Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “K”, MUMBAI
Before: SHRI KULDIP SINGH
Present for: Assessee by : Shri Ajit Kumar Jain, A.R. Shri Siddhesh Chaugule, A.R. Ms. Neha Rai, A.R. Revenue by : Shri Anoop Hiwase, D.R. Date of Hearing : 23 . 03 . 2023 Date of Pronouncement : 31 . 05 . 2023 O R D E R
Per : Kuldip Singh, Judicial Member:
The appellant, M/s. Firefly Market Research India Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing present appeal, sought to set aside the impugned order dated 24.02.2021 passed by Commissioner of Income Tax, (Dispute Resolution Panel-1), 2 M/s. Firefly Market Research India Pvt. Ltd.
Mumbai [hereinafter referred to as the CIT(DRP)] qua the assessment year 2016-17 on the grounds inter alia that :- “General 1. On the facts and in the circumstances of the case and in law, the learned Transfer Pricing Officer (TPO) and the learned Assessing Officer (AO) under the directions of the Hon'ble Dispute Resolution Panel (DRP) ered in making an adjustment of Rs. 14,163,877 (comprising of support services availed of INR 6,751,261 and allocation of costs of INR 7,412,616) under Chapter X of the Income- tax Act, 1961 (the Act) under other provisions of the Act Legal 2. On the facts and in the circumstances of the case and in law, the learned TPO exceeded his jurisdiction by passing the Transfer Pricing Order u/s 92CA(3) dated 1 November, 2019, which is beyond the mandatorily prescribed time limit (that falls on 31 October 2019) as per section 92CA(3A) read with section 153(4) of the Act, and thereby rendering the said Transfer Pricing Order had in law, without jurisdiction, barred by limitation and void ab initie; hence the same is liable to be quashed.
3. On facts and in the circumstances of the case and in law, the learned TPO, the AO and the Hon'ble DRP have exceeded their jurisdiction by computing the transfer pricing addition without applying any of the prescribed methods as provided under section 92C(1) of the Act and thus their orders on this issue are bad in law Factual 4. On facts and in the circumstances of the case and in law, the learned TPO and the AO, under the directions of the Hon'ble DRP have erred in not appreciating the factual details, submissions and various documentary evidences which demonstrate receipt of services by the appellant and computing the ALP of the transaction at NIL and consequently making a transfer pricing adjustment; 5. On facts and in the circumstances of the case and in law, the learned TPO, the AO and the Hon'ble DRP have erred in rejecting the Transactional Net Margin Method (TNMM)/Other Method, as the most appropriate method for benchmarking this transaction and computing the transfer pricing addition without applying any of the prescribed methods as provided under section 92C(1) of the Act and thus their orders on this issue are bad.”
Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee is into the business of providing qualitative market research and other related 3 M/s. Firefly Market Research India Pvt. Ltd.
services across all industry sectors, which referred to understanding and analyzing the consumer observations with respect to a particular product by application of knowledge from fields such as sociology, psychology etc.
During the year under consideration the assessee entered into international transaction with Associate Enterprises (AEs). The Ld. Transfer Pricing Officer (Ld. TPO) after providing opportunity of being heard to the assessee proposed adjustment on account of arms length price (ALP) qua the international transactions of availing support services and cost allocation with its AEs to the tune of Rs.1,41,63,877/-.
The assessee carried the matter before the Ld. DRP by way of filing objection who has rejected the same. The Assessing Officer (AO) framed the assessment by making addition on account of TP adjustment to the tune of Rs.1,41,63,877/- on account of ALP of international transactions. Feeling aggrieved with the impugned order passed by the Ld. DRP/AO the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Assessee has filed the present appeal raising grounds challenging the arms length price of the international transactions 4 M/s. Firefly Market Research India Pvt. Ltd.
by way of transfer pricing grounds and no corporate tax issue is there in the present appeal.
At the very outset, the Ld. A.R. for the assessee sought to decide the legal ground No.2 & 3 as primary grounds that “the transfer pricing order in this case under section 92CA of the Act is passed beyond the time limit prescribed under section 92CA(3A) read with section 153 of the Act rendering the TP order illegal, null and void ab-initio and liable to be quashed”. So we would first decide this legal issue which was also decided by the Ld. DRP against the assessee.
The Ld. A.R. for the assessee challenging the impugned order passed by the Ld. TPO contended that the order passed by the Ld. TPO is beyond the time limit prescribed under section 92CA(3A) read with section 153 of the Act and consequent assessment order passed by the AO is also not sustainable and brought on record, the factual position and computation of 60 days available with the TPO to pass the TP order, necessary to decide the issue in controversy in a tabulated form, which is as under:
Computation of 60 days for TP Order Particulars Ground 2: Validity of Order passed under Section 92CA(3) of the Act Calculation of due date for passing transfer pricing order under section 92CA(3) Asst. Order due date as per section 31 December 2019 153 of the Act for AY 2016-17 Transfer Pricing Order due date: Number of Days in 30 (At least sixty days before the period December 2019 of limitation referred to in section Number of Days in 30 153 of the Act.) December 2019 Total Number of Days 60 5 M/s. Firefly Market Research India Pvt. Ltd.
