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Income Tax Appellate Tribunal, “K” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM
IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS KAVITHA RAJAGOPAL, JM (Assessment Year 2016-17) (Assessment Year 2011-12) CO No. 33/MUM/2017 Arising Out of ITA No. 3015/MUM/2016 (Assessment Year 2011-12) Johnson & Johnson Private Ltd 501, Arena Space, Behind DCIT/ACIT/JT/ITO/NFAC Majas Bus Depot, Off. J.V. Delhi Vs. Link Road, Jogeshwari (East), Mumbai-400 060 (Appellant) (Respondent) PAN No. AAACJ0866E ITA No. 3015/MUM/2016 (Assessment Year 2011-12) Johnson & Johnson Private Ltd DCIT/ACIT/JT/ITO/NFAC 501, Arena Space, Behind Vs. Delhi Majas Bus Depot, Off. J.V. Link Road, Jogeshwari (East), Mumbai-400 060 (Appellant) (Respondent) Assessee by : Shri M.P. Lohia, AR Revenue by : Ms. Vranda U. Matkari, DR Date of hearing: 28.04.2023 Date of pronouncement : 13.06.2023 O R D E R PER PRASHANT MAHARISHI, AM:
At the time of hearing assessee preferred an additional ground of appeal as per ground no.40 to 42 as under:-
“On the facts and in the circumstances of the case, the Appellant wishes to raise the following additional grounds of appeal which is independent of the other grounds of appeal:
Time limit for passing order under Section 92CA of the Income-tax Act, 1961 (the Act)
On the facts and circumstances of the case and in law, the Learned Transfer Pricing Officer erred in passing transfer pricing assessment order under Section 93CA (3) of the Act on 30 January 2015, which was barred by limitation, thereby rendering the transfer pricing order as null and void as per the provisions of Section 92CA (3A) read with Section 153 of the Act.
Validity of proceedings under Section 143(3) read with Section 144C of the Act
On the facts and circumstances of the case and in law, the Learned Assessing Officer has erred in issuing the draft assessment order dated 23 March 2015 as per provisions of Section 144C of the Act, without appreciating the fact that the transfer pricing order being passed on 30 January 2015 is barred by limitation resulting in no transfer pricing adjustments and therefore the condition required to be met for Final assessment order barred by limitation
On the facts and circumstances of the case and in law, the learned AO erred in not appreciating that the time limit prescribed under section 153 is the outer time limit for passing the final assessment order and hence, the final assessment order dated 26 February 2016 is time barred and liable to be quashed.
The Appellant craves leave to add, alter, modify or delete or modify the above grounds of appeal
” The additional grounds were filed by letter dated 29th
07. September, 2022, stating that all the above additional grounds are jurisdictional in nature, those are available to the assessee based on the judicial precedents later on. It does not require any further investigation of facts and therefore, those should be admitted.
The learned Authorized Representative reiterated the application for admission of additional grounds relying on the decision of the Hon'ble Supreme Court in case of National Thermal Company Limited Vs. CIT 229 ITR 383 and Jute Corporation of India Ltd. in 187 ITR 688. Further, decision of the Hon'ble Bombay High Court in case of Ahmedabad Electricity Co. Ltd in 199 ITR 351.
We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also carefully perused the application for admission of the additional ground. The assessee has challenged the validity of transfer pricing order stating that the orders are passed under Section 92CA (3) of the Act, late by 1 day and therefore, is not passed within the due time. It is also the claim of the assessee that as the order of the Transfer Pricing Officer is invalid, the assessee cannot be said to be an 'eligible assessee' in terms of explanation to section 144C of the Act and hence, the final assessment order passed on 26 February 2016 is barred by limitation. All these above facts are available on record. Merely, the dates of passing of the order are required to be considered. Therefore, no fresh facts are required to be investigated. Assessee has challenged that the order is barred by limitation, it goes to the root of the jurisdiction which can be raised at any time during the pendency of appeal. The issue of admission of additional ground of appeal has been dealt with by Hon'ble Supreme Court in the decisions cited in the application. In view of this, we admit the additional grounds no. 40 to 42.
