TaxTMI 
TaxTMI 
2025 (6) TMI 60
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....ssue of notice u/s 143(2) of the Act dated 22.09.2019. The assessee in the report in Form 3CEB has reported following transactions as international transactions: S.No. Name of the AE Description of International Transactions Transfer Pricing Method Amount in INR 1. LS Cable & System Ltd. Purchase of raw materials TNMM 61504914 2. LS Cable & System Ltd. India Project Office Purchase of raw materials TNMM 6528553 3. LS Vina Cable & System Purchase of raw material TNMM 8611687 4. LS Global Co.Ltd. Purchase of raw material TNMM 279045817 5. LS Metal Co.Ltd. Purchase of raw material TNMM 46458376 6. LS Cable & System Ltd. Sale of manufactured goods TNMM 313634879 7. LS Cable & System Ltd. India Project Office Sale of manufactured goods TNMM 129455015 8. LS Cable & System Ltd. India Project Office Sale of manufactured goods Other Method 3809602 9. LS Cable & System Ltd. Purchase of machinery Other Method 49861799 10. LS Cable & System Ltd. India Project Office Receipt of services TNMM 110194344 11. LS Cable & System Ltd....
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....and non-recurring loss and hence, must be excluded while computing the operating margin of the Appellant. 5. That the Ld. AO/TPO/DRP has erred in the facts and in circumstances of the case and in law, in not allowing the Depreciation/capacity adjustment carried out by Appellant for improving comparability analysis based on his own conjectures and summaries even though the same is allowed under the Income tax Act. 6. That the Ld. AO/TPO/DRP has erred in the facts and in circumstances of the case and in law, in rejecting the custom duty adjustment undertaken by Appellant for improving comparability analysis based on his own conjectures and summaries even though the same is allowed under the Income tax Act. 7. That the Ld. AO/TPO/DRP has erred in the facts and in circumstances of the case and in law in rejecting cash profit level indicator without appreciating the fact that there were significant differences between the depreciation of comparable companies visà- vis the appellant. 8. That the Ld. AO/TPO/DRP has erred in the facts and in circumstances of the case and in law in not making appropriate adjustments to account for differences in wo....
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....0. Ld.AR of the assessee submitted that in the instant case, the ld. DRP has rejected the objections taken by the assessee vide its order dt. 23.06.2022 and the appellant has received the intimation letter vide DIN No. ITBA/DRP/S/91/2022-23/1043577555(1) on 27.06.2022. This means the same would have been uploaded on portal on this date and thus, being made available to the appellant, TPO, NFAC and thus available to AO as well. Ld. AR further argued that the AO has mentioned in its final order that the DRP directions were issued on 29.06.2022. Thus, taking the date of DRP directions as mentioned in the AO Order, the due date to pass the AO final order would also be 31.07.2022. Since the final Assessment Order has been passed on 24.08.2022 which is in divergence to due date prescribed u/s144C (13) of the Act, the ld. AR of the assessee submits that the final order passed by the Assessing Officer is barred by limitation, and hence, should be treated as void. 11. On the other hand, the ld. CIT DR vehemently supported the order of the lower authorities and argued that in the present case though the ld. DRP has passed the order on 27.06.2022 but it is possible that the said order was ....
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....e furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under subsection (5) for further enquiry and passing of the assessment order. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing....
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....essee went before the Hon'ble DRP, who vide order, dated 29.06.2022 has dismissed the objections of the assessee and retained the order of the TPO." 14. From the perusal of the observation of the AO, it is clear that the order of ld. DRP rejecting the objections of the assessee was served on the AO on 29.06.2022. Thus the final assessment order so passed by the ld. AO is barred by limitations as the timeline of one month for completion of the final assessment order starts from 29.06.2022 i.e. the month in which the order passed by ld. DRP was received by the AO and expired on 31.07.2022. However undisputedly, the final assessment order was passed on 24.08.2022 which is beyond the period of one month as allowed in section 144C(13) of the Act. Thus the final order passed u/s 143(3) r.w.s. 144C(13) is barred by limitations and is void and invalid order. The Hon'ble Jurisdictional High Court in the case of PCIT Vs. M/s Fibrehome India Pvt. Ltd. in ITA No. 91 of 2024 vide order dt. 05.02.2024 has held as under:- "3. We note that an identical question has been answered by us in W.P.(C) 15381 of 2022 titled as "Louis Dreyfus Company India Private Limited vs. Deputy Commissione....
