KKR INDIA ADVISORS PVT. LTD.,MUMBAI vs. PR. CIT - CIRCLE -6, MUMBAI

A.Y. 2013- 14 against the revision order passed under Section 263 of the Income-tax Act, 1961 (the Act) on 29th March, 2019, by the Pr. Commissioner of Income Tax-6, Mumbai (learned PCIT), holding that the assessment order passed under Section 143(3) dated 13th December, 2016 is erroneous and prejudicial to the interest of the Revenue and therefore, the assessment order is

Briefly stated facts shows that assessee field its return of income on 29th November, 2013, declaring total income of ₹10,24,36,022/-, the return was picked up for scrutiny for verification of large outward remittances and loss from currency fluctuations.

The learned Assessing Officer made reference to the learned Transfer Pricing Officer u/s 92CA which culminated into the transfer pricing order under Section 92CA(3) of the Income-tax Act, 1961 (the Act) on 31st October, 2016 without any adjustment. Therefore, the assessment order under Section 143(3) of the Act dated 13 December 2016 was also passed without any T P Adjustments on ALP of International Transactions.

The learned PCIT on examination of the record found that assessee was involved in charging lower advisory fees from the related parties. Further, the employees of the assessee were involved in operational activities of other group entities. The assessee claimed employee benefit reimbursement expenditure of ₹8.07 crores to parent company, however, the learned Transfer Pricing Officer did not make any adjustment and therefore, the learned Transfer Pricing Officer order dated 31 October 2016 not making any adjustment was erroneous and prejudicial to the interest of the Revenue. The learned PCIT

After considering the explanation of the assessee, the learned PCIT held that the learned Transfer Pricing Officer order is erroneous to the extent of verification of information on employee benefit expenditure claimed by the assessee. Accordingly, he set aside the assessment order along with Transfer Pricing Officer’s order directing Ld Transfer Pricing Officer to verify the veracity of claim of employee benefit expenditure and pass an order afresh. He further held that adjustment with respect to the lower amount of management fees, be examined afresh, which has resulted into revenue loss. As the assessment order did not contain any T P adjustment because of the no adjustment made by LD TPO, he held that assessment order is also erroneous so far as prejudicial to the interest of revenue. Accordingly, he passed an order under Section 263 of the Act on 29 March 2019, setting aside the assessment order along with Transfer Pricing Officer’s order with above direction.

Assessee aggrieved with the above order is in appeal before us.

At the time of hearing, assessee submitted a letter dated 6 September 2023, stating that as per Section 153 of the Act, the time limit to pass the final assessment order pursuant to direction issued under Section 263 of the Act expired on 31 December 2020. Further, as per the decision of the Hon'ble Supreme Court in Writ Petition no.3 of 2020, the period from 15 March 2020 till 20 February 2022, shall be excluded for the purpose of limitation. Therefore, the limitation period of 90

The assessee also submitted that pursuant to the order under Section 263 of the Act, the learned Assessing Officer on 26 June 2019 referred the international transaction to the learned Transfer Pricing Officer with direction of the learned PCIT. Consequent to that, the learned Transfer Pricing Officer passed an order under Section 92CA (3) read with section 263 of the Act on 24 January 2020, making an adjustment of ₹11.63 crores. However, no final assessment order under Section 143(3) read with section 153 of the Act incorporating the above adjustment made by the LD TPO has been passed.

The learned CIT Departmental Representative was asked to intimate that whether any assessment order under Section 143(3) read with section 263 of the Act pursuant to the order of learned Transfer Pricing Officer under Section 92CA(3) of the Act dated 24th January, 2020, has been passed or not. The learned CIT Departmental Representative submitted that his office has had two communications to the learned Assessing Officer to show whether any assessment order has been passed or not. He submitted that no reply has been received.

We have carefully considered the rival contentions and perused the orders of the learned PCIT, the learned Transfer Pricing

However, if it is found later that the learned Assessing Officer has passed an assessment order pursuant to the order under Section 263 of the Act within the time limit allowed, the

In the result, the appeal of the assessee is allowed.