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Income Tax Appellate Tribunal, MUMBAI BENCH “H”,MUMBAI
Before: SHRI AMIT SHUKLA & MS. PADMAVATHY S.
O R D E R Per Padmavathy S (AM): This appeal is against the final order of assessment passed by the National Faceless Assessment Centre (in short, the AO‟) under section 143(3) read with section 144C(13) of the Income-tax Act (in short, „the Act‟) dated 29/01/2022 for A.Y. 2017-18. Besides raising various grounds contending the issues on merits, 2 ITA 588/Mum/2022 Siemens Technology & Services Ltd the assessee raised additional grounds contending the legality of the order passed by the Transfer Pricing Officer (TPO). The additional grounds read as follows:-
Ground No. 17 On the facts and the circumstances of the case and in law, the final assessment order dated 29 January 2022 passed by the National Faceless Assessment Centre, Delhi ('the learned AO') under section 143(3) read with section 144C(13) read with section 144B of the Income-tax Act, 1961 ('the Act') is barred by limitation in terms of the timeline prescribed under the provisions of section 153(1) of the Act, and hence, the said assessment order is void-ab-initio, 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 order dated 30 January 2021 passed by the Joint Commissioner of Income-tax (Transfer Pricing) - 4(1) ('the learned TPO') under section 92CA(3) of the Act is beyond the time limit prescribed under section 92CA (3A) r.w.s. 153 of the Act, thus making the transfer pricing 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 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, the action of the Assessing Officer in passing the draft assessment order dated 30 March 2021 by invoking section 144C of the Act is without jurisdiction and hence, all the proceedings consequent to the draft assessment order are also illegal and bad in law and liable to be quashed. Ground No. 20 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 29 January 2022 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.
3 ITA 588/Mum/2022 Siemens Technology & Services Ltd 2. The Ld.AR further submitted that the additional grounds now raised does not warrant any verification of new facts and is purely legal and accordingly prayed for admission of the additional grounds. The ld DR vehemently opposed the admission of additional ground.
The additional grounds raised are pure legal issue, which does not require investigation of new facts. Hence, placing reliance on the judgment of the Hon‟ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), we admit the additional grounds.
The Ld.AR during the course of hearing submitted that if the additional grounds on the legality of the TPO's order is adjudicated in favour of the assessee, then the grounds raised on the merits would become academic and may not warrant any adjudication. Therefore we will first proceed to adjudicate the additional grounds contending the legality of the order passed by the TPO.
The Ld.AR in this regard submitted that the order of the TPO is passed beyond the time limit prescribed under section 92CA read with section 153 of the Act. The Ld.AR submitted the following chart with regarding to the various relevant dates:
S.No. Particulars Relevant date / period 1 Assessment year involved 2017-18 2 Period of limitation for making an order of assessment 31/12/2019 (i.e. 21 months as per section 153(1) of the Income-tax Act, 1961 (“the from the end of the Act” Assessment Year) 3 Extension of period of limitation in case reference is 12 months made u/ 92CA 4 Therefore, assessment proceedings should be 31-12-2020 completed on / or before 5 Extension of 3 months to pass the order as per the 31-03-2021 CBDT notification dated 24 June 2020 6 Date prior to the date on which period of limitation 30-03-2021 4 ITA 588/Mum/2022 Siemens Technology & Services Ltd expired (stated in Sr.No.5 above) 7 Sixty days period expired on [March = 30 days 30-01-2021 (excluding 31-03-2021) February = 28 days January = 2 days] 8 Transfer Pricing Order u/s 92CA(3) of the Act should 29-01-2031 have been passed on /or before 9 Transfer Pricing Order u/s 92CA(3) actually passed on 30/01/2021 10 Draft Assessment order passed on 31/12/2021 11 DRP directions passed on 31-12-2021 12 Final assessment order passed on 29-01-2022
In view of the chronology of the above events, the Ld.AR submitted that section 92CA(3) provides that the TPO order should be passed before 60 days prior to the date prescribed under section 153 of the Act, which in the given case is 30th January, 2021 and consequently, in terms of section 92CA of sub section 3(a) read with section 153(1), 60 days prior to 30th January, 2021 expires on 29/01/2021. The TPO in the given case has passed the order dated 30/01/2021 and, therefore, the order is passed beyond the time limit and hence, not valid. The Ld.AR in this regard relied on the decision of Pfizer Healthcare India Pvt Ltd vs JCIT (2021) 124 taxmann.com 536 and also the decision of the co-ordinate bench in the case of DSV Air & Sea Pvt Lt d vs ADIT (2023) 149 taxmann.com 153.
