TaxTMI 
TaxTMI 
2024 (3) TMI 720
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....rein after. Assessee Company is engaged in the business of distribution of medical devices. It has filed its return of income for AY 2016-17 on 30 November 2016 declaring a total income under the normal provisions of the Income-tax Act, 1961 ('the Act) of Rs. 47,44,45,300/- and book profit of Rs. 36,31,30,030/- under provision of section 115JB of the Act. Further, since tax payable under the normal provisions of the Act was higher than tax payable under provisions of section 115JB of the Act, the assessee paid tax as per normal provisions of the Act. 4. The assessee's case was selected for scrutiny assessment proceedings under section 143(3) of the Act and simultaneously, transfer pricing proceedings were initiated by the learned Transfer Pricing Officer (learned TPO) under Section 92CA(2) of the Act. The learned TPO proposed the following transfer pricing (TP) adjustments vide its order dated, 1 November 2019 :- Particulars of TP Adjustment Amount (in INR) 1 Adjustment on account of alleged Advertising, Marketing and Promotion (AMP) expenses 1,08,99,66,623 2. Adjustment on account of reimbursement of expenses 6,26,48,940 3. Adjustment on account of IT m....
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....e reimbursement of expenses. 3. Adjustment on account of IT management and related support services 1,14,44,925 Nil The ld. DRP directed the Ld. TPO to examine the correctness of the margins of 3 comparables. Upon verification and correcting the operating margins of such comparable companies, the margin earned by the assessee was within the revised arm's length range of comparable companies hence, the adjustment was deleted. 4. Alternate adjustment on account of import of finished goods* 15,35,87,893 14,13,63,999 The ld. DRP directed the Ld. TPO to consider alleged excessive AMP expenses as non-operating while computing margin for import of finished goods. Further, the ld. DRP directed the Ld. TPO to examine the correctness of margins of; * Sataytej Commercial Company Ltd * Hospimax Healthcare Pvt. Ltd. * Confident Sales India Pvt. Ltd. After considering the above, the revised operating margin of the assessee is 17.60% on operating revenue (considering the alleged AMP expenses as non-operating) is higher than the range of the margins of the comparable companies considered. The Id AO/ TPO inadvertently did not follow the H....
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....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 1-1-2020. However, this would mean that an order of assessment can be passed at 12 am on 1-1-2020, 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 1-11-2019 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. 9. To draw the parallel between the dates and the passing of the order in the case of Pfizer Healthcare India (P) Ltd. as well as in the case of the assessee following summary of events and time....
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....een submitted that as per section 144C(1) of the Act, inter alia, the ld. AO shall forward a draft assessment order to the eligible assessee if he propose to make any variation which is prejudicial to the interest of the assessee Further as per section 144C(15)(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 section 92CA(3); or ii) any non-resident not being a company or any foreign company. Thus here in this case, it is neither a foreign company or a person in whose case variation is proposed as per TP order as the order passed by learned TPO in case of the assessee is time barred, which needs to be quashed. Accordingly, the assessee is not an eligible assessee and a final assessment order is required to be passed instead of draft assessment order However, the learned AO passed a draft assessment order and thus, the entire draft and final assessment order is bad and invalid in law and required to be quashed. 12. In support, the following decisions have been referred and relied upon:- * DCIT vs Saint Gobain India Private Limited (WA no 1....
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....t 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". 4. The plea taken by the assessee placing reliance on the decision in the case of Pfizer Healthcare (supra) may not to be admitted on following grounds: i. It is pertinent to mention that SLP has been filed and it is admitted vide SLP (Civil) Diary No(s)-29289/2022" in the case of M/s Pfizer Healthcare Industries Pvt. Ltd, against the decision of Single Judge of Hon'ble Madras High Court. ....
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....the legislature. vii. Sec 92CA (3A) expressly provides for counting the last day ie. 31.12.2019 and therefore for counting the 60 days the last day has to be taken into account and thus the order passed by the TPO dated 01.11.2019 is well within the time. viii. 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. ix. 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 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 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 o....
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....n 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:" 15. Ergo, the ld. 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. Thus, 60 days have to be counted prior to the date of last date of limitation u/s 153. 16. Section 153 of the Act as applicable for the AY 2016-17 reads as under:- '153. (i) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of (a) two years from the end of the assessment year in which the income was first assessable; (b) on....
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....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." 19. 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. 20....