2022 (6) TMI 1378 - AT - Income Tax

Assessment u/s 92CA(3A) r.w.s. 153 - time limit for passing the transfer pricing order - HELD THAT - Since the order passed by the TPO u/s 92CA of the I.T.Act is beyond the period of limitation and bad in law the addition in respect of international taxation (TP adjustments) stands quashed. Therefore grounds on merits on TP adjustments both in assessee s and revenue s appeals are not adjudicated. Foreign tax credit claimed - HELD THAT - We restore the matter to the A.O. for de novo consideration. A.O. is directed to compute foreign tax credit that is due to the assessee as per law after affording a reasonable opportunity of hearing to the assessee - Grounds allowed for statistical purposes. Computation of deduction u/s 10A - CIT(A) had directed the A.O. to reduce the impugned expenses from both the export turnover as well as from the total turnover while computing the deduction u/s 10A - HELD THAT - The directions of the CIT(A) is in accordance with the judgment of HCL Technologies Ltd. 2018 (5) TMI 357 - SUPREME COURT - Therefore we see no reason to interfere with the order of the CIT(A) on this issue. It is ordered accordingly.

Issues Involved:
1. Admissibility and adjudication of additional grounds raised by the assessee.
2. Validity of the transfer pricing order passed by the Transfer Pricing Officer (TPO) beyond the prescribed time limit.
3. Computation of foreign tax credit.
4. Computation of deduction under section 10A of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Admissibility and Adjudication of Additional Grounds Raised by the Assessee:

The assessee raised eleven grounds in the appeal and additional grounds 12 to 14. Ground 12 was admitted as it raised a purely legal issue that did not require new fact investigation. Grounds 13 and 14 were not adjudicated due to the absence of specific arguments. The Tribunal, referencing the Hon'ble Apex Court judgments in National Thermal Power Co. Ltd. v. CIT and Jute Corporation of India Ltd. v. CIT, admitted additional ground 12 for adjudication.

2. Validity of the Transfer Pricing Order Passed by the TPO Beyond the Prescribed Time Limit:

The main contention in additional ground 12 was that the transfer pricing order dated 30.01.2015 was beyond the time limit prescribed under section 92CA(3A) r.w.s. 153 of the Income Tax Act, making it illegal and void. The Tribunal noted that the TPO should have passed the order on or before 29.01.2015. Since the order was passed on 30.01.2015, it was barred by limitation. The Tribunal relied on the judgment of the Hon'ble Madras High Court in DCIT v. M/s. Pfizer Healthcare India Pvt. Ltd., which held that orders passed during the 60 days prior to the due date of assessment completion are time-barred. Consequently, the Tribunal quashed the transfer pricing order and the associated TP adjustments.

3. Computation of Foreign Tax Credit:

The assessee contended that the CIT(A) erred in the methodology for computing the foreign tax credit, allowing only a partial claim. The Tribunal restored the matter to the Assessing Officer (A.O.) for de novo consideration. The A.O. was directed to compute the foreign tax credit due to the assessee as per law, after providing a reasonable opportunity of hearing to the assessee. Grounds 10 and 11 were allowed for statistical purposes.

4. Computation of Deduction under Section 10A of the Income Tax Act:

The Revenue's appeal included a ground regarding the computation of deduction under section 10A. The CIT(A) had directed the A.O. to reduce the impugned expenses from both the export turnover and the total turnover while computing the deduction, in line with the judgment of the Hon'ble Apex Court in CIT v. HCL Technologies Ltd. The Tribunal upheld the CIT(A)'s directions, finding no reason to interfere with the order.

Conclusion:

(i) The appeal filed by the assessee was partly allowed.
(ii) The appeal filed by the Revenue was dismissed.

Order pronounced on the 16th day of June, 2022.

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