TaxTMI 
TaxTMI 
2023 (9) TMI 1027
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....imitation. 3. In support of the said additional ground, assessee has also filed chronology of events as well as relied heavily upon the judgment of Hon'ble Madras High Court in the case of M/s. Pfizer Healthcare India Pvt. Ltd. vs. JCIT (2021) 433 ITR 28 and the decision of the Co-ordinate Bench of Mumbai Tribunal in the case of Atos India Pvt. Ltd., in ITA No.1795/Mum/2017. Apart from that, Ld Counsel also submitted that in assessee's own case for A.Y.2009-10, this Tribunal vide order dated 14/11/2022 on similar grounds and facts have not only quashed the transfer pricing adjustment but also the assessment order being barred by limitation. 4. The facts in brief qua the legal issue raised are that the assessee company is engaged in business of marketing motor spirit (petrol) and high-speed diesel through retail outlets, providing shared services to its group companies worldwide. Trading and Manufacturing and selling of Modified Bitumen. Emulsion (Bitumen Business). Lubricants and Coolants (Lube Business), cost recharge to its group companies and providing IT Enabled Services in relation to Scientific and Technical consultancy. It had electronically filed its Return of Income ....
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....ces under Section 40(a) of the Act 10 Ground No. 39 to 40: Disallowance of depreciation claimed on Goodwill arising on merger 11 Ground No. 41 to 42: Disallowance of Repairs & Maintenance expenditure 12 Ground No. 43 to 45: Disallowance of Repairs & Maintenance expenditure 10. The Revenue Department has also filed an appeal against the final assessment vide ITA No. 3016/Mum/2016 and the grounds of appeal are as under:- Sr. No. Particulars TRANSFER PRICING GROUNDS 1 Ground No. 1: Rejection of comparables Le, Jalan Agencies Limited. TCS e-serve International Limited and Castrol India Limited CORPORATE TAX GROUNDS: 2 Ground No. 2 Monthly Lease Rentals 3 Ground No. 3: Tax holiday benefit of 10A/10B 11. Apart from the grounds of appeals stated earlier, the Assessee has also filed additional grounds of appeal in ITA No. 2933/Mum/2016 which are as under: Sr. No. Particulars 1. Ground No. 46: Deduction on reversal of provision of service tax 2. Ground No. 47 Deduction of salary of real estate team. 3. Ground No. 48: Validity of Order passed under Section 92CA(3) of the Act * On th....
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....er Sec 153 of the Act 24 months from the end of Assessment Year i.e., 31.03.2014 3 Extension of period of limitation in case reference is made under Sec 92CA of the Act (as per section 153 (1) proviso as amended by Finance Act, 2012). 12 Months i.e. 31.03.2015 4 Proceeding for assessment should be completed on / before this date. 31.03.2015 5 A date prior to the date on which period of limitation expires. 30.03.2015 6 Sixty-day period expires on: 30.01.2015 7 Transfer Pricing order u/s 92CA(3) of the Act ought to be passed on /or before 29.01.2015 8 Date on which Transfer pricing order u/s 92CA(3) is passed. 30.01.2015 9. Delay in passing of Transfer Pricing Order for AY 2011-12 1 day 10. Draft Assessment order passed on: 02.03.2015 11. DRP Directions passed on: 29.12.2015 12. Final Assessment order passed on: 26.02.2016 14. In view of the aforesaid chronology of events, the ld. Counsel submitted that Section 92CA(3) provides that the ld. TPO order should be passed before 60 days prior to the date prescribed u/s. 153 of the Act which in this case is 31/03/2015 and consequently, in terms ....
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....When the word "to" is specifically incorporated in Sec.92CA(3A), any other interpretation excluding the last day would be against the plain language of the statute and the intent of the legislature. vi. The Section 92CA(3A) states that "an order u/s. 92CA(3) may be made at any time before 60 days prior to the date on which the period of limitation referred to in Section 153 expires". The Section refers that an order may be made at any time before 60 days and these 60 days have to be prior to the date on which Sec 153 limitation expires. It needs to be noted that the word used regarding limitation in Section 153 is expires that implies that the date on that particular time ceases to exist, that is not alive and it has expired. The last day expires on 00.00 am. It is only after the expiry of this date that an order may not be passed. Therefore, while computing the 60 days period, the last day of March has to be counted for computing the time limitation. If the same is counted, then working reverse the period of limitation for passing of a TP Order expires on 30.01.2015 and since the order is passed on this date, therefore the order is not barred by time limitation. ....
