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TMI Blog2023 (8) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... 92CA(1) of the Act, without satisfying the conditions specified therein, A. Transfer Pricing Grounds 3. erred in upholding the learned TPO's contentions for making a transfer pricing adjustment of Rs. 11,91,65,955 under Section 92C(4) of the Act to the total income of the Appellant on the premise that the international transactions entered by the Appellant with its associated enterprises (AEs) were not at arm's length: Rejection of benchmarking analysis undertaken by the Appellant 4. erred in upholding the learned TPO's action of rejecting the benchmarking analysis undertaken by the Appellant for the provision of consultancy services, Rejection of the Comparable Uncontrolled Price (CUP) method as the most appropriate method 5. erred in accepting the learned TPO's contention of rejecting the CUP method applied by the Appellant as the most appropriate method, without giving cogent reasons, for benchmarking the international transactions with AEs of provision of consultancy services, Application of the Transactional Net Margin Method (TNMM) as the most appropriate method 6. erred in upholding the learned TPO's action of applying TNMM as the most ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal transaction pertaining to payment of regional allocated cost, value of the said transaction was inadvertently reported as an expense of Rs. 1,29,00,270 (Rs. 82.70,094 plus Rs. 46,30,174) instead of income of Rs. 36,39,920 Payment made towards reimbursement of expenses (paid) 14. erred in upholding the learned TPO's action of determining the arm's length price of the international transaction of reimbursements amounting to Rs. 41,98,151 to AEs to be Nil, disregarding the documentation submitted by the Appellant; Cost incurred to AFs towards various services is recovered with mark-up 15. erred in not appreciating the fact that the payment made by the Appellant towards services with respect to provision of consultancy services availed, reimbursements expenses and cost allocation is eventually recovered with a mark-up of 10%, in the form of a subsidy received from AEs as per the existing inter-co agreement; Effect of miscellaneous income of the subsequent sear in AY 2009-10 The Appellant craves leave to add this ground for the said assessment year which is arising out of the Hon'ble DRP directions for the subsequent year, Le AY 2010-11, which was served aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... data collection and other HR Consultancy services. During the year under consideration the assessee has reported the international transaction with its associate enterprise in form no. 3CEB, therefore, the A.O u/s 92CA(1) referred the international transaction entered by the assessee to the Transfer Pricing Officer after obtaining prior approval of the Commissioner of Income Tax -8, Mumbai vide order dated 24.01.2011. Thereafter the Transfer Pricing Officer has made an upward adjustment to the Arm's length Price by Rs. 11,91,65,955/- vide order passed u/s 92CA(3) dated 30.01.2013. Accordingly, the AO has added the arm's length adjustment of Rs. 11,91,65,955/- to the total income of the assessee vide order u/s 143(3) dated 26.04.2013 and also disallowed prior period expenses Rs. 74,52,345/- disallowance u/s 40A(ia) Rs. 1,50,000/-, mismatch of AIR Rs. 20,77,447/- and assessed total income at Rs. 7,14,73,190/- after allowing claim of brought forward business loss and unabsorbed depreciation. 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 4. During the course of appellate proceedings before us the ld. Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to date' the day on which limitation expires is required to be included while computing the period of 60 days and the period of 60 days is required to be seen including the last date on which the limitation expires. The ld. Counsel also submitted that the period of limitation for making of order for assessment as per Sec. 53 of the Act is two year and where a case is referred u/s 92CA of the Act to the TPO the period of limitation shall be 3 years from the end of the assessment year in which the income was first assessable. As per the computation shown by the ld. Counsel the order u/s 92CA(3) of the Act ought to be passed on or before 29.01.2013, however, the TPO has passed the same order on 30.01.2013. Therefore, the impugned order passed u/s 92CA(3) is time barred by 1 day. The ld. Counsel has also paced reliance on the following judicial pronouncements i.e Pfizer Healthcare India Pvt. Ltd. Vs. JCOIT, 433 ITR 028 (Mad); DCIT Vs. Saint Gobain India P. Ltd. 137 taxmann.com 215 (Mad) and also placed reliance the decision of ITAT Mumbai in the cases i.e (i) Strides Shasum Limited Vs. DCIT, Circle 15(3)(2) vide ITA No. 2877/Mum/2014 dated 28.02.2023 (ii) M/s Mondelez India Foods Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year and during the course of the