7. The Ld.DR in this regard made a detailed written submission the extract of which is given below:-
“2. In the captioned matter, which was kept for hearing today i.e. 17.10.2023, the appellant had raised an additional ground with respect order of TPO being barred by limitation. The appellant has relied on the decision of Hon'ble Madras High Court in case of Pfizer Healthcare India (P) Ltd Vs JCIT [433 ITR 28] Madras and Division Bench decision of Hon'ble Madras High Court in case of DCIT Vs Saint Gobain India (P) Ltd [444 ITR 636 (Madras)]. The additional ground raised by the appellant is not acceptable and should not be allowed. In this regard the undersigned has following submission.
5 ITA 588/Mum/2022 Siemens Technology & Services Ltd 3. It is submitted that the Interpretation by the Hon'ble Court regarding the time limit in Sec.92CA (3 A) is against the Provisions of the General Clauses Act and the settled principles of Interpretation of Laws. 4 It is submitted that the legislature uses different words such as "from", "to", "before", after", "prior”, "within", "not later than", " not thereafter", "not less than", "at least" for computation of days. The principle of excluding the date of starting day and the inclusion of ending day are provided in Sec. 12 of the limitation Act and in Sec, 9 of the General Clauses Act and a provision cannot be interpreted ignoring the same. 5 As per Sec. 9 of the General Clauses Act, in computation of the time limit, the day referred to as "from" has to be excluded and the day referred to as "to" has to be included. In the case on hand, the date of the order dated 30.01.2021 was taken as starting point of limitation and 60 days was computed from 30.01.2021 and rightly the same has to be excluded and the last day31.03.2021 has to be included and thus the order dated 30.01.2021 is rightly passed as per See.91CA(3A).
6. When the period is marked by terminus a quo and terminus ad quern, the canon of interpretation envisaged and Section 9 of the General Clauses Act, 1897 require to exclude the first day and to include the last day.
Thus the exclusion of both the date of order as well as the last day is against the express provisions of Sec. 92CA(3A) and the settled laws of interpretation and General Clauses Act with regard to the computation of time limit. Such an interpretation will cut down the actual period of limitation given by the legislature.
Sec.92CA(3A) expressly provides for counting the last day i.e. 31.03.2021 and therefore for counting the 60 days the last day has to be taken into account and thus the order passed by the TPO dated 30.01.2021 is well within the time.
When the word "to" is specifically incorporated in Sec.92CA(3A), any other interpretation excluding the last day would be against the plain language of the statute and the intent of the legislature.
The period of limitation computed by the assessee in the additional ground is not as per the letter and spirit contained in the Act. The Section 92CA(3A) states that "an order u/s.92CA(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 expires. The Section refers that an order may be made at any time before 60 days and these 60 days have to be prior to the date on which 'Sec. 153 limitation expires. It needs to be noted that the word used regarding limitation in Section 153 is expires that implies that the date on that particular time-ceases to exist, that is not alive and it has expired. The last day expires on 00.00 am. It is only after the expiry of this date that an order may not be passed. Therefore, while computing the 60 days period, the last day of March has to be counted for computing the time limitation. If the same is counted, then working reverse the period of 6 ITA 588/Mum/2022 Siemens Technology & Services Ltd limitation for passing of a TP Order expires on 30.01.2021 and since the order is passed on this date, therefore the order is not barred by time limitation.
Sec. 92CA(3A) uses the word may only and the same cannot be construed as shall and equated to limitation especially when further proceedings are contemplated under the Act such as passing draft assessment order, remedy before Dispute Resolution Panel and final assessment order.
There is no necessity or occasion to read the word "may" as "shall". Sub- sections 3A and 4 were introduced in Sec. 92CA by the very same Finance Act, 2007 and the Legislature has consciously used the word "may" in Sec. 92CA(3A) while using, the word "shall" in Sec.92CA(4). Hence, in view of the context and background of the provisions, the word "may* should not and cannot be read as "shall, 13. It is pertinent to mention that SLP has been filed and it is admitted vide SLP (Civil) Diary No(s)-29289/2022" in the case of M/s Pfizer Healthcare Industries Pvt. Ltd, against the decision of Hon'ble Madras High Court. Hence, the issue has not reached finality. Therefore, it is requested not to admit the additional grounds of appeal
14. In view of the above discussion, it is humbly prayed that the additional ground may be rejected and case be heard on merit.”