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....on 92CA(3A) was 29/01/2015 as the date prior to the date of which limitation expires is 30/03/2015 and 60 days expires on 31/02/2015. Accordingly, in view of the Section 92CA(3), ld. TPO's order which has been passed u/s. 92CA(3) on 29/12/2015 wherein in this case it has been passed on 30/01/2015. 18. Sub-section 3A of section 92CA provides a time limit for passing of the order by the TPO u/s 92CA (3) in the following manner:- "(3A) Where a reference was made under sub-section (l) before the 1st day of June, 2007 but the order under sub- section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (l) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires:" 19. Ergo, the TPO can pass an order u/s 92CA of the Act at any time before 60 days prior to the date on which period of limitation referred to u/s 153 expires. Th....
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....d "to" have not been used. Even the employment of the General Clauses Act will not aid the Revenue, the reason of which will be disclosed a little later in this judgment. But, right now, it is relevant to consider the scope of the word "to". 27. The word "to" is used as a preposition or as an adverb. In popular sense, it is used to express the direction in which a person, thing, or time travels. The flow of direction 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 wh....
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....te of Chartered Accountants of India v. Price Waterhouse[(1997) 6 SCC 312] and Harbhajan Singh v. Press Council of India [(2002) 3 SCC 722 : JT (2002) 3 SC 21].)" 29. The language employed is simple. 31.12.2019 is the last date for the assessing officer to pass his order under Section 153. The TPO has to pass order before 60 days prior to the last date. The 60 days is to be calculated excluding the last date because of the use of 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....
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....ing officer to the determination by the TPO, section 92CA(4) would come into operation. Therefore, it is very clear that once a reference is made, it would have an impact on the assessment unless a decision on merits is taken by DRP rejecting or varying the determination by the TPO. 33. It would only be apropos to note that as per proviso to Section 92CA (3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining 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 contenti....
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....ation is not in time, it cannot be relied upon by the assessing officer while concluding the assessment proceedings. 39. Upon consideration of the judgments and the scheme of the Act, we are of the opinion that the word "may" used therein has to be construed as "shall" and the time period fixed therein has to be scrupulously followed. The word "may" is used there to imply that an order can be passed any day before 60 days and it is not that the order must be made on the day before the 60th day. The impact of the proviso to the sub-section clarifies the mandatory nature of the time schedule. The word "may" cannot be interpreted to say that the legislature never wanted the authority to pass an order within 60 days and it gave a discretion. Therefore, the learned Judge rightly held the orders impugned in the writ petitions as barred by limitation, as the Board, in the Central Action Plan, has specified 31.10.2019 as the date on which orders are to be passed by the TPO, reiterating the time limit to be mandatory. 22. Thus, following the principle of ratio laid down by the Hon'ble Madras High Court, the time limit for passing the ld. TPO order in the case of the assessee was....
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....rises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company." 31. The aforesaid section envisages that, AO in the first instance has to forward a draft of the proposed order of assessment to the "eligible assessee", if he proposes to make any variation which is prejudicial to the interest of such assessee. The draft assessment order is to be forwarded to an "eligible assessee", which means that, for this section to apply a person has to be an "eligible assessee" Here, the draft assessment order is to be forwarded only to an "eligible assessee" and not to every assessee under the Act. 32. Thus, under the aforesaid provision, the expression "eligible assessee" is followed by an expression "means" and there are two categories referred therein (i) any person in whose case the variation arises as a consequence of TPO"s order and (ii) any NR or Foreign company. The use of the word "means" indicates that the definition "eligible assessee" for the purposes of Section 144C(15)(b) is a hard and fast definition and can only be applicable in the....
