TaxTMI 
TaxTMI 
2024 (12) TMI 487
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.... as the AO/ TPO have exceeding their jurisdiction by going beyond DRP' s directions. 4. On facts and circumstances of the case and in law, the final assessment order is invalid as the same has been passed in violation of statutory procedure under section 144 B of the Act. 5. On the facts and circumstances of the case and in law, the assessment proceedings are time barred as the same have not been completed within prescribed timelines. 6. On the facts and circumstances of the case and in law, the final assessment order is bad in law since it violates the order of Hon'ble High Court in Appellant's own case by making an adjustment using Brightline Test and enforcing demand on the same. 7. Without prejudice to the above, even if adjustment made using Brightline Test is held to be protective, on the facts and circumstances of the case and in law, the final assessment order is bad in law as an adjustment is made on protective basis which has no legal existence as per the provisions of the Act. 8. Without prejudice to any other contention, the final assessment order suffers from various arithmetical inaccuracies and factual errors. GRO....
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....ion can be appropriately benchmarked under Transactional Net Margin Method (TNMM)/ Resale Price Method (RPM) using aggregation approach under trading segment. 19. The TPO / AO erred on facts and in law by ignoring that the AMP function is already subsumed in net profits earned by the company and the alleged transaction can be appropriately benchmarked under TNMM using aggregation approach under manufacturing segment. 20. The TPO / AO erred on facts and in law by making incorrect adjustments under garb of 'intensity adjustment' which is not as per prescribed Rules for application of TNMM/ RPM and that in absence of availability of adequate and accurate data in public domain, ad- hoc adjustment is not permissible under provision of Act and Rules. 21. The TPO / AO erred on facts and in law by not appreciating that AMP/ Sales ratio is not a measure of intensity of AMP function. 22. Without prejudice to any other grounds, 'Intensity adjustment' used to adjust net profit margin of comparable companies purportedly to equalize functions, appears to be mere mirror image of already invalidated Bright Line Test ('BLT') adopting same ratio, rationale and par....
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....s and in laws, the AO erred, both on facts and in law, in completing assessment using loss processed under Sec 143 (1) at Rs. 21,05,08,945 /-, as against the returned loss of Rs. 22,09,49,746 /-. 35. That on facts and in laws, the AO erred, both on facts and in law, in making a disallowance of Rs. 9,92,03,093 /-, on account of Interest Income Capitalized by the Appellant. a. That the impugned disallowance is patently bad, untenable and illegal, both on facts and in law, as the AO has made the same by: i. Failing to observe that the income as per books of accounts and the taxable income are mutually exclusive, and that the treatment of a transaction in the books of accounts cannot govern to determine the taxability as per Income Tax Act; ii. Erring in recognizing the "inextricable link" between nature of fund available (i.e. capital nature for expansion activities) vis- a- vis its utilization for short duration, being idle funds; iii. That the addition tantamount to double taxation, as the expense 'depreciation' has already been reduced to that extent. iv. Misinterpreting the Income Computation and Disclosure Standards and other ....
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....ave been passed by 30.04.2022. B. The following facts with regard to issuance and receipt of DRP directions are mentioned below:- (1) DRP directions were manually circulated on 24.03.2022 (page 319 of appeal set) and a copy was marked to CIT(TP)-2, DCIT, TP-2(1)(1) and the National e-assessment Delhi and the assessee. (2) DRP manually uploaded the directions on the ITBA system and sent to assessee on 30.03.2022 (page 301 of appeal set). (3) As the DRP has manually passed directions u/s 144C(5) in ITBA (systems), it did not automatically become visible inside the case history notings. (4) Report from Systems Directorate As all the communication is now though computer systems, to get a authentic information about the receipt of DRP directions by the Assessing Officer, i.e. Faceless AO( JAO)/ Jurisdictional AO (JAO), a report has also been called from the Systems directorate, a copy of which is placed at Annexure 1 (copy of which has been duly handed over to the bench and to the assessee counsel, during the course of hearing). In the report, it has been stated by the systems, that the DRP direction appeared only on 18.04.2022. Bein....
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....T(Ne AC)-2(1)(1) DEL on 18.04.2022 using the said functionality. Date Action/ Descript ion From User To User Noting/ Remarks View Document 18-04-2022 Document/ Response received from 'Uploading of Document based on DIN/ PAN- AY' screen DC/ ACIT(Ne AC) 2 (1)(1) DEL AO - Assessment Unit Re AABCH 3162 L 2018-19. pdf A copy of the said document named "AABCH3162L 2018-19. pdf" {which is the DRP order u/s 144C(5) dated 16.03.2022} is attached herewith. Since the document was uploaded by DCIT/ACIT(Ne AC)- 2(1)(1 ), Delhi, using the said functionality on 18.04.2022, it became available in the Case History/Notings of the assessment proceedings on the said date i.e. 18.04.2022. Thus, from the above report from the systems, it is clearly proved that as, the DRP directions were manually uploaded, it did not appear in the case history notings automatically and appeared/ became available to Assessing Officer only on 18.04.2022 and that is the date, which is to be taken for counting of limitation period. 5. Report from the Na FAC (National Faceless Assessment Centre) The CBDT has set up the National Faceless Assessment Centre ....
