D.C.I.T., BANGALORE vs. M/S SWISS RESHARED SERVICES INDIA PVT. LTD.,, BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER IT(TP)A No. 290/Bang/2015 Assessment Year : 2010-11 M/s. Swiss Re Global Business Solution India Pvt. Ltd. (previously known as Swiss Re The Deputy Shared Services India Pvt. Ltd.), Commissioner of 2nd to 5th Floor, Fairwinds Income Tax, Building, Embassy Golf Links Circle – 6(1)(2), Business Park, Challaghatta Vs. Bangalore. Village, Varthur Hobli, Bangalore, Karnataka – 560 071. PAN: AAECS8786L APPELLANT RESPONDENT & IT(TP)A No. 438/Bang/2015 Assessment Year : 2010-11 (By Revenue) : Shri Nageswar Rao, Assessee by Advocate : Shri Sumer Singh Revenue by Meena, CIT DR (OSD) Date of Hearing : 23-12-2021 Date of Pronouncement : 30 -12-2021 ORDER PER BENCH Present appeal is filed by assessee against final assessment order dated 29.01.2015 passed by the Ld.DCIT, Circle – 6(1)(2), Bangalore for Assessment Year 2010-11 on following grounds of appeal.

Page 2 of 19 IT(TP)A No. 290 & 438/Bang/2015 “Based on the facts and circumstances of the case and in law, Swiss Re Shared Services (India) Private Limited (hereinafter referred to as "Appellant"), respectfully craves leave to prefer an appeal against the appeal order passed by the learned Assessing Officer [hereinafter referred to as the "learned AO"] under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 ("the Act") on the following grounds: That on the facts and circumstances of the case and in law: 1. The learned AO, based on directions of the Hon'ble DRP, erred in assessing the total income at Rs. 4,89,94,919/- as against returned income of Rs. 70,62,944/- computed by the Appellant; Grounds of appeal relating to transfer pricing matters On the facts and in the circumstances of the case and in law: 2. The learned AO/ Transfer Pricing Officer ('TPO') erred in making an addition of Rs. 4,18,86,975 to the total income of the Appellant on account of adjustment in the arm's length price of the Information Technology enabled Services ("ITeS") transaction entered by the Appellant with its associated enterprise; 3. The learned AO/ TPO erred, in law and in facts, by not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Rules, and conducting a fresh economic analysis for the determination of the ALP in connection with the impugned international transaction and holding that the Appellant's international transaction is not at arm's length; 4. The learned AO/ TPO erred, in law and in facts, by determining the arm's length margin/ price using only FY 2009-10 data which was not available to the Appellant at the time of complying with the transfer pricing documentation requirements; 5. The learned AO/ TPO erred in rejecting certain comparable companies by applying the following quantitative and qualitative filters: (a) The learned AO/ TPO erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant for having different accounting year (i.e. companies having accounting year other than March 31 or companies whose financial statements were for a period other than 12 months); (b) The Hon'ble DRP erred, in law and in facts, by suo-moto modifying the related party filter ("RPT") of 'less than 25

Page 3 of 19 IT(TP)A No. 290 & 438/Bang/2015 percent' to 'equal to 0 percent' and thereby rejecting certain companies, which otherwise were passing the filter of RPT < 25 percent, applied and not disputed by both the Appellant and the AO/TPO; 6. The learned AO/ TPO erred, in law and in facts, by accepting / rejecting companies based on unreasonable comparability criteria; 7. The learned AO/TPO have erred, in law and in facts, by undertaking a negative working capital adjustment; 8. The learned AO/TPO have erred, in law and in facts, by not granting capacity adjustments to account for differences in the capacity utilisation of the Appellant vis- à-vis the comparables, 9. The learned AO/TPO have erred, in law and in facts, by not granting depreciation adjustments to account for differences in the rate of depreciation charged by the Appellant vis-à-vis the comparables; 10. The learned AO/TPO have erred in law and in facts, by not granting adjustments to account for differences in the marketing expenditure incurred by the Appellant vis-à- vis the comparables; 11.The learned AO/TPO erred, in law and in facts, by not making suitable adjustments on account of differences in the risk profile of the Appellant vis-à-vis the comparables, while conducting comparability analysis; 12.The learned AO/TPO erred, in law and in facts, by computing the arm's length price without giving benefit of +/- 5 percent under the proviso to section 92C of the Act; Grounds of appeal relating to general matters 13. The learned AO has erred, in law and in facts, by levying interest of Rs.24,15,703 and Rs.52,160 under section 234B & 234C of the Income Tax Act, 1961, respectively. 14. The learned AO erred, in law and in facts, in initiating penalty proceedings u/s 271(1)(c) of the Act. The Appellant submits that each of the above grounds is independent and without prejudice to one another. The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide on the appeal in accordance with the law.” The assessee has raised the following additional grounds vide application dated 12.07.2018, 31.07.2019 and 21.10.2021. “In addition to the grounds of objections raised in Form 36B before the Hon'ble Tribunal, after ground number 14,

