TMI Blog2021 (3) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... lthcare India Pvt. Ltd. and Honda Trading Corporation [ 2015 (9) TMI 846 - ITAT DELHI] respectively and mandate of section 92CA (3) read with section 153 of the Act, impugned order passed by the ld. TPO is barred by limitation which was required to be passed by 29.01.2013 and as such is hereby quashed. Consequent additions made on account of transfer pricing adjustment by way of determining the ALP transaction by the TPO are also not sustainable in the eyes of law, the order of the TPO being barred by limitation. Since vide assessment order dated 24.02.2014 AO has made addition on account of determination of ALP of international transaction, such addition stands deleted being order of ld. TPO barred by limitation, but the assessment order u/s 143 (3) passed by AO is in time, it stands except those additions proposed by ld. TPO. Thus, additions made by AO, based on order of ld. TPO, stand deleted without entering into grounds raised on merits by the taxpayer. - ITA No. 2381/Del./2014 - - - Dated:- 11-3-2021 - SHRI KULDIP SINGH , JUDICIAL MEMBER And SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER ASSESSEE BY : SHRI RAVI SHARMA , ADVOCATE SHRI ANUBHAV RASTOGI , ADVOCATE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performed, assets employed and risks assumed by the Appellant in this regard; 2.4. arriving at the incorrect conclusion that the credit risk in respect of the subject transaction was borne by the Appellant, and failing to appreciate the fact that the Appellant had received the entire outstanding amount (including interest) from the AE in relation to the subject transaction. Transfer Pricing Objections - Interest accrued on deferred payments 2.5. completely disregarding the detailed and proper comparability analysis submitted by the Appellant to benchmark the subject international transaction and upholding the Ld. TPO's action in using the lending rates to benchmark the same based on the risks assumed by the Appellant; 2.6. without prejudice to the above contentions of the Appellant, determining credit rating in relation to the subject international transaction on the basis of incorrect assumption of the facility provided by the Appellant being 'unsecured' in nature. Transfer Pricing Objections - Business Support Services Segment 2.7. rejecting, without any cogent reason, the quantitative and qualitative screens/ filters applied and se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons with its AEs as under :- S. No. Nature of International Transactions Value of transaction (Rs.) 1 Import of agricultural commodities 20,75,47,963 2 Export of Agri-Commodities 182,32,67,992 3 Washout Income 23,11,27,360 4 Provision of Market Research and Research for Freight and Metal 2,98,66,151 5 Provisional of Back-Office Support Services 5,52,68,298 6 Distribution of Crude Palm Oil 109,46,30,547 6.1 Receipt of Commission Income 1,088,975 6.2 Purchase of Crude Palm Oil for Distribution 542,094,743 6.3 Distribution of Crude Palm Oil 551,446,829 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty market, facilitation charges are to the tune of US$ 1 per MT which was less than the commission charged from the AE and thus found this transaction at arm s length. However, ld. TPO after analyzing all functions, risk and assets utilized proceeded to conclude that the transaction for purchase of crude palm oil from AEs and sale to the entity was a pure trading activity but camouflaged as distribution services and thereby benchmarked with the purchase price prevailing on the date of import in the open market and thereby made an adjustment of ₹ 19,43,65,246/-. Accordingly, ld. TPO proposed the TP adjustment as under :- Total Loss as per return of income filed (14,91,03,171) Add : (as discussed above (i) Addition on account of Transfer Pricing adjustment 21,14,43,344 (ii) Addition on account of AIR information 15,55,197 21,29,98,541 Total Income 6,38,95,370 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rits of this case. 12. Since taxpayer has raised jurisdictional issue which goes to the roots of the case, we would decide the additional ground no.5 first before going into the grounds raised on merits. 13. Ld. AR for the taxpayer challenging the impugned order passed by the AO/DRP/TPO contended inter alia that the order passed by the ld. TPO dated 31.01.2013 was barred by limitation and as such, consequent assessment order is also not sustainable; that the last date to pass the transfer pricing order by the ld. TPO was 29.01.2013 and not 30.01.2013 as contended by the Revenue; that the order passed by the ld. TPO is barred by limitation as the period of 60 days is to be computed in accordance with the provisions contained u/s 153 of the Act by excluding the last date and relied upon the decision rendered by the Hon ble Madras High Court in case of M/s. Pfizer Healthcare India Pvt. Ltd. vs. JCIT WP No.32699/2019 judgment dated 07.09.2020. 