AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1378
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.... Appellant. 2. The learned CIT (A)/AO/TPO erred in law and on the facts and circumstances of the case in making adjustment of INR 4,50,23,650/- to the total income of the appellant on account of adjustment in relation to Advertising, Marketing & Promotion Expenses (AMP) which is contrary to catena of decisions of Hon'ble High courts/Tribunal and is bad in law (herein after referred to as the "impugned transactions"). 3. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in holding that the AMP expenditure incurred by the Appellant in India, being payments made to third parties, can be characterized as an international transaction' as per the provisions of the Act. 4. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case to the extent it confirms adjustment under Transfer Pricing Regulations with reference to imaginary and non-existent international transactions of AMP, is bad in law as it is not in accordance with provisions of law. 5. On the facts and in circumstances of the case and in law, even if the word transaction is given its widest connotation, the learned CIT(A)/....
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....arned CIT(A) erred in law and on the facts and circumstances of the case in upholding TPO's action, issued much beyond legitimate jurisdiction, in questioning the reasonableness. quantum, and commercial expediency of AMP expenditure incurred by the Appellant. 14. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in alleging that the AMP expenses incurred by the Appellant in India, were not wholly and exclusively for purposes of its business and resulted in creation of marketing intangibles for the AEs. 15. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in not appreciating that the benefit arising from the incurrence of AMP expenses by the Appellant has been received by the Appellant and benefit, if any, resulting to the AEs is merely incidental. 16. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in not appreciating that the AMP expenses incurred by the Appellant are wholly and exclusively focused on generating domestic sales for its business operations. 17. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances ....
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....ion Value of Transaction (in INR) Most Appropriate Method 1. Import of car audio 278,770,471 TNMM 2. Purchases of fixed Assets 229,879 3. Reimbursement of pre-incorporation expenses 15,960,055 Benchmarking not required 4. Reimbursement of expenses paid 15,411,279 Benchmarking not required 5. Reimbursement of expenses received 28,547 Benchmarking not required 3.1 The assessee selected Transactional Net Margin Method ('TNMM') as the Most Appropriate Method ('MAM') and the ratio of net operating margin computed by taking Operating Profit as a percentage of Operating Cost (OP/OC) as the Profit Level Indicator ('PLI'). The Ld. Assessing Officer ('AO') referred the appellant assessee's case to the Ld. Transfer Pricing Officer ('TPO') for determining the Arm's Length Price ('ALP'), who proposed adjustment of INR 56,200,462 vide order dated 30th January, 2013 passed under section 92CA(3) of the Act. Consequentially, the assessment was completed at loss of INR 3,314,033 vide order dated 21st May 2013 passed under section 144C of the Income Tax Act, 1961 ('Act'). Aggrieved, the appellant assessee filed appeal before ....
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.... to the additional grounds at this stage, without prejudice to the original grounds/other additional grounds of appeal. If the additional grounds challenging the validity of assessment order and the order of the Ld. TPO were decided favourably, the original grounds/other additional grounds would become academic and, specific adjudication of the original grounds/other additional grounds might not be required. 8. The Ld. Counsel submitted that the order passed by the Ld. TPO dated 30th January, 2013 was barred by limitation by one day. Narrating the sequence of dates, he pointed that the Ld. TPO passed the order under section 92CA(3) of the Act on 30th January, 2013. Further, it was submitted that the draft assessment order was passed on 25th March, 2013 and the final assessment order on 25th May, 2013. The Ld. Counsel submitted that the Ld. TPO had to pass the order in accordance with the provisions of section 92CA(3A) of the Act, where reference had been made to him, at any time before sixty days prior to the date on which the period of limitation referred to in section 153 of the Act for making the draft assessment order was going to expire. The Ld. Counsel contended that the d....