proceeding for the assessment of total income, a reference under sub-section(1) of section 92CA is made, 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." As per provision of Sec. 92CA(3A) the TPO is required to pass an order u/s 92CA(3) of the Act at any time before 60 days prior to the date on which the period of limitation referred to in Sec. 153 for making the assessment order on assessment or reassessment or re-computation or fresh assessment as the case may be expires. The decision of single bench of Hon'ble High Court of Madras in the case of Pfizer Healthcare Ltd Vs. JCIT as supra is reproduced as under: "30. Now, coming to the question of how the 60 day period is to be computed, the critical question would be whether the period of 60 days would be computed including the 31st of December or excluding it. Section 153 states 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. The elementary principle of interpreting any word while considering a statute is to gather the mens or sententia legis of the legislature. Where the words are clear and there is no obscurity, and there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for the court to take upon itself the task of amending or alternating (sic altering) the statutory provisions. Wherever the language is clear the intention of the legislature is to be gathered from the language used. While doing so, what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results in rejection of words has to be avoided. As stated by the Privy Council in Crawford v. Spooner [(1846) 6 Moore PC 1 : 4 MIA 179] "we cannot aid the legislature's defective phrasing of an Act, we cannot add or mend and, by construction make up deficiencies which are left there". In case of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary for deciding the particular case. This princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... international transaction is noticed subject to satisfaction of section 92B, a reference is made to the TPO under sub-section (1) of section 92CA of the Act. The TPO after considering the documents submitted by the assessee is to pass an order under section 92CA (3) of the Act. As per section 92CA(3A), the order has to be passed before the expiry of 60 days prior to the date on which the period of limitation under section 153 expires. As per 92CA(4), the assessing officer has to pass an order in conformity with the order of the TPO. After receipt of the order from the TPO determining ALP, the assessing officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer. Sub-section (5) of section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. Sub-section (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "purpose and object" or the "reason and spirit" pervading through the statute. The process of construction, therefore, combines both literal and purposive approaches. In other words the legislative intention i.e. the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. This formulation later received the approval of the Supreme Court and was called the "cardinal principle of construction".' 38. In case of assessments involving transfer pricing, fixing of time limits at various stages sets forth that the object of the provisions is to facilitate faster assessment involving such determination. In the present case, as rightly held by the learned Judge in paragraphs 22 to 29 of the order dated 7-9-2020, the order of the TPO or the failure to pass an order before 60 days will have an impact in the order to be passed by the Assessing Officer, for which an outer time limit has been prescribed under sections 144C and 153 and is hence mandatory. What is also not to be forgotten, considering the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in terms of provisions of subsection (15) to Sec. 144C of the Act. 9. In this regard, we find that coordinate bench of the ITAT on the similar issue on identical facts in the cases i.e (i) Strides Shasum Limited Vs. DCIT, Circle 15(3)(2) vide ITA No. 2877/Mum/2014 dated 28.02.2023 (ii) M/s Mondelez India Foods Private Limited Vs. Ad. CIT, Range 5(1) vide ITA Nos. 1492, 1576 & 2340/Mum/2015 dated 14.11.2022 and (iii) M/s Tubacex Prakash India Pvt. Ltd. Vs. The ACIT/JCIT/DCIT/ACIT-national E-assessment Centre, Delhi and DCIT, circle 14(1)(2), dated 24.03.2023 and (iv) Tata AIA Life Insurance Company Limited Vs. The ACIT -2(3) dated 27.04.2023 held that the order of the TPO and draft assessment order are barred by limitation, therefore, resulting in assessee not being a eligible assessee u/s 144C(15)(b)(i) of the Act. Consequently, the final assessment was also bad in law. Therefore, since the issue on hand being squarely covered on similar fact and circumstances, therefore, we find merit in the submission of the assessee and allow the additional ground raised by the assessee. No argument were made by the ld. Counsel for the assessee in respect of the original ground of appeal, ..... 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