8. We heard the parties and perused the material on record. We notice that the co-ordinate bench in the case of DSV Air & Sea Pvt Ltd (supra) has considered a similar issue and held that – “12. In order to determine if the order dated 31-1-2021 passed by Ld. TPO is barred by limitation as contended by Ld. A.R. for the taxpayer we would advert to the provisions contained under section 92CA(3) read with section 153 of the Act.
13. Undisputedly, sub-section (3A) to section 92CA has been inserted w.e.f. 1-6- 2007 provide time limit for the Transfer Pricing Officer to pass the order i.e. within a period of 60 days prior the date of completion of assessment as per section 153. So, u/s 92CA(3A) read with section 1 TPO was required to pass the order within the period of 60 days prior to the date on which 1 period of limitation referred to in section 153 expires i.e. 21 months.
14. In the instant case undisputedly assessment order in this case was passed on 26-2-2022 an the Ld. TPO was required to pass the order within 60 days prior to the date on which period of limitation as prescribed under section 153 of the Act expires.
7 ITA 588/Mum/2022 Siemens Technology & Services Ltd 15. Now, the question arises as to howthe period of 60 days prior to the date of TP order i.e. 3' 3-2013 is to be computed.
Hon'ble Madras High Court in case of Pfizer Healthcare India (P.) Ltd. (supra) while dealing with the issue held that for computing the period of 60 days, the last date as per section 153 should be excluded. Operative part of the judgment is extracted for ready perusal as under :- "30. Now, coming to the question of how the 60 day period is to be computed, the critics question would be whether the period of 60 days would be computed including the 31st c December or excluding it. Section 153 states that no order of assessment shall be made a any time after the expiry of 21 months from the end of the assessment year in which this 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 o 31-12-2019. The period of 21 months therefore, expires on 31-12-2019 that must stands 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."
In the case at hand Ld. A.R. for the taxpayer computed the limitation period under section 92CA(3A) for the year under consideration in tabulated form as under: Financial Year 2016-17 Assessment Year 2017-18 End of Assessment Year 31-03-2018 Due date for completion of assessment under 31.12.2019 section 153(1) i.e. 21 months from the end of A.Y. Extension of 12 months in case of transfer pricing 31-12-2020 as per Section 153(4) of the Act Extension of 3 months to pass the order under - section 92CA(3A) i.e. 60 days prior to the date prescribed under section 153 8 ITA 588/Mum/2022 Siemens Technology & Services Ltd Date on which limitation expires under section 153 1 day i.e. 31-03-2021 Less:Remaining days of March 30 days Less:Remaining days of February 28 days Less:Remaining days of January 2 days Due date for passing the TPO order under section 92CA(3) i.e. 51 from 29-01-2021 31 March 2021 Date of passing the TP order under section 31-01-2021 92CA(3)
**** 19. Computation period of 60 days given by the taxpayer extracted in the preceding para 14 cannot be faulted with on any ground because from 26-2- 2022, the date of passing order of the AO, 60 days was to be computed by excluding the date of order i.e. 31-1-2021. so while excluding the date of passing assessment order i.e. 26-2-2022, the order was required to be passed by the Ld.TPO BY 29-1-2021 whereas the impugned order has been passed on 31-1- 2021 which is barred by limitation.” 9. In the given case, from the chronology of events as tabulated above, it is clear that the 60 days period as per the provisions of section 153(1) read with section 92C(3) expires on 30/03/2021 and therefore, the transfer pricing order should have been passed one day prior i.e.by 29/01/2021. In assessee's case it is further noticed that the TPO has actually passed the order on 30/01/2021. Therefore, in the light of the decision of the Hon‟ble Madras High Court and various order orders passed by the co-ordinate bench of the Tribunal relying on the decision in the case of Pfizer Healthcare India Pvt Ltd (supra), we are of the considered view that the impugned order passed by the TPO is barred by limitation and, therefore, liable to be quashed. 10. In the light of the decision, the TP adjustment contended by the assessee on merits has become infructuous and does not warrant any adjudication.