14. However, on the other hand, ld. DR for the Revenue to repel the arguments addressed by the ld. AR for the taxpayer contended inter alia that the TPO has passed order in this case well within time i.e. on 30.01.2013 but due to clerica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 01.11.2019 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. 20. In the instant case, ld. AR for the taxpayer contended that the period of 60 days is to be computed as per table given below :- Date of assessment order 31.03.2013 No. of Days in March 30 No. of Days in February 28 No. of Days in January 2 Total 60 days 21. Identical issue has also been dealt with by the coordinate Bench of the Tribunal in case of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order by the TPO, reads as under : - `(3A) Where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under subsection (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under subsection (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.'. 6.3. It transpires from a reading of the above provision that where a reference is made to the TPO after 1.6.2007, an order under sub-section (3) may be made at any time before 60 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 re-assessment, etc., expires. 6.4. The ld. DR vehemently contended that the use of the word `may' in this provision for the passing of the order by the TPO within a period of 60 days of the limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the case may be, the rules in Schedule III, the market value of any asset is to be taken into account in such assessment, the Assessing Officer may refer the valuation of any asset to a Valuation Officer- (a) in a case where the value of the asset as returned is in accordance with the estimate made by a registered valuer if the Assessing Officer is of opinion that the value so returned is less than its fair market value; (b) in any other case, if the Assessing Officer is of opinion- (i) that the fair market value or the asset exceeds the value of the asset as returned by more than such percentage of the value of the asset as returned or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do'. In Raj Paul Oswal vs. CWT (1988) 171 ITR 489 (P H), there arose a quarrel as to the meaning of the word `may' used in section 16A in the context of making reference to the Valuation Officer. Settling the controversy, the Hon'ble High Court held that the word `may' used in section 16A(1)(b), should be read as `shall'. It held that if the legislative in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;, thereby making this time limit as mandatory and not directory. As such, it is held that the TPO is bound by the given time limit for passing of his order. 6.9. Having held that the word `may' in section 92CA(3A) should be read as `shall', we once again note that prior to the insertion of section 144C by the Finance Act, 2009, the time limit for completion of assessment was contained in section 153 and accordingly the time limit for the passing of the order by the TPO was also set out accordingly in section 92CA w.r.t. the time limit for the completion of assessment as per section 153. However, with the insertion of section 144C, the time limit for the completion of assessment, or in other words, for passing of the final assessment order, stood shifted to sub-sections (4) or (13) of section 144C and got detached from section 153. Along with this, passing of draft order also became mandatory, for which we have held above that the same is required to be passed within a reasonable time and it has got no relation with the time limit given in section 153. When the position is such that the draft order has to be passed independent of the time limit given in section 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly timed draft order cannot lead to the setting aside of the final assessment order. However the passing of the time barred order by the TPO, which is again a mandatory procedure prescribed under the Act, would be a non-curable defect, having the consequence as if it was not passed. In such circumstances, though the final assessment order would be saved but the addition on account of transfer pricing adjustment arising from the determination of the ALP of the international transactions by the TPO as emanating from his time barred order, would be unsustainable. We hold accordingly and direct the deletion of addition on account of transfer pricing adjustment made in the final assessment order. 22. Ld. DR for the Revenue, on the other hand, contended that the ld. TPO has passed order in this case well within time but due to inadvertence date of order is written as 31.01.2013 instead of 30.01.2013 and relied upon copy of dispatch register, wherein file of the instant case is reported to be sent to DIT for approval vide dispatch no.897 on 30.01.2013. 23. We are unable to agree with the contention raised by the ld. DR for the Revenue for two reasons :- (i) that any order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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