Deadline for passing TP Order for AY 31 October 2019 2016-17 Date of TP order passed for AY 2016- 1 November 2019 17 Delay 1 Day Delay in passing TP order
The Ld. A.R. for the assessee while discussing the factual position qua the order passed by the Ld. TPO and statutory provisions applicable thereto contended inter alia that the order passed by the Ld. TPO dated 01.11.2019 is not sustainable being barred by limitation; that the last date to pass the transfer pricing order by the Ld. TPO was 31.10.2019; that the order passed by the Ld. TPO is barred by limitation as the period of 60 days is completed in accordance with the provisions of section 153 of the Act by excluding the last date and relied upon the decision rendered by the Hon’ble Madras High Court in case of M/s. Pfizer Healthcare India Pvt. Ltd. & ors. vs. DCIT in WANo.1120 of 2021 & ors. judgment dated 31.03.2022.
However, on the other hand, the Ld. D.R. for the Revenue to repel the argument addressed by the Ld. A.R. for the assessee contended that the Ld. TPO passed order in this case well within the time i.e. on 01.11.2019.
In order to determine if the order dated 01.11.2019 passed by the Ld. TPO is barred by limitation as contended by the Ld. AR for the assessee, we would advert to the provisions contained under section 92CA(3) read with section 153 of the Act.
Undisputedly, sub-section (3A) to section 92CA has been inserted w.e.f. 01.06.2007 providing time limit for the Transfer 6 M/s. Firefly Market Research India Pvt. Ltd.
Pricing Officer to pass the order i.e. within a period of 60 days prior to the date of completion of assessment as per section 153. So, under section 92CA (3A) read with section 153, Ld. TPO was required to pass the order within the period of 60 days prior to the date on which the period of limitation referred to in section 153 expires i.e. 21 months.
Undisputedly the TP order was passed on 01.11.2019 whereas the Ld. TPO was required to pass the order within 60 days prior to the date of which period of limitation referred to in section 153 of the Act expires.
Now the question arises as to how the period of 60 days prior to the date of transfer pricing order i.e. 01.11.2019 is to be computed. Hon'ble Madras High Court in case of M/s. Pfizer Healthcare India Pvt. 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 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 time expiry of 21 months from the end of the assessment year in which the income was first assessable. The submission of the revenue is to the effect that limitation expires only on 12 am of 01.01.2020. However, this would mean that an order of assessment can be passed at 12 am on 01.01.2020, 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 of 31.12.2019. The period of 21 months therefore, expires on 31.12.2019 that must stand 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 01.11.2019 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 dale by which the 7 M/s. Firefly Market Research India Pvt. Ltd.
Transfer Pricing orders are to be passed as 31.10.2019. The impugned orders are thus, held to be barred by limitation."
Identical issue has been decided by the co-ordinate Bench of the Tribunal in case of ECL Finance Ltd. vs. ACIT in order dated 22.09.2021 and in case of Louis Dreyfus Commodities India Pvt. Ltd. vs. DCIT in ITA No.2381/Del/2014 order dated 11.03.2021 in favour of the assessee by following M/s. Pfizer Healthcare India Pvt. Ltd. (supra) case rendered by Hon’ble Madras High Court.
In view of what has been discussed above and following the order passed by the Hon’ble Madras High Court in case of M/s. Pfizer Healthcare India Pvt. Ltd. (supra) and order passed by the co-ordinate Bench of the Tribunal in case of ECL Finance Ltd. (supra) and Louis Dreyfus Commodities India Pvt. Ltd. (supra) on the identical issue, we are of the considered view that as per limitation prescribed under section 153 of the Act that assessment order was required to be passed within a period of 21 months from the end of assessment year i.e. A.Y. 2016-17 and a further period of 12 months is to be added in case reference is made under section 92CA of the Act to the Ld. TPO, meaning thereby the period of 60 days expires to pass the transfer pricing order on 31.10.2019 whereas the transfer pricing order has been passed in this case on 01.11.2019 i.e. beyond the period of 60 days, hence barred by limitation.
Since the order passed by the Ld. TPO is held to be barred by limitation the same is illegal, null and void ab-initio, hence quashed. Consequently, the assessment order passed by the AO, 8 M/s. Firefly Market Research India Pvt. Ltd.
qua transfer pricing adjustment only, is also without jurisdiction and as such is no order in the eyes of law hence quashed. Keeping in view the findings returned by the Bench on legal issue we deem it not necessary to go into the grounds raised by the assessee on merit. Consequently, appeal filed by the assessee is allowed.
Order pronounced in the open court on 31.05.2023.