CAE INDIA PRIVATE LIMITED ,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -2(1)(1), BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER

IT(TP)A Nos. 40 & 41/Bang/2023 Assessment Years : 2010-11 & 2011-12 M/s. CAE India Pvt. Ltd., Survey No. 26 & 27, The Assistant 1st Floor, IVC Road, Commissioner of Uganvadi Post, Income Tax, Bandaramanahalli Circle – 2(1)(1), Village, Vs. Bengaluru. Devanahalli Taluk, Bengaluru – 562 110. PAN: AAECM3338G APPELLANT RESPONDENT Assessee by : Shri Ketan Ved, CA Revenue by : Ms. Neera Malhotra, CIT-DR Date of Hearing : 07-06-2023 Date of Pronouncement : 19-06-2023 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals arises out of separate orders both dated 24.11.2022 passed by the Ld.ACIT, Circle – 2 (1)(1), Bangalore for A.Ys. 2010-11 and 2011-12. Brief facts of the case are as under: 2. Assessee is a company engaged in the business of integration of hardware & software in the field of simulation and services. It

Page 2 IT(TP)A Nos. 40 & 41/Bang/2023) filed its return of income on 14.10.2010 and 19.11.2011 for A.Ys. 2010-11 and 2011-12 respectively declaring a loss of Rs.2,20,13,276/- and Rs.5,97,59,475/- for A.Ys. under consideration respectively. The book profits declared by the assessee under 115JB was at Rs.4,17,57,263/- for A.Y. 2010-11 and Rs.4,89,52,064/- for A.Y. 2011-12. The cases for both the years under consideration were selected for scrutiny as the assessee had entered into international transaction with its associated enterprise for the years under consideration. 2.1 A reference was made to the Ld.TPO on 15.03.2013 for A.Y. 2010-11 and 22.03.2014 for A.Y. 2011-12. The dates of reference has been recorded in the draft assessment order dated 13.03.2014 for A.Y. 2010-11 and in the draft assessment order dated 24.02.2015, for A.Y. 2011-12. The Ld.TPO thereafter proposed certain adjustments and passed the orders u/s. 92CA on 30.01.2014 for A.Y. 2010-11 and 30.01.2015 for A.Y. 2011- 12. On receipt of the transfer pricing orders, the Ld.AO passed the draft assessment order on 13.03.2014 proposing certain corporate tax addition along with the transfer pricing addition for A.Y. 2010-11 and 24.02.2015 for A.Y. 2011-12. 2.2 Against the draft assessment order, the assessee filed objections before the DRP and the DRP passed the directions on 29.12.2014 for A.Y. 2010-11 and 30.11.2015 for A.Y. 2011-12. On receipt of the DRP directions, the Ld.AO passed the final assessment order on 27.02.2015 for A.Y. 2010-11 and 30.12.2015 for A.Y. 2011-12. 2.3 Against the above final assessment orders passed for the years under consideration, assessee filed appeal before this

Page 3 IT(TP)A Nos. 40 & 41/Bang/2023) Tribunal in IT(TP)A No. 1105/Bang/2015 for A.Y. 2010-11 and IT(TP)A No. 316/Bang/2016 for A.Y. 2011-12. The revenue had also filed cross appeals against the appeals filed by assessee. This Tribunal considered the appeals filed by assessee as well as revenue for A.Ys. 2010-11 and 2011-12 by way of a consolidated order dated 30.08.2021. In the order passed by this Tribunal, the legal issue raised by assessee challenging the validity of order u/s. 92CA(3) was alone considered. This Tribunal while adjudicating the legal plea raised as an additional ground for both years under consideration observed and held as under: “3. The assessee has also raised an additional ground in both the appeals, which reads as follow:- “On the facts and in the circumstances of the case and in law: Transfer Pricing related 1A. The impugned order u/s 92CA(3) of the learned Transfer Pricing Officer has been passed beyond the time limit provide under section 92CA(3A), therefore, bad in law and liable to the quashed.” We shall first adjudicate the additional ground raised by the assessee. 4. At the time of hearing before the Tribunal, the learned AR submitted that the additional ground is raised for the first time before the Tribunal as it was inadvertently not raised before the Income Tax Authorities. The learned AR, thus, prayed that the additional ground may be admitted in view of the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). 5. The learned Departmental Representative did not raise any serious objection for admitting the additional ground. 6. After hearing both the parties and perusing the material on record, we are of the view that this additional ground raised by the assessee will go to the root of the matter. Hence, we admit the additional ground raised by the assessee, which would not require any fresh investigation into facts of the case, by following the dictum laid down by the Hon’ble Apex Court in the case of National Thermal