The learned Authorized Representative submitted that in the present case, in A.Y. 2011-12, the learned Transfer Pricing Officer has passed the Transfer Pricing order under Section 92CA(3) of the Act on 30th January, 2015. This order is required to be passed on or before 29 January 2015, as per the provision of Section 92CA (3) of the Act read with section 153 of the Act. According to that, the 60 day period expires on 29th January, 2015. The order of the learned Transfer Pricing Officer is passed on 30 January, 2015; this order is time barred and requires to be quashed for this proposition. He relied upon the decision of the Hon'ble Madras High Court in case of Saint Gobain India Pvt. Ltd. (2022) 444 ITR 636 (Mad) (HC). He further submitted that as the order of the learned Transfer Pricing Officer barred by limitation, according to provision of Section 144C (15)(b) of the Act, assessee ceases to be an 'eligible assessee' for the purpose of Section 144C of the Act and therefore, the time limit available for making an assessment in the case of the assessee expires on 31st March, 2015. However, the final assessment order is passed on 26th February, 2016. Therefore, the final assessment order passed is also barred by limitation. Therefore, the assessment order passed by the learned Assessing Officer is also required to be quashed. For this proposition, he relied heavily on the decision of the co- ordinate Bench in for A.Y. 2012-
The learned Departmental Representative vehemently opposed the argument of the assessee and relied upon the decision of Louis Dreyfus Commodities India (P.) Ltd. (2022) 138 taxmann.com 556, wherein it has been held that even if the learned TPO’s order is held to be bad in law, the draft assessment order and subsequent final assessment order cannot be said to be invalid order.
The learned Authorized Representative submitted that the decision cited by the learned Departmental Representative does not apply with respect to the final assessment order passed by the learned Assessing Officer as that was not the case before the co-ordinate Bench. He further submitted that in Mondelez India Foods P. Ltd in dated 14 November, 2022 has considered the above case. He further submitted that before the co-ordinate Bench in Louis Dreyfus Commodities India (P.) Ltd. (supra), there were no occasions to consider the definition of 'eligible assessee' and consequent validity of entire assessment proceedings.
We have carefully considered the rival contentions and perused the orders of the lower authorities. The impugned assessment year before us is, A.Y. 2011-12. 016. Provisions of section 153 prescribes time limit for passing assessment order. It provides that no order of assessment shall be made under section 143 or section 144 at any time after the expiry of two years from the end of the assessment year in which the income was first assessable. By virtue of the first proviso, this time limit was curtailed to 21 Months. Therefore for AY 2011-12 , the time limit for passing assessment order u/s 143 (3) would be 31/12/2013. By virtue of second proviso if a reference u/s 92CA is made then this time limit is further extended to 33 months from the end of the Assessment year. Thus for A Y 2011-12, it would be 33 months from 31/12/2013 i.e. 31/3/2015. The ld TPO as per provisions of section 92CA (3A) of the Act is bound to
Hon'ble Madras HC in case of Saint Gobain India Pvt. Ltd. 444 ITR 636 [2022] 137 taxmann.com 215 (Madras) where in it has been held :-
"28. The word "date" in section 92CA(3A) would indicate 31-12-2019. But the preceding words "prior to" would indicate that for the purpose of calculating the 60 days, 31-12-2019 must be excluded. The usage of the word "prior" is not without significance. It is not open to this court to just consider the word "to" by ignoring "prior". The word "prior" in the present context, not only denotes the flow of direction, but also actual date from which the period of 60 days is to be calculated. It is settled law that while interpreting a statute, it is not for the courts to treat any word(s) as redundant or superfluous and ignore the same. In this connection, it is pertinent to note the judgment of the Apex Court in Grasim Industries Ltd. v. Collector of Customs 2002 taxmann.com 1803, wherein, it was held as follows : "10. No words or expressions used in any statute can be said to be redundant or superfluous. In matters of interpretation one should not concentrate too much on one word and pay too little attention to other words. No provision in the statute and no word in any
Now the issue is that when the transfer pricing order passed by the learned Transfer Pricing Officer is held to be invalid, therefore, there cannot be any variation as a consequent to the order of Transfer Pricing Officer. Therefore, the assessee ceases to be an 'eligible assessee' within the meaning of section 144C (15) (b) of the Act. The moment an assessee ceases to be an 'eligible assessee' in absence of valid transfer pricing order, the ld AO should not have passed the draft assessment order. Thus provision of section 144C does not apply to the assessee. Thus, the time limit for completion of the assessment reverts back to 21 Months from the end of the assessment year. Therefore, as held by the co-ordinate Bench in ATOS India Private Limited (supra), the final assessment order passed by the learned Assessing Officer on 26th February, 2016 is also barred by limitation. Therefore, following the decision of the co-ordinate Bench, we quash the assessment order passed for A.Y. 2011-12 by the learned Assessing Officer on 26th February, 2016 as it is barred by limitation.
