TaxTMI 
TaxTMI 
2023 (12) TMI 703
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....guar Land Rover Limited, UK; and Lastly, assessee has also challenged disallowance u/s.40a(ia) of Rs. 1,89,33,194/-. Besides this also assessee has also raised a legal ground that the TPO order has been passed beyond the period of limitation stipulated u/s.92CA(3A) of the Act and therefore, the whole transfer pricing adjustment is bad in law and also the Corporate tax addition deserves to be quashed because final assessment order is barred by limitation. 3. The brief facts are that assessee, i.e., Jaguar Land Rover India Limited is 100% subsidiary of Jaguar Land Rover Limited, UK which is manufacturer of sports and luxury vehicles and in India JLR UK sells products to subsidiary companies like assessee which are responsible for the import, marketing, sale and distribution of the products to independent Jaguar and Land Rover retailers. During the relevant financial year JLR India Ltd., had entered into various international transactions relating to purchase of vehicle, spare parts and accessories from JLR UK; purchase of vehicles from M/s. Tata Motors Limited besides of the transactions. Assessee filed its return of income for A.Y. 2016-17 on 29/11/2016 declaring loss of Rs. 49,7....
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....ent order has been passed on 23/04/2021. Therefore, not only the whole transfer pricing adjustment but also disallowance u/s. 40(a)(ia) made on corporate tax deserves to be quashed as the final assessment order itself is barred by limitation. In support following computation of period of limitation has been provided before us. Sr. No. Events Relevant Dates 1. Assessment Year ("AY") 2016-17 2. End of AY 31.03.2017 3. Due date for completion of assessment under section 153(1) read with section 153(4) of the Act (i.e. 21+12-33 months from the end of AY) 31.12.2019 4. Time limit for passing the order under section 92CA(3A) of the Act 60 days 5. Less: Date on which limitation expires under section 153 of the Act Le. 31.12.2019 1 day 6. Less: Remaining days of December 2019 30 days 7. Less: Number of days of November 2019 30 days 8. Last date of passing order under section 92CA(3) of the Act 31.10.2019 9. Date on which transfer pricing order ("TP order) under section 92CA(3) of the Act is passed. 1.11.2019 10. Last date to pass final assessment order considering assessee is not an eligible assessee 31.12.2019 11. Date on which final assessment order wa....
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....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. vii. Sec. 92CA(3A) uses the word may only and the same cannot be construed as shall and equated to limitation especially when further proceedings are contemplated under the Act such as passing draft assessment order, remedy before Dispute resolution panel and final assessment order. viii. There is no necessity or occasion to read the word "may" as "shall" Sub-sections 3A and 4 were introduced in sec. 92CA by the very same Finance Act, 2007 and the Legislature has consciously used the word "may" in Sec 92CA(3A) while using the word "shall" in sec. 92CA(4). Hence, in view of the context and background of the provisions, the word "may" should not and cannot be read as "shall" If such an interpretation is accepted it will make the provisions of the statute inoperative, it is well settled law of interpretation that any statute or enabling pr....
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....2-2019 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 which the period of 60 days is to be calculated. It is settled law that while interpreting a statute, it is not for the courts to treat any word(s) as redundant or superfluous and ignore the same. In this connection, it is pertinent to note the judgment of the Apex Court in Grasim Industries Ltd. v. Collector of Customs 2002 taxmann.com 1803, wherein, it was held as follows : "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 ....
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.... 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 date". Even going by section 9 of the General Clauses Act, when the word "from" is used, then, that date is to be excluded, implying here that 31-12-2019 must be excluded. After excluding 31-12-2019, if the period of 60 days is calculated, the 60th day would fall on 1-11-2019 and the TPO must have passed the order on or before 31-10-2019 as orders are to be passed before the 60th day. Therefore, 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....
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.... 37...................................................................................... 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 is hence mandatory. What is also not to be forgotten, considering the scheme of the Act, the inter-relatability and inter-dependency of the provisions to conclude the assessment, is the consequence or the effect that follows, if an order is not passed in time. When an order is passed in time, the procedures under 144C and 92CA(4) are to be followed. When the determination 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....
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....variation which is prejudicial to the interest of such assessee, Sub-section 15 has defined "eligible assessee" for the purpose of section 144C. The relevant provisions of section 144C(1) and sub section 15 reads as under:- 144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation which is prejudicial to the interest of such assessee. . . . (15) For the purposes of this section,- (a) "Dispute Resolution Panel" means... (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) 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 m....
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....owever, once the transfer pricing order under section 92CA(3) of the Act, per-se, becomes a nullity, there remains no transfer pricing variation arising/ resulting or remaining as a consequence thereto. The effect of passing a null and void transfer pricing order here is that it has to be 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. Thus, in absence of any transfer pricing order being passed at all and any variations arising there from, the entailing consequence in instant case is that the appellant cannot be said to be an "eligible assessee" under section 144C(15)(b)(ii) of the Act. 35. Accordingly, once the assessee becomes an "ineligible assessee", the very foundation for proceeding 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....
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....desh)- Revenue"s SLP dismissed by the Hon"ble Apex Court in CC No. 16694/2013 on 27th September 2013 38. What culminates from the aforesaid two sets of parallel decisions is that the provisions of section 144C of the Act are specific and provides for a special code which must be strictly followed since it impacts the rights of an assessee substantively, i.e., the ability to accept or object a draft order proposition, file objections before the Dispute Resolution Panel and ensure a speedy disposal thereof. Any lapse in treating an assessee as "eligible assessee" where it is otherwise not one and vice-versa results in fatality, since it becomes a jurisdictional defect and goes on to the roots in deciding the validity of the entire 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 a....
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....on-est, results in an incurable illegality which is liable to be held as null and void, and thus, consequentially holding the final assessment order to be bad in law as well. 42. Thus, despite the fact that the reference made to the Ld. TPO is valid, in absence of a legally valid transfer pricing order and a valid draft assessment order, the Ld. AO cannot assume jurisdiction to proceed with the assessment under Section 144C of the Act and pass the consequential final assessment order. The decisions of the Hon"ble jurisdictional High Court in case of International Air Transport Association (supra) and Dimension Data Asia Pacific PTE Ltd. (supra) forties appellant"s contentions and the irresistible conclusion 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....