Page 4 of 19 IT(TP)A No. 290 & 438/Bang/2015 the Petitioner hereby wishes to introduce ground numbers 15-18 as under: 15. "The learned AO/ TPO and DRP erred in including Accentia Technologies Ltd., Jeevan Scientific Technology Ltd., Acropetal Technologies Ltd., in the final set of comparable companies by applying unreasonable comparability criteria. 16. The learned DRP, failed to adjudicate on other equally valid grounds justifying exclusion of the following companies from final set of comparable companies: a. Infosys BPO Ltd., b. E-clerx Services Ltd. c. ICRA Online Ltd. 17. The learned AO/ TPO and DRP erred in rejecting Caliber Point Business Solutions Ltd., Datamatics Financial Services Ltd., Nittany Outsourcing Services Private Ltd. (now known as e4e Healthcare Business Services Private Ltd.) and R Systems International Ltd., from the final set of comparable companies by applying unreasonable comparability criteria. 18. The learned DRP erred in rejecting Jindal Intellicom Pvt. Ltd. and Microgenetics Systems Ltd. from the final set of comparable companies by applying unreasonable comparability criteria." The Petitioner submits that the above additional grounds are being raised by way of abundant caution. The additional grounds raise issues which are fundamental to the appeal and non-admission and non-adjudication of the same would result in an incomplete appreciation and adjudication of the matter. The Petitioner submits that the failure to raise these grounds at an earlier stage is neither wilful nor wanton but due to reasons stated above. No prejudice would be caused to the Respondent by reason of the above additional grounds being admitted and adjudicated upon and accordingly the balance of convenience is in favour of such an order being passed by this Hon'ble Tribunal. The Petitioner states and submits that the issues raised in the additional grounds above arise out of the order of the lower authorities. Reliance is based on the decisions of the Hon'ble Supreme Court of India in the case of Jute Corporation of India vs. C.I.T. (187 ITR 688) and National Thermal Power Corporation vs. C.I.T. (229 ITR 383) as well as the full Bench of the Hon'ble High Court of Bombay in the case of Ahmadabad Electricity Co. Ltd. (199 ITR 351)." In the above circumstances the Petitioner prays that this Hon'ble Tribunal may kindly be pleased to;

Page 5 of 19 IT(TP)A No. 290 & 438/Bang/2015 (i) admit and adjudicate the above additional ground, and (ii) pass any other order that may be required in the circumstances of the case and render justice.” “In addition to the grounds of objections raised in Form 36B and additional grounds filed earlier before the Hon'ble Tribunal, after ground number 18, the Petitioner hereby wishes to introduce ground number 19 as under: 19. The learned AO/TPO has erred in passing an order u/s 92CA(3) of the Act, without appreciating the fact that, the order passed is invalid, consequently, all subsequent proceedings are invalid. The Petitioner submits that the above additional ground is being raised by way of abundant caution. The additional ground raises issues which are fundamental to the appeal. The Petitioner would like to press on the fact that the appeal involves adjudication only on the adjustment made u/s 92CA and admission of the ground may lead to the order passed under the said section being null and void. In this regard, the Appellant would like to place reliance on the decisions of the Hon'ble Delhi Tribunal in the case of Honda Trading Corporation, Japan vs. DCIT (ITA No. 1132/De1/2015) and Asian Honda Motor Co. Ltd. Vs. DCIT (ITA No. 6143/De1/2015). Non-admission and non- adjudication of the ground would result in an incomplete appreciation and adjudication of the matter. The Petitioner submits that the failure to raise these grounds at an earlier stage is neither willful nor wanton but due to reasons stated above.” “In addition to the grounds of objections raised in Form 36B and additional grounds filed earlier before the Hon'ble Tribunal, after ground number 19, the Petitioner hereby wishes to introduce ground number 20 as under: 20. The learned AO/TPO has erred in issuing an order u/s 92CA(3) of the Act, after expiry of time limit provided under Section 153/15313 of the Act, rendering such order void, bad in law and not enforceable under the act and consequently, all subsequent proceedings invalid. The Petitioner submits that the above additional ground is being raised by way of abundant caution. The additional ground raises issues which are fundamental to the appeal. The Petitioner would like to press on the fact that the appeal involves adjudication only on the adjustment made u/s 92CA and admission of the ground may lead to the order passed under the said section being null and void. In this regard, the Appellant would like to place reliance on the decisions of the Hon'ble Delhi Tribunal in the case of Honda Trading Corporation, Japan vs. DCIT (ITA No. 1132/Del/2015) and Asian Honda Motor Co. Ltd. Vs. DCIT