Additional ground no.40 and 41 filed by the assessee are allowed.
In view of our decision above, all the grounds of appeal filed by the assessee and the learned Assessing Officer in
In the result, appeal of the assessee is allowed.
Consequently, the appeal of the learned Assessing Officer and cross objections of the assessee, are dismissed.
Now we come to appeal of Assessee for Ay 2016-17. Ay 2016-17 passed by the National e-assessment centre, Delhi under Section 143(3) read with section 144C(13) read with section 144B of the Act dated 9th May, 2021, wherein the return of income filed by the assessee on 30th November, 2016, declaring total income of ₹874,84,28,690/- under the normal provisions of book profit under Section 115JB of the Act at ₹926,13,23,136/-, was assessed at ₹1,844,84,71,403/- as per normal contribution of income and book profit was computed at ₹928,68,24,196/-.
The assessee has raised the ground of appeal no. 3 and additional ground no 95 on the identical facts and circumstances except the changes in relevant dates challenging the assessment order stating that it is barred by limitation. Ground no.3 is raised in the original moratorium of appeal stating that the order of the learned Transfer Pricing Officer is barred by limitation and therefore, all transfer pricing additions/ adjustments are invalid.
27. After hearing the parties, as there is no change in facts and circumstances of case compared to AY 2011-12, we admit the additional ground raised by the assessee for the reasons given by us, admitting additional grounds of the assessee for A.Y. 2011-12.
28. The arguments of the assessee and the Revenue against the additional ground admitted as well as on the validity of the order of the learned Transfer Pricing Officer and Assessing Officer are also similar as made for Ay 2011-12.
On careful consideration of the arguments of both the parties, we find that in this case the i. Return of income was filed on 30 November, 2016 for A.Y. 2016-17.
ii. The time limit of 21 months is available from the end of the assessment year on 31 March, 2017 for completing the assessment. iii. Therefore, in normal circumstances, the assessment order should have been passed on 31 December 2018. v. The order of the learned Transfer Pricing Officer was passed on 1st November, 2019 , the draft assessment order was passed on 26th December, 2019 and final assessment order was passed on 9th May, 2021. vi. As the time limit available for passing an assessment order is till 31-12-2019. But in case of an order to be passed under section 92CA of the Act, the time limit is 60 days prior to the due date for completion of assessment under section 92CA(3A) of the Act and such an order ought to have been passed in this case by the first appellant on or before 31-10-2019. Such order is passed on 1st November 2019. However, such an order was passed only on 1-11-2019 and therefore, the order dated 1-11-2019 passed by the first appellant is beyond the time limit stipulated under section 92CA(3A) read with section 153(1) of the Act. vii. Thus, the order of ld TPO is barred by limitation.
Case before honourable High court in case of saint Gobain is also for AY 2016-17.
Hence, we quash the assessment order allowing ground no 3 and additional ground no 95. Other grounds of appeal are not required to be decided.
In the order, Appeal of assessee is allowed.
Order pronounced in the open court 13.06.2023.