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....above sequence of events, it is crystal clear that the Ne AC has received the DRP directions only on 06.04.2022 and even if the period of limitation for passing of final assessment order is counted from the date Ne AC has received the directions, even then last date for passing of order becomes 30.05.2022 and on that date, the AO has duly passed the assessment order i.e. the order was passed well within time. C. Whether Ne AC can be treated as Assessing officer In some of the cases, the assessee has argued that Ne AC has to be treated as Assessing Officer and date of receipt by the Ne AC should be adopted as the date for counting of limitation period for passing of final assessment order. It is respectfully submitted that till 31.03.2022 as per section 144B (1), National Faceless Assessment Centre was finalizing the assessment, however, the provisions of section 144B has been amended in the Act from 01.04.2022 and it is mentioned in section 144B(1) that National Faceless Assessment Centre is the coordination body and assessment is not done by the Ne FAC Centre. Because of the faceless regime, the national faceless assessment centre is the body which is be....
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.... directions are received by the AO. As it has already been mentioned that the Ne AC is not AO and in the instant case the AO is the jurisdiction AO accordingly the time lines for completion of assessment are to be from the date of receipt of DRP directions by the AO, which in the instant case is 18.04.2022 and the AO has passed the assessment order u/ s 144C r.w.s. 144C on 30.05.2022 that is time limit stipulated for the provisions of section 144C(13 ) of the IT Act. Further, it is a settled law that the provisions of law has to be read as it is and unless specifically mentioned, nothing is to added or taken away from the provision. In section 144C (13), it is clearly mentioned that the date of receipt is the only relevant date for counting limitation period, then only that date, is to be seen and nothing else. Reliance is also placed on the Hon'ble SC judgment in the case CIT, Chennai vs. Mohammed Meeran Shahul Hameed 131 taxmann.com 94 (SC) 2021 for explaining the receipt of the order". Being pertinent, the relevant extract of the decision of Hon'ble Supreme Court is reproduced below: "4.3 On a fair reading of sub- section (2) of section 263 it can be se....
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....nciple of construction that the words of statute are to be understood in their ordinary and natural meaning unless and until there is something else in the statute to suggest the contrary. Reliance is placed on the decision of the Apex Court in the case of Mohammad Ali Khan vs. Commissioner of Wealth- tax, (1997) 92 taxman 52 (SC). The relevant extract of the decision is reproduced below: "6. It is a cardinal principle of construction that the words of a statute are first understood in their natural, ordinary or popular sense and phrases and sentences are construed according to their grammatical meaning unless that leads to some absurdity or unless there is something in the context or in the object of the statute to suggest the contrary. It has been often held that the intention of the Legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence, a construction which requires for its support additional support, addition or substitution of words or which results in rejection of words as meaningless, has to be avoided. Obviously, the aforesaid rules of const....
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.... withstand clause and it has to be given priority vis- a- vis other provisions. E. Further, during the course of hearing, an argument was made that once the DRP directions are uploaded, it is visible to all including the Assessing Officers and for all practical purposes that date has to be taken as date of receipt for counting the limitation period u/s 144C(13) of the Act. In this connections the following submissions are made for the consideration of the Hon'ble Bench. 1. If the Act clearly and unambiguously mentions the "date of receipt by AO" then how can any other interpretation is possible for computing the limitation period, by assuming that the orders becomes automatically visible to all once it is uploaded on systems. This interpretation is unfortunately not in line with the letter and spirit of the statute/ Act and specially in the context of settled law about the interpretation of the Act/ statute. 2. In the case of assessee, both the systems directorate as well as NaFAC has has submitted report (as mentioned supra) that the DRP directions were uploaded in systems only on 18.04.2022. Not only this, the NaFAC has also mentioned that the physical ....
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.... View Download functionality for every case pending in that Unit every day. The View Download functionality obviously does not reflect/record the Date of Receipt; for determining the date of limitation. It merely reflects the date of generation of the document. Therefore, considering the availability of orders/ directions on the View Download functionality as fulfillment to the requirement of as per section 144C (13) will invariably result in incorrect determination of the date of limitation for passing of consequential orders/actions. Here, it will also be relevant to draw parallel with the limitation relating to filing of second appeal. In second appeal, the limitation for filing appeal before ITAT is reckoned from the date of receipt of CIT (A) order in the office of the jurisdictional PCIT, and not mere reflection in the View Download functionality of ITBA. F. Assessee reliance on the following case laws: 1. ITAT Delhi in the case of Haier Appliances Pvt. Ltd. vs. DCIT, 1T&TP Delhi 2(1)(1) in ITA no. 417/Del/2022 for A.Y. 2017-18 i) With utmost respect, it is submitted that the order passed by the Hon'ble Tribunal is perverse because....