Page 6 of 19 IT(TP)A No. 290 & 438/Bang/2015 (ITA No. 6143/Del/2015). Non-admission and non- adjudication of the ground would result in an incomplete appreciation and adjudication of the matter. The petitioner submits that the ground of appeal with respect to this issue has been raised at earlier stages of litigation and before the Hon'ble Tribunal as well. The appellant is only revising the language of previously filed Ground No. 19, for providing better clarity on the contention.” 2. Brief facts of the case are as under: The issues alleged in additional ground raised in Grounds 19 and 20 is in respect of contesting order passed by the Ld. TPO being time barred and liable to be quashed. It is submitted that assessee may be permitted to raise these additional grounds which goes to the root of the case. The Ld.Counsel submitted that admission of additional ground nos. 19 & 20 vide application dated 31.07.2019 and 21.10.2021 be heard first. Admission of Additional Ground Nos. 19 & 20: The Ld. Counsel submitted that both these grounds are on the same issues; regarding the validity of proceedings as order u/s. 92CA(3) was passed after expiry of limitation period. It is submitted that no new facts needs to be investigated for adjudicating the issue raised in these grounds. He placed reliance on the decision of Hon’ble Supreme Court in the case of NTPC Ltd. vs. CIT reported in 229 ITR 383. On the contrary, the Ld.CIT.DR objected for admission of additional grounds. We have perused the submissions advanced by both sides in the light of records placed before us. Since the additional grounds 19 & 20 raised by assessee being a legal issue goes to the root of the matter, we are of the view that

Page 7 of 19 IT(TP)A No. 290 & 438/Bang/2015 it is paramount to take up this issue for adjudication before addressing the other issues raised by assessee. Accordingly, we admit the additional grounds 19 & 20 raised by assessee vide application dated 31.07.2019 and 21.10.2021. Before us the Ld.Counsel contended that the order passed by the Ld.TPO is time barred under the provisions of section 153 rws 92CA(3) of the Act and hence it is liable to be quashed. He referred to the provisions of section 153(1) and submitted that reference u/s 92CA (3) of the Act was received by the Ld.TPO on 03/07/2012 and therefore date of limitation for passing of the order by ld. TPO expired on 30/01/2014. Whereas the Ld.TPO passed order u/s 92CA(3) on 31/01/2014 therefore, the order passed by the Ld.TPO is barred by the limitation. Ld. Counsel thus submitted that since the order of the Ld.TPO is barred by limitation, subsequent proceedings made pursuant to order u/s.92CA(3) does not survive. He submitted that on identical facts, this issue has been decided in following case:  Decision of Hon’ble Delhi Tribunal in case of Honda Trading Corporation vs. DCIT reported in (2015) 61 taxmann.com 223  M/s. Asian Honda Motor Co. Ltd. vs. DCIT in ITA No. 6143/Del/2015, order dated 18.07.2016  M/s. Pfizer Healthcare India Pvt. Ltd. vs. JCIT in W.P. No. 32699 of 2019, judgment dated 07.09.2020, High Court of Madras The Ld.CIT.DR submitted that the order passed by the TPO is not barred by the limitation and submitted that such illegality is capable of being cured and it is merely a case of irregularity in assessment proceedings by the Ld.TPO. The Ld.CIT.DR filed the comments of

Page 8 of 19 IT(TP)A No. 290 & 438/Bang/2015 Ld.TPO on additional grounds. For sake of convenience, the same is reproduced as under:

Page 9 of 19 IT(TP)A No. 290 & 438/Bang/2015

Page 10 of 19 IT(TP)A No. 290 & 438/Bang/2015

The Ld.CIT.DR thus submitted that assuming there is a delay in passing order u/s. 92CA(3), at best, it would be a curable defect.