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.... can complete the assessment without providing any further opportunity of being heard to the assessee. This means that the moment the Assessing Officer receives the directions under sub-section (5), he has to straightaway complete the assessment and he does not even have to hear the assessee. The Assessing Officer shall simply comply with the directions received from the DRP within one month from the end of the month in which such direction is received." 18. In this backdrop, we note that both the judgments of the Bombay High Court in Shell India and Vodafone Idea construe the time lines as provided in Section 144C to be mandatory in character. In our considered opinion, this interpretation is in accord with the intent behind insertion of that provision and the bare text and spirit of that section. Thus, we accord our approval to the interpretation as set out in the aforenoted decisions of the Bombay High Court. 19. Further, the procedure of assessment as provided under Section 144C does not envisage or contemplate the interdiction or involvement of the TPO once a directive has been framed by the DRP. The role of the TPO comes to an end once an order as contemplat....
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.... at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view take very long time with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been proposed to be inserted so as to provide inter alia the Dispute Resolution Panel as an alternative dispute resolution mechanism." 21. Thus, if the provisions of Section 144C as mandated by the Statute are not strictly adhered the entire object of providing for an alternate redressal mechanism in the form of DRP stand defeated. That is not the intention of the legislature when the provision was introduced in the Act. Section 144C(10) of the Act provide that the directions of DRP are binding on the AO. By failing to pass any order in terms of the provision, the AO cannot be permitted to defeat the entire exercise and render the same futile. When a Statute prescribes the power to do a certain thing in a certain way, then the thing must be done in that way and o....
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..... Consequently, the ROI as filed has to be accepted. Petitioner is entitled to receive the refund together with interest, in accordance with law. The procedure to be completed within 30 days of this order being unloaded. This would, however, not preclude revenue, should the need arise, from reopening the assessment by following due process and in accordance with law." 16. Further the decision of Hon'ble Madras High Court in the case of M/s Taeyang Metal India Private Limited vs. DCIT in Writ Petition No.12159 of 2023 and W.M.P. No.11989 of 2023 vide order dated 23.02.2024 has held as under: "6. The interpretation of sub-section 13 of Section 144C takes centre stage in the adjudication of this dispute. The said sub-section is set out below: "(13) Upon receipt of the directions issued under subsection (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 [or section 153B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received." From the above provision,....
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....ed by limitation if computed from the end of June 2022. If so computed, the period of one month expired on 31.07.2022, whereas the assessment order came to be issued on 25.03.2023. Hence, the assessment order was issued beyond the time limit specified in sub-section (13) of Section 144C. By taking into account not only statutory prescription but also the interpretation thereof by the Division Bench of this Court in Roca and that of the Division Bench of the Delhi High Court in Louis Dreyfus, I conclude that the assessment order cannot be sustained. 9. In view of the conclusion that the assessment proceedings are barred by limitation, it is unnecessary to examine as to whether the assessing officer was duly authorized to exercise jurisdiction either under the WhatsApp message issued on 13.04.2022 or upon the physical file being signed on 21.04.2022." 17. Further the decision of the ITAT, Chennai Bench 'D" in the case of M/s Cognizant Technology Solutions India Private Limited (as successor-in-interest of M/s KBACE Technologies Private Limited) vs. ACIT in IT(TP)A 61/CHNY/2023 vide order dated 29.05.2024 has held has under: "10. We have heard rival submissions in....