TaxTMI 
TaxTMI 
2016 (5) TMI 1629
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.... and in law, the Ld. AO/ Ld. Transfer Pricing Officer (TPO)/ Ld. Dispute Resolution Panel (DRP) erred in making an addition of Rs. 85,64,000 to the income of the Appellant, by re-computing the arm's length price of the international transactions. 4. That on the facts and circumstance of the case and in law, the Ld. AO/Ld. TPO/Ld. DRP erred in benchmarking the international transactions pertaining to purchases from / sales to Associated Enterprise (AE) by ignoring the applicability of Internal Transactional Net Margin Method (TNMM). 5. Without prejudice to ground 4 above, on the facts and circumstance of the case and in law, the Ld. AO/Ld. TPO/Ld. DRP erred in benchmarking the international transactions pertaining to purchases from / sales to AE by: a. Erroneously considering the operating profit margin of the AE as well as the non-AE transactions as the tested party's margin (instead of considering the margins only from the AE segment); b. Rejecting, based on subjective grounds and presumptions, the comparability analysis conducted by the Appellant for determining the arm's length price, without specifically pointing out functional no....
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.... by the AO by stating that the same was barred by limitation as per the provisions of Section 144C(13) of the Act. 4. Facts of the case in brief are that the assessee filed the e-return of income on 17.11.2006 declaring an income of Rs.3,45,94,389/- under normal provisions of the Income Tax Act, 1961 (hereinafter refer to as the Act) and adjusted book profit amounting to Rs.21,45,06,103/- u/s 115JB of the Act. The said return was processed u/s 143(1) of the Act on 19.11.2007. Subsequently, the case was selected for scrutiny. The AO noticed that the assessee entered into foreign transactions totaling to Rs.5262.03 lacs, therefore, this case was referred to the Transfer Pricing Officer (TPO) for computation of arm's length price u/s 92CA of the Act. The TPO made an adjustment of Rs.139.34 lacs to the arm's length price vide order dated 19.10.2009. The AO passed the draft assessment order u/s 143(3) r.w.s. 144C of the Act on 26.11.2009. The assessee raised the objections before the Dispute Resolution Panel (DRP)-1, New Delhi who vide order dated 02.07.2010 communicated the direction to the AO who passed original assessment order u/s 143(3) r.w.s. 144C of the Act on 09.08.2010. 5....
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.... the sides had agreed to restore the issue to the file of the DRP for making a speaking order, we restore the issue to the file of DRP with a direction that the DRP may pass a fresh speaking order u/s 144C of the Income-tax Act after meeting out all the objections preferably within a year from the date of the service of the order after providing an opportunity of being heard to the assessee." 6. On the direction of the ITAT the DRP passed the order dated 17.01.2013 and directed the AO to complete the assessment in accordance with the directions given in the said order. Thereafter, the AO passed the impugned assessment order on 24.07.2013. 7. Now the assessee has challenged the validity of the assessment order passed by the AO. The ld. Counsel for the assessee submitted that as per the provisions contained in sub-Section 13 of Section 144C of the Act, the AO could have passed the order on or before 28.02.2013 because the order was to be passed within one month from the end of the month in which the direction had been given by the DRP. However, in this case the order was passed on 24.07.2013, therefore, it was barred by limitation. It was further submitted that the direction wa....
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.... the end of the month in which such direction has been received. In the aforesaid provisions, the use of the word "shall" makes it mandatory for the AO to comply with the directions of the ld. DRP and pass the assessment order within one month of the receipt of such directions. It is also noticed that this sub-Section (13) of Section 144C of the Act has an overriding effect on the provisions contained in Section 153 of the Act because the sentence starts with non-obstante clause and it has been provided in Section 144C(13) of the Act that "notwithstanding" anything to contrary, contained in Section 153 or Section 153B of the Act, the assessment shall be completed within one month from the end of the month in which directions given by the DRP are received by the AO. Therefore, the provisions contained in sub-Section (13) of Section 144C of the Act overrides the provisions contained in Section 153 or Section 153B of the Act. Furthermore, 4th proviso to Section 153(2A) of the Act reads as under: "Provided also that where the order under section 254 is received by the (Principal Chief Commissioner or) Chief Commissioner or (Principal Commissioner or) Commissioner or, as the ca....