TMI Blog2021 (2) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... that no order of assessment shall be made at any time after the expiry of 21 months from the end of the assessment year in which the income was first assessable. The submission of the revenue is to the effect that limitation expires only on 12 a m of 1-1-2020. However, this would mean that an order of assessment can be passed at 12 a m on 1-1-2020, whereas, in my view, such an order would be held to be barred by limitation as proceedings for assessment should be completed before 11.59.59 of 31-12-2019. The period of 21 months therefore, expires on 31-12-2019 that must stand excluded since Section 92CA(3A) states 'before 60 days prior to the date on which the period of limitation referred to Section 153 expires'. Excluding 31-12-2019, the period of 60 days would expire on 1-11-2019 and the transfer pricing orders thus ought to have been passed on 31-10-2019 or any date prior thereto. Incidentally, the Board, in the Central Action Plan also indicates the date by which the Transfer Pricing orders are to be passed as 31-10-2019. The impugned orders are thus, held to be barred by limitation. - Writ Petition Nos.32699, 33751, 34174, 34389, 34568 & 32703 of 2019 And Oths. - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (1) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires: Provided that in the circumstances referred to in clause (ii) or clause (x) of Explanation 1 to section 153, if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to have been extended accordingly. 5. Thus, on a combined reading of Sections 92CA(3A) and 153(1), impugned orders dated 1-11-2019 fall beyond limitation, as limitation under section 153 expired on 31-12-2019, the period of 60 days prior thereto would run till the 1st of November, 2019 and 'any date prior thereto' would mean the 31st of October or before. 6. They also argue that the word 'may' used in Section 92CA(3A) is to be read as 'shall'. For this p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletion of transfer pricing audits getting time barred on 31-10-2019' be completed by that date. 11. Reliance is placed by the petitioner on the following judgments of the Supreme Court/decisions of the High Courts. (i) State of Uttar Pradesh v. Jogendra Singh (AIR 1963 SC 1618) (ii) Superintendent and Remembrancer of Legal Affairs to Government of West Bengal v. Abani Maity (1979 4 SCC 85) (iii) Mohan Singh Ors. v. International Airport Authority of India Ors. (1997 9 SCC 132) (iv) R.Rudraiah Anr. v. State of Karnataka Ors. (1998 3 SCC 23) (v) D.K.Basu v. State of West Bengal and others (2015 8 SCC 744) (vi) Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others (1998 8 SCC) (vii) Sahara Hospitality Ltd. and Another v. Commissioner of Income-Tax and Others (352 ITR 38) (viii) Chamber of Tax Consultants v. Central Board of Direct Taxes, New Delhi ((2019) 104 taxmann.com 397) (ix) Sharbati Devi Jhalani v. CWT (159 ITR 549 (Del) (x) Surendra Kumar Jain v. Pr. CIT (408 ITR 328 (Del)) (xi) Moser Baer India Ltd. and others v. Additional Commissioner of Income-Tax and Another (2009 316 ITR 1 (Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of January 2020 and not 31st of December 2019. She points out that the interim orders passed by this Court permitted the Assessing Authority to continue with proceedings and pass orders of assessment, retaining the same in sealed covers. This has been done in all cases barring one, W.P.No.34568 of 2019, where the order of stay passed by this Court was not complied with and a final order of assessment come to be passed 14-1-2020. The prayer in this Writ Petition has been amended to challenge the final order of assessment in the light of the consent expressed by the learned Senior Standing Counsel for the Revenue. 16. Furthermore, the Writ Petitions are not maintainable as objections may well be filed as against draft orders of assessment before the Dispute Resolution Panel (DRP) and the provisions of Section 144C(8) are wide, entitling the DRP to confirm, reduce or enhance the variations made. 17. In reply, Mr.Vohra points out that the determination of ALP has ramifications on other aspects of taxability, such as the existence of a permanent establishment and the grant of tax credit. While, admittedly, proceedings for regular assessment and for transfer pricing do go on simult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completion of draft assessment that may be challenged before the DRP. Limitation, which is the issue raised in these writ petitions, is a mixed question of law and facts, but there are no disputes on factual aspects in the present case. The writ petitions are thus, held to be maintainable. 22. Limitation has been prescribed for each stage/process in an assessment, commencing with the filing of a return, transfer pricing proceedings under section 92, filing of objections to draft assessment order in terms of Section 144C(2), passing of final order of assessment after expiry of the period for filing of objections in terms of Section 144C(4), issuance of directions by the DRP in terms of Section 144C(12) and passing of final assessment order after receipt of directions from the DRP in terms of Section 144C(13). An assessment involving issues of transfer pricing is thus measured by limitation at every step. 23. On the question of interpretation of the language employed in the provisions, the following judgements of the Supreme Court settle the position that one should not proceed blindly on the basis of the words/phrases employed in Statute, whether 'may', 'shall' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of the expressions shall be liable to confiscation used in Section 3(2) and may in sub-section (1) of Section 64, which will preserve the efficacy of the provisions as an instrument for combating these anti-social activities, and reject the other which will render them ineffective. 21. Thus considered, it seems clear that the expressions shall be liable to confiscation and may in the aforesaid provisions were intended to have a compulsive force. 25. In Mohan Singh Ors. v. International Airport Authority of India Ors. (1997 9 SCC 132), the Bench, considering the identical question as before me now, states: 17. The distinction of mandatory compliance or directory effect of the language depends upon the language couched in the statute under consideration and its object, purpose and effect. The distinction reflected in the use of the word shall or may depends on conferment of power. In the present context, may does not always mean may. May is a must for enabling compliance of provision but there are cases in which, for various reasons, as soon as a person who is within the statute is entrusted with power, it becomes duty to exercise. Where the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r legislative action and the delegation. In Crawford on the Construction of Statutes at page 516, it is stated that: The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other .... 