Page 11 of 19 IT(TP)A No. 290 & 438/Bang/2015 We have perused submissions advanced by both sides in the light of records placed before us. Firstly we look at the various provisions which are cited before us. Section 92CA (3A) of the act reads as under: "[(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" Admittedly the reference to ld TPO was made after 1-6-2007 Therefore the provisions of this section are applicable to the facts of the case. Accordingly ld. TPO may make order under this section at any time before 60 days prior to the date of expiry of limitation as per section 153 (1) of the act. According to section 153 (1) of the act the time limit for passing an order u/s 143 (3) was as under :- Time limit for completion of assessments and reassessments. 153. 39[(1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of-- (a) two years from the end of the assessment year in which the income was first assessable ; or (b) one year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under sub-section (4) or sub- section (5) of section 139, whichever is later :] Provided that in case the assessment year in which the income was first assessable is the assessment year commencing [on or after the 1st day of April, 2004 but before the 1st day of April, 2010], the provisions of clause

Page 12 of 19 IT(TP)A No. 290 & 438/Bang/2015 (a) shall have effect as if for the words "two years", the words "twenty-one months" had been substituted :] [Provided further that in case the assessment year in which the income was first assessable is the assessment year commencing [on or after the 1st day of April, 2005 but before the 1st day of April, 2009] and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA-- was made before the 1st day of June, 2007 but (i) an order under sub-section (3) of that section has not been made before such date; or (ii) is made on or after the 1st day of June, 2007, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years", the words "thirty-three months" had been substituted:] 42b[Provided also that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1st day of April, 2009 or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA-- (i) is made before the 1st day of July, 2012, but an order under sub-section (3) of that section has not been made before such date; or is made on or after the 1st day of July, 2012, (ii) the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years", the words "three years" had been substituted.] [Extracted from taxmann.com as amended by the Finance Act 2012] Therefore accordingly the order u/s 143(3) for AY 2010-11 should have been passed by 31.3.2014. 10. Based on the facts narrated above we hereby tabulate the relevant dates pertaining to the proceedings before the various authorities for the impugned AY. 1. Date of filing of return of income - 04.10.2010 2. 143(1) issued on – 14.04.2011

Page 13 of 19 IT(TP)A No. 290 & 438/Bang/2015 3. 143(2) issued on - 26.08.2011 4. Reference by the Ld.AO made on - 03.07.2012 5. Time period within which 143(3) is to be passed as per sec. 153(1) – 31.03.2014 6. Date by which order u/s. 92CA(3) was to be passed – 28.01.2014 7. Date of passing the order u/s. 92CA(3) – 31.01.2014 Before us the Ld. Counsel relied on decision of Hon’ble Delhi Tribunal in case of Honda Trading Corporation Vs. DCIT (supra) wherein, it was held that the time limit specified u/s 92CA(3A) is mandatory and not directory and therefore the Ld.TPO is bound by the time limit for passing of the order u/s 92CA (3) of the Act. Accordingly, in that case time limit as per section 153(1) of the Act was up to 7.06.2014 and the Ld.TPO passed his order on 31.05.2014 instead of on or before 08.04.2014, hence order passed by the Ld.TPO therein was held to be time barred. Hon’ble Delhi Tribunal further held that in such circumstances the final assessment order would be same but the addition on account of transfer pricing adjustment arising from the determination of the ALP of the international transaction by the TPO emanating from his time barred order passed u/s. 92CA(3) is unsustainable. Hon’ble Delhi Bench thus directed for deletion of addition of on account of transfer pricing adjustment made in the final assessment order. Hon’ble Delhi Tribunal held as under:- " B. Time limit for passing of order by the TPO 6.1. The ld. AR also challenged the passing of the order by the TPO. It was submitted that the TPO passed order on 31.5.2014, which was time barred and, hence, the same should be annulled leading to the quashing of the final assessment order. In the opposition, the ld. DR supported the Revenues stand.

