TaxTMI 
TaxTMI 
2026 (5) TMI 220
X X X X Extracts X X X X
X X X X Extracts X X X X
....fer pricing adjustment without appreciating the facts and legal position of the case. 2. Error in holding TPO's order as time-barred: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the Transfer Pricing Officer's order passed u/s. 92CA(3) of the Income Tax Act, 1961, was barred by limitation merely because it was digitally signed on 01.11.2019, even though the order was finalized and dated 31.10.2019, being within the prescribed time limit u/s 92CA/3A) read with section 153 of the Act. 3. Failure to appreciate procedural nature of digital signature: The Ld. CIT(A) failed to appreciate that the act of digitally signing the order is a procedural formality in compliance with the e assessment framework under the Income-tax Rules, and that such procedural delay cannot render an otherwise vahdly passed order as time-barred in view of section 2928 of the Act. 4. Incorrect reliance on judicial precedents: The Id. CIT(A) erred in relying upon the decision of the Hon'ble Madras High Court in the case of Pfizer Healthcare India Pvt. Ltd. and the ITAT, Mumbai decision in Zydus W....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an upward adjustment of Rs. 10,77,31,990/-. The assessment u/s 143(3) r.w.s. 144C (3) of the Act was completed by the AO vide order dated 11.02.2020, after making certain additions/disallowances. The adjustment made by the TPO was in respect of the international transaction of provision of the Research Support Services, provided by the assessee to its AEs. 5. Against the order of AO, the assessee preferred an appeal before CIT(A) and in the said appeal, inter alia other technical grounds and grounds on merit, the assessee also challenged the validity of the order of TPO u/s 92CA of the Act for being time barred and bad in law. In ground No. 2, as raised before CIT(A), it was argued on behalf of the assessee, in reference to Section 92CA(3A) of the Act, that the time limit for passing the TPO's Order u/s 92CA(3) of the Act would be at any time before sixty days prior to the date on which the period of limitation referred to in section 153 of the Act, and as applicable in the case, expires. It was argued that the in light of the above the limitation, date for passing the order u/s 92CA(3) of the Act, would be 31st October when the limitation date for order u/s 143(3) of the Act is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eved by the order of ld. CIT(A), the revenue has filed the present appeal challenging the said order and the assessee cross objections that CIT(A) erred in not deciding the ground numbers 3.1 to 3.5 (before CIT(A)) on merits. 7. We have heard the submissions of Ld. AR of the assessee and Ld. DR of the Revenue. At the outset, it was suggested by ld. AR that in light of the amendment in section 92CA of the Act, as suggested in the Finance Bill, 2026, the dispute in any case will have to go back to CIT(A) for adjudication on merits. The relevant part from Clause 4 of Chapter III of the Finance Bill, 2026 is reproduced below- "4. In section 92CA of the Income-tax Act, 1961 (hereafter in this Part referred to as the Income-tax Act), after sub-section (3A), the following subsection shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 2007, namely:-- "(3AA). Notwithstanding anything contained in any judgment, order or decree of any court, for the purposes of making order under sub-section (3), the calculation of sixty days shall be made and shall always be deemed to have been made in the following manner, namely:-- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and refund the balance amount of DDT (viz. Rs. 7,75,00,718) paid by the assessee. 10. Ld. AR of the assessee referred to the judgment of Hon'ble High Court of Bombay at Goa in case of M/s Colorcon Asia Pvt. Ltd. vs. Joint Commissioner of Income Tax & ORs. in Tax Appeal No. 5 of 2024 dated 28.11.2025, wherein it was held that the nature of income is the apropos element to invoke relevant Article of the DTAA applicable on the case, and not the person who is subjected to the tax. The relevant part from para 60 of the order of Hon'ble High Court is reproduced below- "60...... The BFAR erred in holding the respondent's submission by merely following the special bench's ruling stating that in order to invoke Article 11, the shareholder has to be taxed in India on the dividend earned from India. On a plain reading of the said Article, it is evident that the person on whom the tax on dividend is levied is an irrelevant and extraneous consideration for its application. There is nothing in the Article which suggests that the income has to be taxed in India in the hands of the shareholders. It merely deals with the nature of income, viz. dividend, which cannot be taxed in India a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....specified territory of incorporation or registration (in case of others); iii. Assessee's tax identification number in the country or specified territory of residence and in case there is no such number, then, a unique number on the basis of which the person is identified by the Government of the country or the specified territory of which the assessee claims to be a resident; iv. Period for which the residential status, as mentioned in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A, is applicable; and v. Address of the assessee in the country or specified territory outside India, during the period for which the certificate, as mentioned in (iv) above, is applicable. 