26. In R.Rudraiah Anr. v. State of Karnataka Ors. (1998 3 SCC 23), a Division Bench of the Supreme Court states: 13. The point is whether the language in Section 48-A of the Land Reforms Act. 1961 fixing a period of limitation is clear and unambiguous. If the period is 6 months from the date of commencement of section 1 of the KLR Amendment Act of 1978 (Act 1/1979), and if the date of commencement of that section is not in dispute and the six month period for filing application is to count from 1.1.79 and it expired on 30-6-1979, can it be said that the language of section 48-A is ambiguous and is to be liberally const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the strict grammatical meaning of the words is, their Lordships think, the only safe guide. 11. In more than one case, our Supreme Court has restated these principles. On these principles that govern, this court is bound to place a strict construction on the period of limitation stipulated by section 3 of the Act. Any hardship to be caused is totally irrelevant and must be ignored by the court. 28. The Supreme Court in D.K. Basu v. State of West Bengal and others (2015 8 SCC 744) was interpreting the provisions of Section 21 of the Protection of Human Rights Act, 1993 and in that context states thus: A plain reading of the above would show that Parliament has used the word may in sub-section (1) of Section 21 while providing for the setting up of a State Human Rights Commission. In contrast Parliament has used the word shall in Section 3(1) while providing for constitution of a National Commission. The argument on behalf of the defaulting States, therefore, was that the use of two different expressions which dealing with the subject of analogous nature is a clear indication that while a National Human Rights Commission is mandatory a State Commission is not. That argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quivalent to saying that the donee may do it; but if the object for which the power is conferred is for the purpose of enforcing a right, there may be a duty cast on the donee of the power, to exercise it for the benefit of those who have that right, when required on their behalf. 13. A long line of decisions of this Court starting with Sardar Govindrao v. State of M.P. have followed the above line of reasoning and authoritatively held that the use of the words may or shall by themselves does not necessarily suggest that one is directory and the other mandatory, but, the context in which the said expressions have been used as also the scheme and the purpose underlying the legislation will determine whether the legislative intent really was to simply confer the power or such conferment was accompanied by the duty to exercise the same. 14.In Official Liquidator v. Dharti Dhan (P) Ltd. this Court summed up the legal position thus: (SCC p. 171, paras 7-8) 7.In fact, is quite accurate to say that the word 'may' by itself, acquires the meaning of 'must' or 'shall' sometimes. This word, however, always signifies a conferment of power. That power may, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... content with reference to the decision of this Court in Bachahan Devi v. Nagar Nigam, Gorakhpur in which the position was succinctly summarised as under: (SCC pp. 383-84, paras 18-21) 18. It is well settled that the use of the word 'may' in a statutory provision would not by itself show that the provision is directory in nature. In some cases, the legislature may use the word 'may' as a matter of pure conventional courtesy and yet intend a mandatory force. In order, therefore, to interpret the legal import of the word 'may', the court has to consider various factors, namely, the object and the scheme of the Act, the context and the background against which the words have been used, the purpose and the advantages sought to be achieved by the use of this world, and the like. It is equally well settled that where the word 'may' involves a discretion coupled with an obligation or where it confers a positive benefit to a general class of subjects in a utility Act, or where the court advances a remedy and suppresses the mischief, or where giving the words directory significance would defeat the very object of the Act, the word 'may' should be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;may' and 'shall' is to discover the legislative intent; and the use of the words 'may' and 'shall' is not decisive of its discretion or mandates. The use of the words 'may' and 'shall' may help the courts in ascertaining the legislative intent without giving to either a controlling or a determinating effect. The courts have further to consider the subject-matter, the purpose of the provisions, the object intended to be secured by the statute which is of prime importance, as also the actual words employed. The above decision also dispels the impression that if Parliament has used the words may and shall at the places in the same provisions, it means that the intention was to make a distinction inasmuch as one was intended to be discretionary while the other mandatory. This is obvious from the following passage where this Court declared that even when the two words are used in the same provision the Court's power to discover the true intention of the legislature remains unaffected: (Bachahan Devi case, SCC p. 384, para 22) 22. '9. ... Obviously where the legislature uses two words may and shall in two different p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases, final orders of assessment have been passed on 28-2-2020 stating that the same shall be subject to the outcome of the writ petitions pending before the Madras High Court. Writ Petition No. Name of Assessese 34743/2019 M/s. Flextronics Technologies (India) Pvt. Ltd. 34817/2019 M/s. Mando Automotive India Pvt. Ltd. 34389/2019 M/s.BNY Mellon Technology Pvt. Ltd. 32699/2019 M/s. Pfizer Health Care India Pvt. Ltd. 32703/2019 M/s. Pfizer Health Care India Pvt. Ltd. 35300/2019 M/s. Perkins India Pvt. Ltd. 35520/2019 M/s. Allison Transmission India Pvt. Ltd. 34174/2019 M/s. Siemens Gamesa Renewable Power Pvt. Ltd. 35485/2019 M/s.BGR Boilers Pvt. Ltd.. 33751/2019 M/s.Saint Gobain India Pvt. Ltd., 32. In WP.35420 of 2019 filed by Verizon Data Services India ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
