ACCENTURE SOLUTIONS PVT LTD. (ASOL) AS A SUCCESSOR TO ACCENTURE SERIVCES PVT LTD (ASPL),MUMBAI vs. DY CIT CIRCLE- 14 (1)(1), MUMBAI

Assessee by filing an application sought to raise additional grounds, which are as under: “1. Additional Ground (Ground No. 26 & 27); Without prejudice to ground 1 to 25, the TP order , passed under Section 92CA (3) is invalid and unsustainable in law since the same is passed on 1 November 2018 which is beyond the time limit available for completion of proceedings under section 92CA(3A) of the Act.

The Ld. D.R. for the Revenue opposed raising of additional ground by the assessee on the ground that no such ground has been raised before the Lower Revenue Authorities. However, we are of the considered view that when additional ground sought to be raised by the assessee is a legal ground, which goes to the roots of the case and is also necessary to adjudicate the issue in controversy the same can be raised at any stage of the proceedings. Hence, additional ground raised by the assessee is allowed.

Briefly stated facts necessary for adjudication of the controversy at hand are : the assessee Accenture Solutions Pvt. Ltd. (‘ASOL’) being the successor to the Accenture Services Pvt. LTd. (ASPL), is an Indian company engaged in providing Information Technology (IT) Services, BPO services and consultancy services. Presently the assessee operates out of several units located in the Software Technology Parks of India (STPI) and Special Economic Zone (SEZ) and claimed a deduction under section 10AA of the Act qua the profits earned from the SEZ unit.

During the year under assessment assessee entered into 30 international transactions with its Associate Enterprises (AE). The Ld. TPO after providing opportunity of being heard to the assessee and by rejecting the TP study relied upon by the assessee, proposed adjustment on account of Arm’s Length Price (ALP) qua the international transactions entered into by it with its AE as under:

Assessee carried the matter before the Ld. DRP by way of filing objections who has partly allowed the same. Feeling aggrieved 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.

At the very outset, the Ld. A.R. for the assessee challenged the impugned order passed by the AO/DRP to the extent of making adjustment on account of ALP, on the legal ground that “the TP order in this case is passed by the Ld. TPO beyond the time limit prescribed under section 92CA(3A) read with section 153 of the Act rendering the TP order and consequential assessment order illegal, null and void ab-initio and liable to be quashed. So we would first decide this legal issue before going into the merits of the case.

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 passed beyond the time limit prescribed under section 92CA(3A) read with section 153 of the Act and consequent assessment order, to the extent of TP adjustment, is not sustainable and brought on record the factual position to calculate the period of limitation under the Act necessary to decide the issue in controversy in tabulated form which is as under:

The Ld. A.R. for the assessee while discussing the factual position qua the order passed by Ld. TPO and statutory provisions

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 01.11.2018.

In order to determine if the order dated 01.11.2018 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 of the Act. 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 by the Ld. TPO on 01.11.2018 whereas the Ld. TPO was required to pass the order within 60 days prior to the date on which the period of limitation referred to in section 153 of the Act expires i.e. 31.10.2018.

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 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 ITA No.899/M/2018 order dated 22.09.2021 in favour of the assessee by

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), 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. 2015-16 i.e. 31.03.2016, meaning thereby the assessment order under section 153(1) was to be completed within 21 months from the end of assessment year i.e. on 31.12.2017 with further extension of 12 months in case of transfer pricing reference as per section 153(4) of the Act was made which expires on 31.12.2018. So the limitation for passing the order under section 92CA(3) is 60 days prior to the date prescribed under section 153 of the Act. In the instant case due date for passing the order under section 92CA(3) of the Act is 31.10.2018 whereas the TP order in this case is passed on 01.11.2018 which is beyond the period of limitation because the same was required to be passed 60 days before the date of which limitation expires under section 153 of the Act i.e. o. 31.10.2018, hence barred by limitation.

However, by virtue of this appeal the assessee has also raised corporate grounds No.21, 22 & 23 challenging additions under section 36(1)(va) and non granting of credit of taxes deducted at source and levying of interest under section 234A and 234B of the Act, which are determined as under:

AO/CIT(A) made the disallowance of Rs.14,50,987/- on account of late deposit of employees’ contribution on account of PF & ESIC on the ground that the same were not deposited within the due date prescribed under the Act. However, this issue is now no longer res-integra as has been decided in favour of the assessee by the Hon’ble Bombay High Court in case of CIT V. Ghatge Patil Transporters Ltd. 368 ITR 749 by confirming the order passed by the Tribunal that deduction claimed by the assessee on account of employees contribution to PF & ESIC well before the due date of filing return of income is allowable deduction.

Hon’ble High Court of Bombay in case of Ghatge Patil Transporters Ltd. (supra) held that both employees’ and employer’s contribution are covered under amendment to section 43B and covered under judgment of Hon’ble Supreme Court in case of CIT vs. Alom Extrusions Ltd. (2009) 319 ITR 306 and such deduction claimed by the assessee is allowable.

Co-ordinate Bench of the Tribunal in case of M/s. Adyar Ananda Bhavan Sweets India P. Ltd. vs. ACIT (supra) also decided the identical issue in favour of the assessee by holding that the payment of employees contribution qua PF & ESIC if made before the due date of filing of return of income, the same is allowable deduction as per provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B of the Act.

In view of what has been discussed above, we are of the considered view that since the amended provisions contained under section 43B read with section 36(1)(va) of the Act are not applicable for the year under consideration i.e. A.Y. 2015-16 as the amendment will be effective from A.Y. 2021-22 and the AO/ Ld. CIT(A) have erred in disallowing the same. Consequently, impugned order passed by the Ld. CIT(A) is set aside and as such ground No.21 is determined in favour of the assessee.

In view of what has been discussed above, since TP order (supra) passed by the Ld. TPO is not sustainable in the eyes of law having passed beyond the period of limitation period the consequential TP adjustment made by the AO is also not sustainable, hence ordered to be deleted. Corporate grounds raised by the assessee are determined in favour of the assessee. Resultantly, appeal filed by the assessee is partly allowed.