Page 4 IT(TP)A Nos. 40 & 41/Bang/2023) Power Co. Ltd. v. CIT (supra). This additional ground is raised for the first time before the Tribunal and the Income Tax Authorities did not have any occasion to examine the merits of the additional ground. Accordingly, we remit the issue raised in the additional ground to the files of the DRP, for fresh adjudication in accordance with law. 7. Since we have remitted the issue raised in the additional ground to the files of the DRP, which will go to the root of the matter, we are refrained from adjudicating the grounds raised in the assessee’s appeals. 8. In view of the above, the cross objection filed by the assessee and the Department’s appeals have become infructuous and are dismissed as such. 9. In the result, the appeals filed by the assessee are allowed for statistical purposes and the appeals filed by the Revenue and the cross objections filed by the assessee are dismissed.” 2.4. On receipt of the order passed by this Tribunal, the DRP passed an order giving effect to u/s. 144C(5) r.w.s. 254 of the act for both the years under consideration on 31.10.2022 by way of separate orders. The DRP on the legal issue that was remanded by this Tribunal observed and held as under:

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2.5 It is submitted that similar is the observation of the DRP for A.Y. 2011-12. The Ld.AO passed the impugned orders against the DRP directions on 24.11.2022 by way of separate orders for both the years under consideration. 3. Against this order, assessee is once again in appeal before this Tribunal. 3.1. Before this Tribunal in the second round of appeal, the assessee has once again challenged the validity of the order

Page 8 IT(TP)A Nos. 40 & 41/Bang/2023) passed u/s. 92CA(3) dated 30.01.2014 and 30.01.2015 to be bad in law, as it is barred by limitation. This issue has been alleged by the assessee in Ground no. 1 in both the years under consideration. 3.2. The Ld.AR submitted that, the order passed by the Ld.TPO dated 30.01.2014 and 30.01.2015 for the years under consideration is bad in law, as it is time barred by one day. Narrating the sequence of the dates, he pointed out that, the period of limitation for passing an assessment order for the years under consideration as per section 153(1) of the act expires on 31.03.2014 and 31.03.2015. Accordingly, as required by sub clause (3A) of section 92CA of the act, 60 days prior to the date on which the limitation for passing the order by the Ld.TPO, expires on 29.01.2014 and 29.01.2015 for A.Ys. 2010-11 & 2011-12 respectively. He submitted that thus the order passed by the Ld.TPO u/s. 92CA(3) of the act is time barred by one day. 3.2. The Ld.AR placed reliance on following decisions in support of its contention. a) Decision of Hon’ble Madras High Court in case of Pfizer Healthcare India Pvt. Ltd. vs. JCIT reported in (2021) 124 taxmann.com 536 b) Decision of Hon’ble Madras High Court in case of DCIT vs. Saint Gobain India Pvt. Ltd. reported in (2022) 137 taxmann.com 215 c) Decision of Coordinate Bench of this Tribunal in case of Swiss Re Global Business Solution India (P.) Ltd. v/s. DCIT reported in [2022] 138 taxmann.com 418 (Bangalore - Trib.) [A.Y. 2010-11]

Page 9 IT(TP)A Nos. 40 & 41/Bang/2023) d) Decision of Coordinate Bench of this Tribunal in case of DCIT v/s. Tata Power Solar Systems Ltd. reported in [2022] 140 taxmann.com 272 (Bangalore - Trib.) [A.Y. 2011-12]; and e) Decision of Coordinate Bench of this Tribunal in case of Sigma Aldrich Chemicals (P.) Ltd. v/s. DCIT reported in [2022] 141 taxmann.com 431 (Bangalore - Trib.) [A.Y. 2010-11 & 2011-12] f) Decision of Hon’ble Mumbai Tribunal in case of Mondelez India Foods Pvt. Ltd. vs. DCIT in ITA Nos. 1492/Mum/2015 & 1576/Mum/2015 for A.Ys. 2009-10 & 2010-11 dated 14.11.2022 g) Decision of Hon’ble Mumbai Tribunal in case of Atos India Pvt. Ltd. vs. DCIT in ITA No. 1795/Mum/2017 by order dated 23.02.2023 h) Decision of Hon’ble Mumbai Tribunal in case of Colgate- Palmolive (India) Ltd. vs. ACIT in ITA Nos. 2799, 3488/Mum/2016, 1977/Mum/2017 & 75/Mum/2018 3.3. On the contrary, the Ld.CIT.DR vehemently submitted that order dated 30.01.2014 and 30.01.2015 passed by the Ld.TPO is a valid order and has been passed within the period of limitation. She submitted that, the DRP observation in para 2.8 has to be met with, for computing the number of days to be excluded for calculating the prior to 60 days. It is her contention that, either the date of the order or the time barring date can be excluded and not both the dates, as the legislature uses the word “prior to”. The Ld.CIT.DR has filed the following submissions in support of her contention dated 23.03.2023 and 07.06.2023.