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....upreme Court was dealing with totally different matter i.e. which is issuance of notice U/s 143(2) and also held that once the notice is issued, it is treated as communicated, irrespective of its date of receipt by addressee. In our case, facts are totally and completely different, as the section 144C(13) talks of receipt of DRP's direction by AO and not issue of directions by DRP. Once the Act provide for receipt of DRP' s directions, it is the actual receipt by AO which matters and the issue of direction by DRP is immaterial. Thus the Hon'ble bench reliance on apex court decision is the case of VRA Cottons Mills (P) Ltd. is misplaced and out of context for interpreting the meaning of word receipt. 2. Hon'ble ITAT decision in the case of Microsoft Corporation India Ltd. vs. DCIT 1863/del/2022. The assessee has also relied on the decision of the Hon'ble ITAT in the case of Microsoft Corporation India Ltd. vs. DCIT 1863 /del/2022. The facts of the case are distinguishable as mentioned below:- In para 9 of the order, the Hon'ble Tribunal has taken the date of receipt by Ne FAC 07.04.2022 i.e. the date on which the DRP had uploaded its di....
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....uiry or verification conducted by the verification unit in the circumstances as may be specified by the Board in this behalf. The provisions of section 144B(5)(iii) clearly states that all communications between the Ne AC and various assessment units shall be exchanged by electronic mode. Thus as the DRP directions are sent to the jurisdictional AO through electronic mode on 18.04.2022, accordingly as per section 144B(5)(iii) 18.04.2022 should be the date which is to be treated as date of receipt of the DRP directions by the AO. By making reference to provision of section 13 of Information Technology Act and section 144B of Income Tax Act it has also been emphasized on the point, that the moment document is uploaded by the originator, the receipt of the document should be the same date as the issuance date of the document. In this connection, it is respectfully submitted that in regular systems, definitely the date and time of uploading of documents becomes the date and time of receipt by the addressee, as both the originator and the recipient are in the systems. The systems adopted by the Income Tax Department is unique in the sense that in order to bring transpa....
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....on which the DRP directions were actually received by the jurisdictional AO in its ' Case History Noting' to enable it to proceed and continue with the assessment proceedings. The assessee, on the other hand, contends that the date on which the DRP directions were uploaded in ITBA portal / NFAC on 30 t h March, 2022 is the determinative date for count of limitation period under s. 144 C(13) of the Act. The assessee further contends that, at best, and on a most conservative basis, date of 22.04.2022 may be taken as a date in the alternative, which is the date on which the assessment case was transferred by FAO to JAO under Section 144 B(8) of the Act. The assessee contends that once the DRP directions has been served and uploaded in ITBA Portal and where assessment case itself has been transferred in the month of April, 2022 with a clear noting / stipulation by the system itself that limitation gets expired in April 2022 , there is no reason to view the limitation period differently, more so in the absence of any cogent evidence to the contrary. Even if April 2022 is regarded as the month in which DRPs order was received by the faceless AO, the limitation stands expired in M....
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....ith the FAO on or before 22.04.2022 which was the date on which the records were transferred. The order- sheet itself points out and cautions the JAO for completion of the assessment and that points out that limitation ends in April 2022. The revenue despite having raised long drawn defense, failed to furnish any material of evidentiary value towards the date on the DRP directions came to the privy of FAO which was in turn uploaded to the case history noting of the pending assessment of JAO on 2nd May 2022. In the absence of any affirmative evidence in this regard, the inference needs to be drawn from the chain of events mentioned in order sheet, systems report and affidavit of the JAO. The inference thus needs to be drawn adverse to the revenue for the reason that order sheet provides for transfer of assessment case in April 2022 and the FAO has uploaded the DRP directions in May 2022. In the absence of any material to indicate that the FAO also received the DRP directions in May 2022 for its onward transmission to JAO on 2/05/2022, we are in no position to dislodge the order sheet notings indicating transfer of records in the month of April 2022. The limitation thus stands expire....
