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TMI Blog2022 (3) TMI 1510X X X X Extracts X X X X X X X X Extracts X X X X ..... t is prayed that the directions of Dispute Resolution Panel in so far as it relates to the above grounds may be reversed. 4. The appellant craves leaves to add, alter, amend and /or delete any of the grounds mentioned above." IT(TP)A No. 699/Bang/2016 (Assessee's appeal): Revised grounds of appeal: "The grounds mentioned herein by the Appellant are without prejudice to one another. 1. That on the facts and the circumstances of the case, the order the learned Deputy Commissioner of Income Tax, Circle 7(1)(1), Bangalore ("Assessing Officer" or "AO") pursuant to the direction of the learned Dispute Resolution Panel (learned Panel') under section 144C (5) of the Act to the extent prejudicial to the Appellant, is bad in law and liable to be quashed. [corresponding to Ground 1] 2. That the learned AO and the learned Panel erred in upholding the rejection of Transfer Pricing ('TP') documentation by the learned Additional Commissioner of Income tax, Transfer Pricing - Range 4(2) - Mumbai (learned TPO') and in upholding the adjustment to the transfer price of the Appellant in respect of manufacturing activity of the Appellant. [corresponding to Ground 2] 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant assets were put to use for the purpose of carrying the business. [corresponding to Ground 6 (a)] 12. Without prejudice to the ground no. 10 above, the learned AO erred in not granting deduction under section 57(iii) of the Act for the interest incurred and capitalised onto CWIP in respect of External Commercial Borrowing. [corresponding to Ground 6 (b)] 13. The learned AO erred in making an addition of INR 2,34,55,729 to the total income on account of unreconciled amount as per the income reflecting in Form 26AS and income considered in the books for the year under consideration. The learned AO also erred in not considering the additional evidence filed on September 10, 2015. [corresponding to Ground 7] 14. The learned AO erred in not granting credit to the Dividend Distribution Tax paid by the Company amounting to INR 2,76,16,230 and in charging interest under section 115P of the Act at INR ...... 39,60,390. [corresponding to Ground 8] 15. The learned AO erred in charging interest under section 234B and 234C of the Act. [corresponding to Ground 9] That the Appellant craves leave to add to and/or to alter, amend, rescind, modify the grounds herein below or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case and in law, the transfer pricing order being illegal and void on account of being barred by limitation in terms of section 92CA(3A) r.ws 1,53 of the Act, the action of the Assessing Officer in passing the draft assessment order dated 27 March 2015 by invoking section 144C of the Act is without jurisdiction and hence, the final assessment order dated 28 January 2016 and all proceedings consequent to the draft assessment order are also illegal and bad in law and liable to be quashed. Ground No. 18: On the facts and in the circumstances of the case and in law, the transfer pricing order being illegal and void on account of being barred by limitation in terms of section 92CA(3A) r.w.s 153 of the Act, consequently, the final assessment order dated 28 January 2016 is also barred by limitation as prescribed under section 153 of the Act, thus making the final assessment order illegal, bad in law, null and void and liable to be quashed. Ground No. 19: On the facts and in the circumstances of the case and in law, the Appellant prays for inclusion of the comparable - Photon Energy Systems Limited as the said company is functionally comparable to the manufacturing activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such illegality is capable of being cured and it is merely a case of irregularity in assessment proceedings by the Ld.TPO. 10. The Ld.CIT.DR thus submitted that assuming there is a delay in passing order u/s. 92CA(3), at best, it would be a curable defect. We have perused submissions advanced by both sides in the light of records placed before us. Firstly we look at the various provisions which are cited before us. 11. Section 92CA (3A) of the act 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" 12. Admittedly the reference to Ld.TPO was made after 27.08.2013. Therefore the provisions of this section are applicable to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of July, 2012, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years", the words "three years" had been substituted.] [Extracted from taxmann.com as amended by the Finance Act 2012] Therefore accordingly the order u/s 143(3) for AY 2011-12 should have been passed by 31.03.2015. 14. Based on the facts narrated above we hereby tabulate the relevant dates pertaining to the proceedings before the various authorities for the impugned AY. 1. Date of filing of return of income - 24.09.2011 2. 143(2) issued on - 01.08.2012 3. 143(1) issued on - 17.10.2014 4. Reference by the Ld.AO made on - 27.08.2013 5. Time period within which 143(3) is to be passed as per sec. 153(1) - 31.03.2015 6. Date by which order u/s. 92CA(3) was to be passed - on or before 28.01.2014 7. Date of passing the order u/s. 92CA(3) - 30.01.2015 15. Before us the Ld. Counsel relied on decision of Hon'ble Delhi Tribunal in case of Honda Trading Corporation Vs. DCIT (supra) wherein, it was held that the time limit specified u/s 92CA(3A) is mandatory and not directory and therefore the Ld.TPO is bound by the time limit for pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 limitation set out in section 153 indicates that the adherence to this time limit is not mandatory. He contended that even if the order is passed after the period of 60 days from the period of limitation as given u/s 153, still it would be treated as having been passed within time. This argument was countered by the ld. AR. 6.5. There is no doubt that the legislature has used the word `may in sub-section (3A) of section 92CA. There is further no doubt that the ambit of the word `may is different f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Honble High Court held that the word `may' used in section 16A(1)(b), should be read as `shall'. It held that if the legislative intent had been to accord total discretion to the WTO to make a reference to the Valuation Officer or not in cases which were covered by cls. (a) & (b) of sub-s. (1) of s. 16A of the WT Act, then there was no necessity of providing the guidelines in cl. (a) or in sub-cls. (i) and (ii) of cl. (b) of sub-s. (1) of s. 16A. It was, therefore, held that the legislature by prescribing the contingencies, in which, by implication, it would not be necessary to make a reference, also again by necessary implication be taken to have intended that the reference to Valuation Officer was must if the gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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, there appears some logic in not continuing with the time limit for the passing of the order by the TPO tagged with the time limit given in section 153. It has led to incoherence in the provisions. This position can be set right only with a suitable legislative amendment. 6.10. Having held that the time limit given in sub-section (3A) of section 92CA is mandatory for the passing of the order by the TPO, let us find out the time available with the TPO for the passing of his order. It has been noticed above that the time limit as per section 153(1) read with the third proviso and clause (viii) of the Explanation to the section, comes at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the final assessment order. 8. In view of our decision on the above legal ground, there remains no need to deal with the contentions raised before us on the merits of the addition on account of transfer pricing adjustment." 16. In the present facts, the Ld.CIT.DR has submitted that the order of the Ld.TPO is passed on 28.01.2015 but dated 30.01.2015. Then, the order of the Ld.TPO is not only irregular, wrong or illegal but is also null and void. Such action cannot be considered to be of any irregularity in the procedure, so as to get any kind of protection u/s. 292BB of the Act. 17. The Ld.AR has also placed before us a recent decision by Hon'ble Madras High Court in WP No. 32699/2019 dated 07.09.2020 in case of M/s. Pfizer Health care India Pvt. Ltd. vs. JCIT wherein the issues of computing 60 days period prior to the due date has been decided by the Hon'ble Court as under: "29. The provisions of Section 144C prescribe mandatory time limits both pre and post the stage of passing of a transfer pricing order. Assessments involving transfer pricing issues are different and distinct from regular assessments and the intention of Legislature is to fast track such assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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