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Similar is the submissions for A.Y. 2011-12 filed by the Ld.CIT.DR. 4. We have perused the submissions advanced by both sides in the light of records placed before us. The relevant extract of the provisions u/s. 153(1) and section 92CA(3A) is necessary to be considered for adjudicating this issue before us. For the sake of ready reference, the same is reproduced as under: Reference to Transfer Pricing Officer. 92CA. (1) Where any person, being the assessee, has entered into an international transaction [or specified domestic transaction] in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the [Principal Commissioner or] Commissioner, refer the computation of the arm's length price in relation to the said international transaction [or specified domestic

Page 13 IT(TP)A Nos. 40 & 41/Bang/2023) transaction] under section 92C to the Transfer Pricing Officer. ….……………… ….…………….. (3) On the date specified in the notice under sub-section (2), or as soon thereafter as may be, after hearing such evidence as the assessee may produce, including any information or documents referred to in sub-section (3) of section 92D and after considering such evidence as the Transfer Pricing Officer may require on any specified points and after taking into account all relevant materials which he has gathered, the Transfer Pricing Officer shall, by order in writing, determine the arm's length price in relation to the international transaction 28[or specified domestic transaction] in accordance with sub-section (3) of section 92C and send a copy of his order to the Assessing Officer and to the assessee. (3A) Where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under sub-section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (1) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires:] Provided that in the circumstances referred to in clause (ii) or clause (x) of Explanation 1 to section 153, if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to have been extended accordingly.] Section 153 of the Income-tax Act, reads as follows : "Section 153. (1) No Order of assessment shall be made under section 143 or section 144 at any time after expiry of twenty one months from the end of the assessment year in which the income was first assessable. Provided further that in respect of an order of assessment relating to the assessment year commencing on or after the 1st day of April 2019, the provisions of this sub-section shall have effect, as if for the words "twenty-

Page 14 IT(TP)A Nos. 40 & 41/Bang/2023) one months, the words "eighteen months" had been substituted. …….……… ...…………. Provided further that where the period available to the Transfer Pricing Officer is extended to sixty days in accordance with the proviso to sub-section (3A) of section 92CA and the period of limitation available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly." 4.1. Chapter–X contains the provisions relating to the computation of income from international transactions having regard to the ALP was inserted by the Finance Act, 2001 w.e.f. 1.4.2002. On such insertion, it became incumbent upon the Ld.TPO to determine the ALP of the international transactions. For the A.Y. 2002-03, the time limit for completion of assessment, after determining the ALP, as was earlier applicable also, continued to be governed by section 153(1)(a) which stood at two years from the end of the assessment year. Section 92CA with the caption 'Reference to the Transfer Pricing Officer' was brought in by Finance Act, 2002 w.e.f. 1.6.2002, according to which, the onus of computing ALP of the international transactions shifted to the Ld.TPO, who was supposed to pass his order under sub-section (3). There was no separate time limit for passing of the order by the Ld.TPO. 4.2. Subsequently, Finance Act, 2007 brought in Clause (3A) to section 92CA w.e.f. 1.6.2007, that provided distinct time limit for the passing of the order by the Ld.TPO. From 01/06/2007, sub section (3A) to section 92CA, required the Ld.TPO to pass an order within a period less than sixty days prior to the date of

Page 15 IT(TP)A Nos. 40 & 41/Bang/2023) completion of assessment as per section 153(1). With the insertion of section 92CA(3A), the time limit for passing of the assessment order continued to be still governed by section 153, though the time limit for passing of the order by the Ld.TPO was also set within the overall time limit prescribed u/s.153 for the passing of the assessment order. 4.3. Thus in our view, the time limit for passing of the order by the Ld.TPO under section 92CA(3A) is linked with the time limit, as mentioned in section 153(1) of the Act. We find that, the Finance Act, 2007 inserted sub-section (3A) carrying the time limit of sixty days for passing of the order by the Ld.TPO before the expiry of time limit for completion of assessment by the Ld.AO u/s.153. The word “may” used in section 92CA(3A), might connote erely an enabling or permissive power in the sense of the usual phrase, but it is also capable of being construed as referring to a compellable duty, particularly when it refers to a power conferred on a court or an authority. As observed in Maxwell on Statutes: “Statutes which authorise persons to do acts for the benefit of others, or, as it is sometimes said, for the public good or the advancement of justice, have often given rise to controversy when conferring the authority in terms simply enabling and not mandatory. In enacting that they ‘may’, or shall, if they think fit,’ or, ‘shall have power,’ or that ‘it shall be lawful’ for them to do such acts, a statute appears to use the language of mere permission, but it has been so often decided as to have become an axiom that in such cases such expressions may have to say the least a compulsory force.” 4.4. Therefore despite the use of the word 'may', in section 92CA (3A), the time limit for passing the order by the Ld.TPO is