12. It was argued that as per Section 90 of the Act r.w.r. 21AB of the Income- tax Rules, in order to decide eligibility of the non-resident shareholders who received the dividend, for relief under India-US DTAA, not only a Tax Residency Certificate must be there on record, the above facts also must be there on record, as mandated by law. It was prayed that since these facts are not there on record, the additional ground raised by the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovided as per section 90 of the Act and the same section, as read with relevant rules, mandates that certain facts be brought on record, through filing of a Tax Residency Certificate or Form 10F for an assessee to claim relief under applicable DTAA. Since form 10F has not been filed in the case; these facts, mandatory for claim of relief u/s 90 of the Act or to decide the claim of eligibility under the same section, are apparently not there on record. 15. In this regard, the reliance is placed on the decision of Hon'ble Bombay High Court in case of M/s Ultratech Cement Ltd. vs The Additional Commissioner of Income Tax in ITA No. 1060 of 2014. The facts before Hon'ble High Court in this case were that the assessee raised an additional ground claiming deduction u/s 80IA of the Act for the first time before Tribunal. It was argued by the assessee that such a deduction had been allowed in subsequent A.Y. when such claim was allowed for the first time, hence the facts needed to decide the ground were there on record. The observations of Hon'ble High Court from para 12 are reproduced below- "12] We note that it is an undisputed position before us that for the subject assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nefit u/s 80IA of the Act has been granted to the appellant assessee's jetty / port it must ipso facto follow that for the earlier years also the benefit must be granted on the mere say of the assessee that there is no change in the facts and circumstances of the case. Admittedly, for the subject assessment year, there is no claim made for the benefit of deduction u/s 80IA of the Act before the lower authorities and the evidence of an Auditor as required by law in Form 10CCB of the Rules for eligibility of deduction u/s 80IA of the Act is not on record. This would be the evidence which would be subject to enquiry/examination by the Assessing Officer and/or the C.I.T. (A) before allowing the deduction claimed. This is a factual enquiry to be done at the time of assessment before the claim can be allowed. Thus the view of the Tribunal that the new ground urged could not be allowed to be raised as the same is dependent upon leading of evidence and verification of the same by the Authority before the claim u/s 80IA of the Act can be allowed, cannot be faulted." 17. Hon'ble High Court clearly observed that when a new ground is dependent upon leading of evidence and verification o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are allowed to raise additional grounds before the Tribunal so long as they arise from the subject matter of the proceedings and not necessarily from the subject matter raised in the memo of appeal. In this respect a perusal of the order of Hon'ble High Court in case of Ahmedabad Electricity Company Ltd. (supra) revealed that the dispute therein was in respect of an additional ground that could not have been raised before lower authorities. The brief facts in case of Ahmedabad Electricity Company Ltd. (supra) were that in respect of the AY 1962-63, an expenditure incurred for construction of a shed and a temporary structure was claimed as a revenue expenditure. The same was disallowed in assessment proceedings for being a capital expenditure. The Tribunal disallowed assessee's appeal holding the asset to be a capital asset. In the subsequent year, the asset was destroyed by a cyclone and the assessee could not claim the deduction u/s 32(1)(iii) because the asset had been claimed as a revenue expenditure. Thus, the question of claiming a deduction u/s 32(1)(iii) arose as a result of the Tribunal's order in the assessee's case for the assessment year 1962-63. The assessee sou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rises for consideration in this case viz. relying upon the evidence on record for a subsequent assessment year to hold that the assessee is entitled to a benefit of deduction u/s 80IA of the Act for an earlier assessment year. A deduction under Chapter VIA of the Act under which Section 80IA of the Act falls would depend, as pointed out above, upon the satisfaction of the facts necessary for claiming a deduction. The allowing of a deduction in a subsequent year's assessment order cannot determine the facts as existing in the earlier assessment year, such as in this case so as to allow the deduction." 21. Thus, the observations of Hon'ble High Court in Ahmedabad Electricity Company Ltd. (supra) that an additional ground can be raised if it becomes available to the assessee due to changed circumstances, was in context of the overall powers of Tribunal to allow grounds that were not there for consideration of lower authorities. In no way did the said judgment deal with the requirement of the essential facts being there on record. The same has clearly been differentiated by Hon'ble High Court in case of Ultratech Cement (supra) in the para reproduced above. It has clearly been p....