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....ctions are received physically only on 06-04-2022 and not received electronically. Also Ne AC has categorically submitted that it has uploaded DRP' s directions on 18-04-2022. Even without these dates of receipt by Ne AC, department is covered by Nikon Case because like in that case, if the date of receipt is taken from date of transfer from FAO to JAO, again the date of limitation comes to 30 -05- 2022 i.e. the date on which order was duly passed. Thus, in a way the decision in the case of Nikon India supports department case. Further, as the similar issue was involved in the case of Syniverse Technologies Services (India) Private Limited, In ITA no. 391/Del/2022, the assessee counsel has also argued and referred to affidavit filed by the CCIT(IT & TP) west Zone Mumbai, in the case of Vodafone Idea Limited Vs. CPC in 156 taxmann.com 258 (Bombay) to press upon the point that once DRP's direction are uploaded, they are automatically visible to the FAO. In this connection reference is again made to the report of the systems directorate, (cited supra) and the same was also discussed in details during physical hearings. Even at the cost of repetition, the first para of....
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....ssed without issuing show cause notice with the draft assessment order. In that case though the Hon'ble Supreme Court has held that the condition prescribed in 144B are mandatory however the Hon'ble Supreme Court has also taken notice of the facts that faceless assessment scheme has been recently introduced by the Income Tax Department and the revenue ought to have been given some leverage to correct themselves and take the corrective action. The relevant extract of the decision of the Hon'ble Supreme Court is very pertinent and for ready reference is reproduced below:- "4. Having heard Shri Balbir Singh, learned ASG, appearing of the Revenue and Shri Dharan Gandhi, learned counsel appearing for the respondent- assessee and having gone through the impugned judgment and order passed by the High Court and considering the fact that the Assessment Order was passed without issuing a show cause notice with a draft Assessment Order, as was mandatorily required, under Section 144 B of the Act, as such, it cannot be said that the High Court has committed any error. However, at the same time, considering the fact that the Faceless Assessment Scheme has been introduced re....
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....the facts are distinguishable. In that case, the Revenue could not bring on record about the receipt of the ld. DRP order by the Assessing Officer. In the case of Nikon India Pvt. Ltd. (supra), the case was transferred from FAO to JAO on the same date. In this case, the Revenue could prove that there was no visibility of ld. DRP order in the case history of the pending assessment proceedings. This was due to the fact that the ld. DRP created the pendency by manually entering the details of Section 144C order. Since, it was manually entered and by not creating linkage with the assessment proceedings, it was not reflected in the pending assessment proceedings for the AO to act upon. The Hon'ble Supreme Court in the case of Ne FAC vs. Automotive Manufactures Pvt. Ltd. (supra), DCIT Vs. Abacus Real Estate Pvt. Ltd. and in the case of Addl. CIT Vs. Multiplier Brand Solutions Pvt. Ltd. held that the revenue should be given time to take corrective measures for updation of the software. In this case, the Revenue could bring on record about the receipt of the ld. DRP order by the Assessing Officer who has to physically apply his mind and pass an order in accordance with the provisions of Se....
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....er on 26.03.2012 and according to the department it was dispatched on 28.03.2012. The relevant last date for the purpose of passing the order under Section 263 considering the fact that the assessment was for the financial year 2008 -09 would be 31.03.2012 and the order might have been received as per the case of the assessee - respondent herein on 29.11.2012. However as observed hereinabove, the date on which the order under Section 263 has been received by the assessee is not relevant for the purpose of calculating/ considering the period of limitation provided under Section 263 (2) of the Act. Therefore the High Court as such has misconstrued and has misinterpreted the provision of subsection (2) of Section 263 of the Act. If the interpretation made by the High Court and the learned ITAT is accepted in that case it will be violating the provision of Section 263 (2) of the Act and to add something which is not there in the section. As observed hereinabove, the word used is "made" and not the "receipt of the order". As per the cardinal principle of law the provision of the statue/act is to be read as it is and nothing is to be added or taken away from the provision of the statue. ....
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....s put forward by Sh. Nageswar Rao, ld. AR and Sh. Rajesh Kumar, CIT- DR. 18. Since the other grounds have not been argued by the ld. AR, they are not being adjudicated. 19. As the appeal of the assessee is dismissed, the Stay Application of the assessee stands dismissed as infructuous. 20. In the result, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 20/09/2024. ============= Document 1 GSTR-3B Normal registered person GSTR-3B is for declaration of the details of outward supplies, inward supplies, tax liability, tax paid Due date in case of monthly filers: 20th of the following month. For QRMP Scheme: 22nd (for 'X' category States/ UT) and 24th (for 'Y' category States/UT) of month following the quarter. Document 2 GSTR-4 Composition Levy Registered person opting for Composition levy or availing benefit of Notification No. 02/2019- CT (Rate) Return for financial year Payment of taxes at a fixed rate Due date for filing: 30th of April following the relevant financial year Document 3 Pvt. Ltd. (Sitapura Unit) • AXIS Bank Mahapura Unit for F.Y. 2012-2013 ⚫ HDFC Bank Ma....