Page 14 of 19 IT(TP)A No. 290 & 438/Bang/2015 6.2. We have heard the rival submissions and perused the relevant material on record. It has been noticed above that the provisions of section 92CA requiring the passing of the order by the TPO determining the ALP of the international transactions, came into being by the Finance Act, 2002. As per sub-section (3) of section 92C, the TPO is required to pass the order determining the ALP of the international transactions. No time limit was initially given for the passing of order by the TPO. It is only by the Finance Act, 2007, that sub-section (3A) was inserted providing time limit for the passing an order by the TPO. No amendment has been carried out in this provision thereafter. Sub- section (3A) of section 92CA containing the relevant time limit for the passing of the order by the TPO, reads as under : - ‘(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.. 6.3. It transpires from a reading of the above provision that where a reference is made to the TPO after 1.6.2007, an order under sub-section (3) may be made at any time before 60 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 re-assessment, etc., expires. 6.4. The ld. DR vehemently contended that the use of the word `may in this provision for the passing of the order by the TPO within a period of 60 days of the limitation set out in section 153 indicates that the adherence to this time limit is not mandatory. He contended that even if the order is passed after the period of 60 days from the period of limitation as given u/s 153, still it would be treated as having been passed within time. This argument was countered by the ld. AR. 6.5. There is no doubt that the legislature has used the word `may in sub-section (3A) of section 92CA. There is further no doubt that the ambit of the word `may is different from the word `shall. Whereas, ordinarily the use of the word `shall signifies mandatory compliance, the word may signifies directory compliance. But at times, the

Page 15 of 19 IT(TP)A No. 290 & 438/Bang/2015 word `may can also be read as `shall and vice versa. In fact, all depends upon the context and the background of the provision in which such a word is used. 6.6. Section 127 deals with the power to transfer cases. Sub-section (1) of this provision provides that : `The Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. Dispute arose in Sahara Hospitality Ltd. vs. CIT (2013) 352 ITR 38 (Bom) as to whether or not giving the assessee a reasonable opportunity of being heard before the transfer of case by the Chief Commissioner, in the backdrop of the use of the word `may in the provision, be considered as mandatory. The Hon’ble Bombay High Court has held that the word `may in section 127 should be read as `shall and hence the granting opportunity to the assessee is mandatory. 6.7. Section 16 of the Wealth-tax Act, 1957 deals with the assessment of wealth. Section 16A having marginal note of `Reference to Valuation Officer provides through sub- section (1) that : `For the purpose of making an assessment (including an assessment in respect of any assessment year commencing before the date of coming into force of this section) under this Act, where under the provisions of section 7 read with the rules made under this Act or, as the case may be, the rules in Schedule III, the market value of any asset is to be taken into account in such assessment, the Assessing Officer may refer the valuation of any asset to a Valuation Officer- (a) in a case where the value of the asset as returned is in accordance with the estimate made by a registered valuer if the Assessing Officer is of opinion that the value so returned is less than its fair market value; (b) in any other case, if the Assessing Officer is of opinion- (i) that the fair market value or the asset exceeds the value of the asset as returned by more than such percentage of the value of the asset as returned or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do. In Raj Paul Oswal vs. CWT (1988) 171 ITR 489 (P&H), there arose a quarrel as to the meaning of the word `may used in section 16A in the context of making reference to the Valuation Officer. Settling the controversy, the Honble High Court held that

Page 16 of 19 IT(TP)A No. 290 & 438/Bang/2015 the word `may' used in section 16A(1)(b), should be read as `shall'. It held that if the legislative intent had been to accord total discretion to the WTO to make a reference to the Valuation Officer or not in cases which were covered by cls. (a) & (b) of sub-s. (1) of s. 16A of the WT Act, then there was no necessity of providing the guidelines in cl. (a) or in sub-cls. (i) and (ii) of cl. (b) of sub-s. (1) of s. 16A. It was, therefore, held that the legislature by prescribing the contingencies, in which, by implication, it would not be necessary to make a reference, also again by necessary implication be taken to have intended that the reference to Valuation Officer was must if the given contingencies did not exist. In this regard, the Honble High Court observed that : `There is no doubt about the fact that the use of expression "may" and "shall" to some extent serves an indicia to the intention of the legislature and helps in deciding as to whether the given requirement is directory or mandatory in character, but the use of expression "may" or "shall" is never considered decisive in that regard. It was thus held that the moment the estimated value exceeded the returned value of the asset by more than what is envisaged by r. 3B, then the WTO had no option, but to make a reference and he is not to wait for a request from the assessee to make a reference. Similar view has been expressed by the Honble Delhi High Court in Sharbati Devi Jhalani vs. CWT & Ors. (1986) 159 ITR 549 (Del). It is vivid from the above discussion that the use of word `may or `shall in a provision is not conclusive of its mandatory or directory nature. One needs to go through the text of the provision and the context in which such a word has been used. 6.8. Reverting to section 92CA, 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 TPO before the expiry of time limit for completion of assessment by the AO u/s 153. Despite the use of the word `may, the time limit for passing the order by the TPO is mandatory, as in the otherwise situation of the TPO having been allowed more time by implication, say of three months or more, could at that time have frustrated the provisions of section 153 for the passing of the assessment order by the AO. Thus we have no hesitation in holding 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 TPO is bound by the given time limit for passing of his order. 6.9. Having held that the word `may in section 92CA(3A) should be read as `shall, we once again note that prior to

