intention of the legislature thus assimilates two aspects: In one aspect it carries the concept of "meaning" 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, fix....
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....rtaining to the eligible assessee the same is reproduced as under: "(b) "eligible assessee" means - (i) Any person in whose case the variation referred to in sub-section(1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) (ii) any non-resident not being a company, or any foreign company." After referring the aforesaid provisions the ld. Counsel contended that since the order of the TPO was barred by limitation, therefore, there was no eligible assessee in the case of the assessee in terms of provisions of subsection (15) to Sec. 144C of the Act. 9. In this regard, we find that coordinate bench of the ITAT on the similar issue on identical facts in the cases 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 E-assessment Centre, Delhi and DCIT, circle 14(1)(2), dated 24.03.2023 and (iv) Tata AIA Life Insurance Company Li....