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Income Tax Appellate Tribunal, K BENCH, MUMBAI
order
: 30.08.2022 O R D E R
Per Rahul Chaudhary, Judicial Member:
The present appeal is directed against the Final Assessment Order dated, 29.04.2021 passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) for the Assessment Year 2016-17, as per directions issued by Dispute Resolution Panel 1, [hereinafter referred to as „the DRP‟] under Section 144C(5) of the Act.
When the matter was taken for hearing, the Ld. Authorised Representative advanced arguments on pressed into service for the Appellant referred to Ground 2 of appeal which read as under: Assessment Year: 2016-17 “Validity of transfer pricing order passed by the learned TPO “2. Erred in not appreciating that the order passed by the Learned TPO on 1 November 2019 is time barred and bad in law, since Section 92CA(3A) of the Act requires the transfer pricing order to be passed “at any time before sixty days prior to “the timeline for the assessment order, it is implied that such order must precede 31 December by not less than sixty days.”
Learned Authorised Representative for the Appellant submitted that in view of the judgment of the Hon‟ble Madras High Court in the case of M/s Pfizer Healthcare India Pvt. Ltd. & Ors. Vs. DCIT in WA No. 1120 of 2021 & ors. (dated 31.03.2022), the issue stands decided in favour of the Appellant. He further submitted that the aforesaid judgment of the Hon‟ble Madras High Court has been followed by the Tribunal in the following cases: ECL Finance Ltd. vs. ACIT: dated - 22.09.2021 Louis Dreyfus Commodities India Pvt. Ltd. vs. DCIT: ITA No. - 2381/Del/2014, dated 11.03.2021 M/s Emerson Electric (Company) India Pvt. Ltd. vs. DCIT: ITA - No. 933/M/2021, dated 18.05.2022
The appeal before us pertains to Assessment Year 2016-17 and the order under Section 92CA(3) of the Act has been passed by the Transfer Pricing Officer on 01.11.2019. We note that in the case of M/s Emerson Electric (Company) India Pvt. Ltd. (supra), the appeal before the Tribunal pertained to the Assessment Year 2016-17 and the order under Section 92CA(3) of the Act was also passed on 2 Assessment Year: 2016-17 01.11.2019. In the identical facts, the Tribunal deciding the issue in favour of the Appellant held as under:
“11. 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 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 assessment 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 3 Assessment Year: 2016-17 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 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, qua transfer pricing adjustment only, is also without jurisdiction and as such is not order in the eyes of law hence quashed.
4 Assessment Year: 2016-17 Keeping in view the findings returned by the Bench on legal issue we deem it not necessary to go into grounds raised by the assessee on merit. Consequently, appeal filed by the assessee is allowed. Ground No. 2 is allowed.” (Emphasis Supplied)
Respectfully following the above decision of the Co-ordinate Bench of the Tribunal, we hold that the order passed by the Transfer Pricing Officer on 01.11.2019 is barred by limitation and therefore, the transfer pricing adjustments made in the Final Assessment Order, dated 29.04.2021 are deleted. Ground No. 2 raised by the Appellant in the present appeal is, therefore, allowed.
In view of the above, Ground No. 3 to 18 and 21 pertaining to the transfer pricing issues raised in the appeal are disposed of as infructuous. Ground No. 19 pertaining to interest under Section 234B is disposed of as being consequential, while Ground No. 20 pertaining to claim of deduction in respect of education cess under Section 37(1) of the Act is disposed of as being not pressed on the basis of statement made by the Ld. Authorised Representative for the Appellant during the course of hearing. Ground No. 22 pertaining to penalty is disposed of as being premature.
In result, the appeal filed by the Appellant is partly allowed.