Page 16 IT(TP)A Nos. 40 & 41/Bang/2023) mandatory. We thus hold that the use of the word 'may' in sub- section (3A) of section 92CA is to be construed as 'shall', thereby making this time limit as mandatory and not directory. As such, it is held that, the Ld.TPO is bound by the time limit for passing of his order. 4.5. Now coming to the phrase, “before sixty days prior to the date”, in section 92CA(3A) of the Act. We note that, Hon’ble Madras High Court in case of Pfizer Healthcare India(pvt.) Ltd., vs. JCIT(supra) interpreted 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 revenue is to the effect that limitation expires only on 12 am of 1-1-2020. However, this would mean that an order of assessment can be passed at 12 am 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 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 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. 4.6. The view expressed by the Single Judge in the Writ Petition in case of Pfizer Healthcare India(pvt.) Ltd., vs. JCIT(supra) has been further approved by a division bench in case of DCIT vs. Saint Gobain India(Pvt).Ltd(supra). Hon’ble Court observed and held as under:

Page 17 IT(TP)A Nos. 40 & 41/Bang/2023) “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 his 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 section can be construed in isolation. Every provision and every word must be looked at generally and in the context in which it is used. It is said that every statute is an edict of the legislature. 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 principle is too well settled and reference to a few decisions of this Court would suffice. (See: Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests [1990 Supp SCC 785 : AIR 1990 SC 1747], Union

Page 18 IT(TP)A Nos. 40 & 41/Bang/2023) of India v. Deoki Nandan Aggarwal [1992 Supp (1) SCC 323: 1992 SCC (L&S) 248: (1992) 19 ATC 219: AIR 1992 SC 96], Institute of Chartered Accountants of India v. Price Waterhouse [(1997) 6 SCC 312] and Harbhajan Singh v. Press Council of India [(2002) 3 SCC 722 : JT (2002) 3 SC 21] .)" 29. The language employed is simple. 31-12-2019 is the last date for the assessing officer to pass his order under section 153. The TPO has to pass order before 60 days prior to the last date. The 60 days is to be calculated excluding the last date because of the use of the words "prior to" and the TPO has to pass order before the 60th day. In the present case, the word "befoe" used before "60 days" would indicate that an order has to be passed before 1-11-2019 i.e on or before 31-10-2019 as rightly held by the Learned Judge. 30. Even considering for the purpose of alternate interpretation, the scope of section 9 of the General Clauses Act, it is to be noted that an inverted calculation of the period of limitation takes place here. If the last date is taken to be the first date from which the period of 60 days is to be calculated, reading down the provision with the use of the word "from", which denotes the starting point or period of direction in general parlance, would mean that 60 days "from the last date". Even going by section 9 of the General Clauses Act, when the word "from" is used, then, that date is to be excluded, implying here that 31-12-2019 must be excluded. After excluding 31-12-2019, if the period of 60 days is calculated, the 60th day would fall on 1-11-2019 and the TPO must have passed the order on or before 31-10-2019 as orders are to be passed before the 60th day. Therefore, either way the contention of the Revenue is a fallacy and has no legs to stand. Mandatory or Directory 31. The next contention that has been raised by the learned senior standing counsel for the appellants is that the usage of the word "may" in section 92CA(3A) indicates that the time fixed is only directory, a guideline, not mandatory and is for the sake of internal proceedings. 32. Let us now examine the relevant procedures relating to Transfer Pricing. After an 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

