TaxTMI 
TaxTMI 
2026 (2) TMI 214
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....essee's contentions, then certain transactions would be rendered incapable of being evaluated for ALP. This certainly is not the case and the Income Tax Rules and OECD Guidelines provide for benchmarking or transactions even with hypothetical prices as held by the ITAT in the case of Gulf Energy Maritime Services P Ltd (supra). As discussed above, the other Method is adopted as the Most Appropriate Method and the ALP of the transactions relating to Corporate Support Service Fee in pursuance of the Agreement is treated as NIL by benchmarking it separately under Rule 10AB and a downward adjustment of Rs. 20,12,29,781/- is proposed on the said transaction. 12. It is hereby clarified that the findings and discussions made in this order are applicable only in respect of reference received for Assessment Year 2017- 2018 and not for any other Assessment Year.' 3. The case of the petitioner is that the reference to the 1st Respondent on 13.01.2022 was beyond the statutory period of limitation under Section 153(2) r/w 153(4) and Section 92CA(1) of the Income Tax Act, 1961. 4. The sum and substance of the challenge to the impugned Order dated 27.01.2022 passed under S....
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....enty one (21) months vide amendment in Finance Act, 2006 with effect from June 1, 2006 and the second proviso inserted by Finance Act, 2007, extending the time for completion of assessment, when a reference has been made to the Transfer Pricing Officer, during the course of assessment proceedings, have to be read in tandem and together. Our decision is also fortified by the fact that section 153 was repealed and substituted with effect from June 1, 2016, where under section 153(1) it is clearly mentioned that the period of assessment is twenty one (21) months and under section 153(4), it is clearly mentioned that in case of reference under section 92CA(1) during the course of assessment proceedings, the period of assessment would be extended by twelve months clarifying the mischief caused on account of the interpretation adopted by the officials. Therefore, when the extended time provided for the Department is twelve (12) months, the Department cannot contend that it is only nine (9) months as because the reference was not made in time. Similarly, we also disagree with the findings of the learned judge, who has embarked much on the circular regarding the necessity for more time for....
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.... allowed. There will be no order as to costs." 7. Learned counsel for the Petitioner submits that the case was earlier handled by the Transfer Pricing Officer (TPO), Hyderabad and thereafter transferred to the 1st Respondent Transfer Pricing Officer (TPO), Chennai. Learned counsel also drew attention to the Registers of Records to be maintained by the 1st Respondent Deputy Commissioner of Income Tax, Transfer Pricing Officer (TPO),Chennai for international transaction as per Annexure-I and Annexure-II to Instructions at Sl.Nos.2 and 3. It is further submitted that the Petitioner was called upon to produce the details. However, the Petitioner failed to produce the same. 8. Learned counsel for the Petitioner submitted that the difference between approval and reference has been brought out clearly in the following three instructions:- a. Instruction No.3 of 2003 dated 20.05.2003 b. Instruction No.15 of 2015 dated 16.10.2015 Instruction No.3 of 2016 dated 10.03.2016 d. In order to make a reference to the TPO, the Assessing Officer has to satisfy himself that the taxpayer has entered into an international transaction with an associated enterprise. One of the sources fr....
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....t of pending returns filed for the Assessment Year 2002-2003 should be completed by June 30, 2003. g. 3. Reference to Transfer Pricing Officer (TPO) b. 3.1. The power to determine the Arm's Length Price (ALP) in an international transaction is contained in subsection (3) of Section 92C of the Act. However, Section 92CA of the Act, inter alia, provides that where the Assessing Officer (AO) considers it necessary or expedient so to do, he may refer the computation of ALP in relation to an international transaction to the Transfer Pricing Officer (TPO). Subsection (3) of Section 92CA provides that the TPO, after taking into account the material available with him shall, by an order in writing, determine the ALP in accordance with Subsection (3) of Section 92 of the Act. Sub-section (4) of Section 92CA provides that on receipt of the order of the TPO, the AO shall proceed to compute the total income of the taxpayer in conformity with the ALP determined by the TPO. Thus, while the determination of ALP, wherever reference is made to him, is required to be done by the TPO under Sub-section (3) of Section 92CA read with Sub-section (3) of Section 92C, the computation of total income ....
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.... is submitted that an objection regarding limitation was raised by the Petitioner on 18.01.2022 and that the objection of the Petitioner was overruled by an Order dated 21.01.2022 passed by the 1st Respondent with the following observations:- "It is clear from the above that the period for completion of assessment or reassessment gets extended by twelve months, where a reference under Section 92CA(1) is made during the course of the proceeding of the assessment or reassessment. In your case the reference under Section 92CA(1) was made by the Faceless Assessment Unit and the same was approved by the concerned Commissioner of Income Tax through online ITBA portal on 10.02.2021 i.e., during the course of the proceedings for reassessment only. A copy of the screenshot of the reference details as per the ITBA portal is enclosed herewith for your reference. Further, as per the ITBA portal, the limitation date for completing the assessment in your case is 31.03.2022. As all the proceedings relating to assessments are being done through online portal only, the dates of references, notices, time limitations etc., cannot be tinkered with. As such, the reference is ....