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....) of the Act in the case of assessee. Therefore, the assessment framed on such time barred order of the Ld. TPO was unsustainable. 12. Per contra, Shri Bhopal Singh, Ld. Dr. DR representing the Revenue vehemently submitted that the order passed by the Ld. TPO was a valid order passed within the period of limitation. The Ld. DR submitted that the CBDT vide Circular No.3/2008 dated 12.03.2008. He drew our attention to the Explanatory Notes on the provisions of the Finance Act, 2007 extending the time limit specified in section 153 of the Act by 12 months, where reference made to the TPO. Further, it had also been provided therein that the TPO should determine the ALP at least two months before the expiry of statutory time limit for making the assessment. In this appeal, due date for completion of the draft assessment under third proviso of section 153(1) of the Act was 31st March, 2013 and the time limit for passing an order under section 92CA(3) of the Act was two months prior to the date of limitation. The Ld. TPO passed the order on 30th January, 2013 which was two months prior to 31st March, 2013; therefore, the order passed by the Ld. TPO was within the period of limitation. ....
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....ears from the end of the assessment year in which the income was first assessable, or (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 sub-section (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 first proviso, have effect as if for the words "two years" the words "three years" had been substituted" 15. A conjoint reading of the relevant provisions of sections 92CA(3A) and 153(1) of the Act show that the Ld. TPO is required to pass order under section 92CA(3A) of the Act at any time before sixty days prior to the date on which the period of limitation referre....
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....ure's defective phrasing of an Act, we cannot add or mend and, by construction make up deficiencies which are left there". In case of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary for deciding the particular case. This principle is too well settled and reference to a few decisions of this Court would suffice. (See : Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests [1990 Supp SCC 785 : AIR 1990 SC 1747], Union of India v. Deoki Nandan Aggarwal [1992 Supp (1) SCC 323 : 1992 SCC (L&S) 248 : (1992) 19 ATC 219 : AIR 1992 SC 96], Institute of Chartered Accountants of India v. Price Waterhouse [(1997) 6 SCC 312] and Harbhajan Singh v. Press Council of India [(2002) 3 SCC 722 : JT (2002) 3 SC 21].)" 29. The language employed is simple. 31-12-2019 is the last date for the assessing officer to pass his order under section 153. The TPO has to pass order before 60 days prior to the last date. The 60 days is to be calculated excluding the last date because of the use of the words "prior to" and the TPO has to pass order before the 60th day. In the present case,....
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....b-section (5) of section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. Subsection (13) of section 144C of the Act provides that upon receipt of directions issued under sub-section (5) of section 144C of the Act, the Assessing Officer shall in conformity with the directions complete the assessment proceedings. It goes without saying that if no objections are filed by the Assessee either before the DRP or the assessing officer to the determination by the TPO, section 92CA(4) would come into operation. Therefore, it is very clear that once a reference is made, it would have an impact on the assessment unless a decision on merits is taken by DRP rejecting or varying the determination by the TPO. 33. It would only be apropos to note that as per proviso to section 92CA(3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining period shall be extended to 60 days. This implies that not only is the time frame manda....
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....y the learned Judge in paragraphs 22 to 29 of the order dated 7-9-2020, the order of the TPO or the failure to pass an order before 60 days will have an impact in the order to be passed by the Assessing Officer, for which an outer time limit has been prescribed under sections 144C and 153 and is hence mandatory. What is also not to be forgotten, considering the scheme of the Act, the inter-relatability and interdependency of the provisions to conclude the assessment, is the consequence or the effect that follows, if an order is not passed in time. When an order is passed in time, the procedures under 144C and 92CA(4) are to be followed. When the determination is not in time, it cannot be relied upon by the assessing officer while concluding the assessment proceedings. 39. Upon consideration of the judgments and the scheme of the Act, we are of the opinion that the word "may" used therein has to be construed as "shall" and the time period fixed therein has to be scrupulously followed. The word "may" is used there to imply that an order can be passed any day before 60 days and it is not that the order must be made on the day before the 60th day. The impact of the proviso to ....