Page 19 IT(TP)A Nos. 40 & 41/Bang/2023) 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 (13) of section 144C of the Act provides that upon receipt of directions issued under sub- section (5) of section 144C of the Act, the Assessing Officer shall in conformity with the directions complete the assessment proceedings. It goes without saying that if no objections are filed by the Assessee either before the DRP or the assessing officer to the determination by the TPO, section 92CA(4) would come into operation. Therefore, it is very clear that once a reference is made, it would have an impact on the assessment unless a decision on merits is taken by DRP rejecting or varying the determination by the TPO. 33. It would only be apropos to note that as per proviso to section 92CA (3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining period shall be extended to 60 days. This implies that not only is the time frame mandatory, but also that the TPO has to pass an order within 60 days. 34. Further, the extension in the proviso referred above, also automatically extends the period of assessment to 60 days as per the second proviso to section 153. 35. Also, but for the reference to the TPO, the time limit for completing the assessment would only be 21 months from the end of the assessment year. It is only if a reference is peding, the department gets another 12 months. Once reference is made and after availing the benefit of the extended period to pass orders, the department cannot claim that the time limits are not mandatory. Hence, the contention raised in this regard is rejected. 36. As rightly pointed out by Mr. Ajay Vohra, learned senior counsel for the respondents in WA. Nos.1148 and 1149/2021, the word "may" has to be sometimes read as "shall" and vice versa depending upon the context in which it is used, the consequences of the performance or failure

Page 20 IT(TP)A Nos. 40 & 41/Bang/2023) on the overall scheme and object of the provisions would have to be considered while determining whether it is mandatory or directory. 37. At this juncture, it is noteworthy to mention the commentary of Justice G.P.Singh on the interpretation of statutes, Principles of Statutory Interpretation (1st Edn., Lexis Nexis 2015), which is quoted below for ready reference: 'The intention of the legislature thus assimilates two aspects: In one aspect it carries the concept of "meaning" i.e. what the words mean and in another aspect, it conveys the concept of "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 scheme of the Act, the inter-relatability and inter-dependency of the provisions to conclude the assessment, is the consequence or the effect that follows, if an order is not passed n time. When an order is passed in time, the procedures under 144C and 92CA(4) are to be followed. When the determination is not in time, it cannot be relied upon by the assessing officer while concluding the assessment proceedings. 39. Upon consideration of the judgments and the scheme of the Act, we are of the opinion that the word "may" used therein has to be construed as "shall" and the time period fixed therein has to be scrupulously followed. The word "may" is used there to imply that an order can be passed any day before 60 days and it is not that the order must be made on the day before the 60th day. The impact of

Page 21 IT(TP)A Nos. 40 & 41/Bang/2023) the proviso to the sub-section clarifies the mandatory nature of the time schedule. The word "may" cannot be interpreted to say that the legislature never wanted the authority to pass an order within 60 days and it gave a discretion. Therefore, the learned Judge rightly held the orders impugned in the writ petitions as barred by limitation, as the Board, in the Central Action Plan, has specified 31-10-2019 as the date on which orders are to be passed by the TPO, reiterating the time limit to be mandatory. 4.7. The arguments advanced by the Ld.CIT.DR have been met with in the above observation by Hon’ble Madras High Court. We therefore reject the argument advanced by the Ld.CIT.DR on this count. 4.8. Thus the time limit given in sub-section (3A) of section 92CA is mandatory for the passing of the order u/s. 92CA(3) by the Ld.TPO. Based on the interpretation by Hon’ble Madras High Court, the period of 60 days prior to the time limit as per section 153(1), available with the Ld.TPO, for passing his order u/s. 92CA(3), for the years under consideration is to be calculated as under: No.of Dates Particulars days AY 10-11 AY11-12 Due date for passing assessment order as per 31/03/14 31/03/15 section 153(1) Calculation of 60 days To exclude the last day of limitation prior to the limitation as per Section 153(1)y i.e; 31/01/14 u/s.153(1) backwards & 31/01/15 March 30 30 February 28 28 January 2 2 Due date to pass the 29/01/14 29/01/15 order u/s.92CA Order u/s.92CA passed on 30/01/14 30/01/15 4.9. As the Ld.TPO admittedly has passed the order u/s. 92CA(3) on 30.01.2014 and 30.01.2015, which is beyond the period of

Page 22 IT(TP)A Nos. 40 & 41/Bang/2023) limitation and therefore deserves to be quashed. We therefore allow the Ground no. 1 raised by the assessee in both the assessment years i.e. 2010-11 and 2011-12. 4.10. As we have quashed the order u/s. 92(3A) to be bad in law, the issues alleged by assessee on merits become academic at this stage. In the result, both the appeals filed by the assessee for A.Ys. 2010-11 and 2011-12 stands allowed on the legal issues raised. Order pronounced in the open court on 19th June, 2023.

Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 19th June, 2023. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order

Assistant Registrar, ITAT, Bangalore