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....2021. The approval given by the Principal Commissioner of Income Tax on 10.02.2021 thus completes the reference by the Assessing Officer to the Transfer Pricing Officer (TPO). 16. Learned Junior Standing Counsel further submitted that since the Notice under Section 148 of the Income Tax Act, 1961 was issued on 24.02.2020, the time limit available for completion of assessment was twelve months from the end of Financial Year in which Section 148 Notice was issued. Financial Year 2019-2020 ended on 31.03.2020. Twelve months from 31.03.2020 would be 31.03.2021. 17. It is submitted that the Petitioner has wrongly mentioned this as 31.12.2020. It is submitted that the time limit for completion of assessment proceedings was available till 31.03.2021 under normal times and as the reference to the Transfer Pricing Officer (TPO) was done on 10.02.2021 during the course of reassessment proceedings, as per provisions of Section 153(4) of the Income Tax Act, 1961 the time limit was available for another 12 months i.e., till 31.03.2022. 18. Learned counsel for the respondents would further submit that the order of the Division Bench in M/s. Virtusa Consulting Service Private Limited, al....
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....ation under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 is applied the time for completing the assessment would have stood extended. Therefore, the present writ petition is liable to be dismissed. 24. By way of re-joinder, the learned counsel for the petitioner on the other hand would submit that the reference can be made within a period during which the reassessment proceedings were pending. It is submitted that if no reference was made within a period of 12 months, no further reference can be made thereafter. It is submitted that approval of the Principal Commissioner or the Commissioner of Income Tax is not sufficient and would not tantamount to reference under Section 92CA(1) of the Income Tax Act. 25. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Junior Standing Counsel for the respondents. 26. In this case, the impugned Order under Section 92CA(3) has been passed on 27.01.2022, whereby the Other Method was adopted as the Most Appropriate Method and the Arm's Length Price (ALP) of the transactions relating to Corporate Support Service Fee pursuant to the Agreement was treated a....
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....o pass an Assessment Order would have been extended by twelve months. 33. As per Sub-Section 4 to Section 153, where a reference is made under Sub-Section (1) to Section 92CA during the course of the proceeding for an assessment or re-assessment, the period available for completion of assessment or re-assessment, as the case may be, gets extended by another 12 months. Thus, the last date for passing an Assessment order would have been extended to 31.03.2022. 34. Sub-section (4) to Section 153 of the Income Tax Act 1961, is reproduced below for the sake of clarity:- "(4) Notwithstanding anything contained in subsections (1), (2) and (3), where a reference under sub-section (1) of section 92CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections (1), (2) and (3) shall be extended by twelve months." 35. However, such extension of time to pass the assessment order would get extended by 12 months provided such a reference to the Transfer Pricing Officer (TPO) is made during the course of the proceeding for an assessment or re-ass....
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.... the receipt of the order from the Transfer Pricing Officer determining the arm's length price, the Assessing Officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer under section 144C(2). It goes without saying that if no objections are filed by the assessee to the draft order, the Assessing Officer has to pass the final assessment order based on the draft order within one month from the end of the month in which the period for filing the objection had expired as per section 144C(4). Sub-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 consisting of top and expert functionaries of the Department 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. As per sub-section (12), the Dispute Resolution Panel has no authority to issue any directions under subsection (5) from the e....
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....) of section 139, whichever is later: Provided that in case the assessment year in which the income was first assessable is the assessment year commencing on or after the 1st day of April, 2004 but before the 1st day of April, 2010, the provisions of clause (a) shall have effect as if for the words 'two years', the words 'twenty-one months' had been substituted: Provided further that in case the assessment year in which the income was first assessable is the assessment year commencing on or after the 1st day of April, 2005 but before the 1st day of April, 2009 and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA- (i) was made before the 1st day of June, 2007 but an order under sub-section (3) of that section has not been made before such date; or (ii) is made on or after the 1st day of June, 2007, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words 'two years', the words 'thirty-three months' had been substituted: Provided also that in case the assessment year in which the income was first asse....
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.... after the 1st day of April, 2010 and during the course of the proceeding for the assessment or reassessment or recomputation of total income, a reference under sub-section (1) of section 92CA is made, the provisions of this sub-section shall, notwithstanding anything contained in the second proviso, have effect as if for the words 'one year', the words 'two years' had been substituted. (2A) Notwithstanding anything contained in sub-sections (1), (1A), (1B) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner :" Section 153 a....
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....ection 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner: Provided that where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer, if satisfied, may allow an additional period of six months to give effect to the order. (6) Nothing contained in sub-sections (1) and (2) shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of sub-sections (3) and (5), be completed- (i) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under t....
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....d proviso to Section 153(2) of the Income Tax Act, 1961, where a notice under Section 148 is served on or after 01.04.2019, the period available for completion of assessment stands extended to twelve months i.e. till 31.03.2020. 45. As mentioned, in the present case, the notice under Section 148 was served on 24.02.2020. Therefore, the limitation for completing the assessment would have expired ordinarily on 31.03.2021, it being twelve months contemplated under the proviso to Section 153(2) of the Income Tax Act, 1961. 46. If the reference was made before the expiry of last date under Section 152(2) of the Income Tax Act, 1961 period for completing the Assessment gets extended by another 12 months in terms of Section 153(4) of the Income Tax Act,1961. 47. The screenshot available along with the typed set of papers also indicates that a proposal was made by the Assessing Officer / 2nd Respondent to PCIT/CIT for reference to Transfer Pricing Officer (TPO) on 08.02.2021 and approval was granted by the Commissioner of Income Tax (CIT) on 10.02.2021. 48. However, the reference was made by the Assessing Officer / 2nd Respondent to the DC/ACIT TPO -1 Hyderabad only on 11.01.20....