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....eeding to pass the draft assessment order does not survive, meaning thereby, that the draft assessment order passed in the instant case becomes legally invalid and hence, all consequential proceedings on the basis of the said order fail. In the instant case, a reference was made by the Ld. AO to the Ld. TPO as per the provisions of section 92CA(1) of the Act and accordingly the timelines prescribed u/s 153 of the Act remain extended by a year in view of the 3rd proviso of section 153 of the Act. Accordingly, the time limit to complete assessment proceedings u/s 143(3) of the Act in the instant case expired on 31 March 2016. As on the date of passing draft assessment order u/s 144C(1) of the Act i.e. on 29 March 2016, the Ld. AO had already received the order passed by the Ld. TPO dated 31 January 2016, which as discussed above, is time barred, illegal and void ab initio, thereby making the Appellant not an eligible assessee u/s 144C(15) of the Act. In view of the same, the Ld. AO was ostensibly required to pass the final assessment order u/s 143(3) of the Act on that day. Having said that, the draft assessment order passed by the Ld. AO under the provisions of law is also illegal a....
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....ire assessment proceedings against the revenue. In this context, on the issue of passing a correct assessment order in first instance (either a draft or a final one), the findings of the Hon'ble Madras High Court in case of ACIT v. Vijay Television (P.) Ltd [2018] 95 taxmann.com 101 (Madras) are extremely critical which reads as follows: "47. The necessity for the Parliament to incorporate Section 144-C is not only to safeguard the Revenue, but also the assessee and any mistake committed by any one of them, the said party is supposed to face the consequences and cannot put the hands of the clock back and start afresh." 39. Further, in case of Zuari Cements Ltd. v. ACIT [Writ Petition No. 5557 of 2012, dated 21-2-2013] (Andhra Pradesh), the Division Bench (DB) of the Andhra Pradesh High Court categorically held that the failure to pass a draft assessment order under Section 144C (1) of the Act would result in rendering the final assessment order "without jurisdiction, null and void and unenforceable." In that case, the consequent demand notice was also set aside. The decision of the Andhra Pradesh High Court was affirmed by the Supreme Court by the dismissal of the Revenue&....
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....on that the draft assessment order imbibes a jurisdictional power in terms of Sec. 144C(1) of the Act and creates/ envisages special rights upon the "eligible assessee". If such an order is passed on an assessee who is not an 'eligible assessee' as defined in section 144C(15)(b)(i) of the Act, then it would render the entire proceedings pursuant to such order null and void. 43. We find that section 153(1) of the Act, as it stood applicable for the AY 2012-13, provided a time limit of 3 years from the end of AY 2012-13 for completion of assessment under section 143(3) of the Act, i.e., on or before 31 March 2016. 44. In such a case if the Ld. AO invokes the provisions of section 144C of the Act and passes the final assessment order after 31 January 2016 i.e. beyond the period of limitation as stated above, such final assessment order u/s 143(3) r.w.s 144C of the Act is liable to be quashed as being barred by limitation. 45. In a recent decision of the Hon'ble Madras High Court in case of Virtusa Consulting Services Put. Ltd [TS-474-HC-2022(MAD)] dated 9 June 2022, it has been held in context of period of limitation under section 153 of the Act ....
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....table giving relevant dates for calculating limitation for passing order u/s. 92CA(3) of the Act. The same is reproduced herein below: Particulars Ground No.41 Validity of Order passed under section 92CA(3) of the Act Calculation of due date for passing transfer pricing order under section 92CA(3) Asst. Order due date as per section 153 of the Act for AY 2009-10 31 March 2013 Transfer Pricing Order due date: (At least sixty days before the period of limitation referred to in section 153 of the Act) Number of Days in March 2013 30 Number of Days in February 2013 28 Number of days in January 2013 2 Total Number of days 60 Deadline for passing TP Order for AY 2009 10 29 January 2013 Date of TP order passed for A.Y 2009-10 30 January 2013 Delay 1 Day Delay in passing TP Order 25. The assessee has determined the period of limitation for passing the order by TPO in accordance with method elucidated by the Hon'ble Madras High Court in the case of Pfizer Healthcare India (P) Ltd. vs. JCIT (supra). Since, the issue raised in the present appeal is similar to the one adjudicated by us in the case of M/s. Mondelez India Food....