TaxTMI 
TaxTMI 
2023 (7) TMI 1467
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....bsp;2186,98,55,847 payable by the Appellant. A Transfer Pricing grounds 2 Erred in making a reference of the Appellant's case to the learned TPO under Section 92CA(1) of the Act, without satisfying any of the conditions laid down in clauses (a) to (d) of Section 92C(3) of the Act based on the information/documents available with him; 3. Erred in law and facts, by passing the transfer pricing (TP) order on 01 November 2019, which is beyond the time limit for completion of proceedings under Section 92CA(3A) of the Act. thus making the TP order invalid and unsustainable in law. Further, the learned AO has erred in passing a draft assessment order incorporating an invalid adjustment proposed in the TP order. Separate segmental margins 4. Erred in law and facts, in upholding that the international transactions of the Appellant of rendering IT and BPO services under the Delivery Centre Agreement (DCA) are two distinct transactions (i.e. rendering of IT services and rendering of BPO services) which should be benchmarked separately. Provision of IT services 5. Without prejudice to Ground No. 4 above, the learned TPO has erred in determining the arm's lengt....
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.... 15. Erred in accepting Persistent Systems as comparable for benchmarking the IT services transaction disregarding the fact the company has significant related party transactions, is functionally different as it is engaged in development and sale of software products and does not provide separate segmental information for software development services. Adjustment required to be made to arm's length margin 16. Erred in not allowing Appellant the benefit of working capital adjustment which is required to be undertaken to account for the difference in working capital levels between the comparable companies and the Appellant. 17. Erred in not allowing Appellant the benefit of the risk adjustment to account for the difference between the risks taken on by the Appellant and the risks taken on by the comparable companies. Transactions of royalty payment 18. Erred in rejecting the economic analysis undertaken by the Appellant using CUP method for benchmarking the royalty payment to AE, and instead determining the arm's length price to be 1% of revenues on an ad hoc basis without using any of the methods prescribed under Section 92C of the Act read with Rule 1088 of ....
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....s per the beneficial tax rate of 5% and 10% under Article 10(2) of the India-Mauritius Tax Treaty and IndiaNetherlands tax treaty respectively, and thereby. rejecting the refund claim of Rs. 294,84,70,521 made by the Appellant with respect to the DDT paid in excess of the beneficial tax rates under the treaties. Non-grant of tax credits pertaining to Accenture Services Private Limited (ASPL), which merged into the Appellant with an appointed date of 1 April 2015 ASPL merged into the Appellant with an appointed date of 1 April 2015. Revised return was filed pursuant to merger of ASPL into the Appellant wherein all income and corresponding TDS, advance tax, MAT credit, DDT pertaining to ASPL was reported by the Appellant. The said merger was also noted by the AO in the draft assessment order dated 26 December 2019. However, still the learned ΛΟ: 29. Erred in not granting credit of taxes deducted at source of Rs. 198,94,21,730 claimed by the Appellant in its return of income, appearing under the PAN of ASPL 30. Erred in not granting credit of advance tax of Rs. 484,00,00,000 claimed by the Appellant in its return of income, appearing in PAN of AS....
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....as also provided IT service and BPO services to its associated enterprises (AE's) located in various countries. During the course of assessment proceedings the assessing officer referred the case to the Transfer Pricing Officer u/s 92CA(1) of the Act in order to determine the arm's length price in relation to international transactions entered into by the assessee. The TPO vide order u/s 92CA(3) dated 01.11.2019 has made an upward adjustment to the arm's length price by Rs. 18,08,53,54,719/- in relation to the international transactions entered into by the assessee company with its associated enterprises during the financial year 2015-16 relevant to assessment year 2016-17. 3. The AO has also noticed that assessee company has claimed deduction u/s 10AA of the Act amounting to Rs. 12,32,20,76,337/- in its return of income in respect of its SEZ units located at Bangalore, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida & Pune. The assessing officer has issued the draft assessment order dated 26.12.2019 proposing adjustment of Rs. 18,08,53,57,719/- made to the returned income of the assessee. 4. Vide application dated 24.01.2020 the assessee filed its objections a....
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.... 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:" Section 153(1) "Time limit for completion of assessment and reassessments- (1) 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, or (b) (b) One year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under sub-section(4) or subsection (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 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 fi....
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....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 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 th....
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....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 made to the TPO under sub-section (1) of section 92CA of the Act. The TPO after considering the documents submitted by the assessee....
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....s, the department cannot claim that the time limits are not mandatory. Hence, the contention raised in this regard is rejected. 36. As rightly pointed out by Mr. Ajay Vohra, learned senior counsel for the respondents in WA. Nos. 1148 and 1149/2021, the word "may" has to be sometimes read as "shall" and vice versa depending upon the context in which it is used, the consequences of the performance or failure on the overall scheme and object of 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. t....
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....t transfer pricing officer has passed order u/s 92CA(3) on 01.11.2019 whereas the limitation for passing the said order u/s 92CA(3) expires on 31.10.2019 Therefore, taking into consideration the provision of the Act and decision of Hon'ble Madras High Court in the cases referred supra the order u/s 92CA(3) of the Act is time barred by 1 day. Further the ld. Counsel has mentioned the provisions of Sec. 144C(15) of the Act pertaining 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. 8. 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 Shas....