Page 17 of 19 IT(TP)A No. 290 & 438/Bang/2015 the insertion of section 144C by the Finance Act, 2009, the time limit for completion of assessment was contained in section 153 and accordingly the time limit for the passing of the order by the TPO was also set out accordingly in section 92CA w.r.t. the time limit for the completion of assessment as per section 153. However, with the insertion of section 144C, the time limit for the completion of assessment, or in other words, for passing of the final assessment order, stood shifted to sub- sections (4) or (13) of section 144C and got detached from section 153. Along with this, passing of draft order also became mandatory, for which we have held above that the same is required to be passed within a reasonable time and it has got no relation with the time limit given in section 153. When the position is such that the draft order has to be passed independent of the time limit given in section 153, there appears some logic in not continuing with the time limit for the passing of the order by the TPO tagged with the time limit given in section 153. It has led to incoherence in the provisions. This position can be set right only with a suitable legislative amendment. 6.10. Having held that the time limit given in sub-section (3A) of section 92CA is mandatory for the passing of the order by the TPO, let us find out the time available with the TPO for the passing of his order. It has been noticed above that the time limit as per section 153(1) read with the third proviso and clause (viii) of the Explanation to the section, comes at 7th June, 2014. Period of 60 days prior to such time limit coming as per section 153, available with the TPO for passing his order, comes to an end on 8th April, 2014. As against this, the order was actually passed by the TPO on 31st May, 2014. Thus, the order passed by the TPO is patently time barred. C. Consequences of valid draft order and TPO's time barred order 7. The ld. AR argued that since the draft order as well as the order of the TPO were time barred, the final assessment order passed by the AO was liable to be set aside. We have held above that the draft order was passed within time and only the order of the TPO is time- barred. When an order is passed without jurisdiction or beyond the permissible time, it is considered as null and void. The effect of passing a null and void order is that it is considered as non est, meaning thereby, that it entails all the consequences of not having been passed at all and is ignored for all practical purposes. The Honble Madras High Court in Vijay Television (P.) Ltd. vs. DRP (2014) 369 ITR 113 (Mad) considered a case in which the assessment

Page 18 of 19 IT(TP)A No. 290 & 438/Bang/2015 order was directly passed without routing through draft order or DRP. The Honble Court held it to be a noncurable defect and resultantly the assessment was quashed. It was held that when there is an omission on the part of the AO to follow the mandatory procedure prescribed under the Act, such an omission cannot be termed as a mere procedural irregularity and it cannot be cured. Extantly, we are confronted with a situation in which the draft order has been passed in time but the lapse has come in the passing of the order by the TPO. The consequence of the above scenario is that the passing of a valid and properly timed draft order cannot lead to the setting aside of the final assessment order. However the passing of the time barred order by the TPO, which is again a mandatory procedure prescribed under the Act, would be a non- curable defect, having the consequence as if it was not passed. In such circumstances, though the final assessment order would be saved but the addition on account of transfer pricing adjustment arising from the determination of the ALP of the international transactions by the TPO as emanating from his time barred order, would be unsustainable. We hold accordingly and direct the deletion of addition on account of transfer pricing adjustment made in the final assessment order. 8. In view of our decision on the above legal ground, there remains no need to deal with the contentions raised before us on the merits of the addition on account of transfer pricing adjustment." In the present facts, the Ld.CIT.DR has in the written submission mentioned that the order of the Ld.TPO is passed on 29.01.2014 or 30.01.2014 but dated 31.01.2014. Then, the order of the Ld.TPO is not only irregular, wrong or illegal but is also null and void. Such action cannot be considered to be of any irregularity in the procedure, so as to get any kind of protection u/s. 292BB of the Act. In view of above and following judicial precedent cited before us by the ld AR being decision of the coordinate bench we hold that the order of the ld TPO passed on 31.01.2014 is barred by limitation and liable to be quashed. Therefore, consequently, the proposed addition on account of transfer pricing adjustment amounting to does not survive. Accordingly, ground nos. 19 and 20 of the appeal of the assesse is allowed.

Page 19 of 19 IT(TP)A No. 290 & 438/Bang/2015 In view of our decision on the above ground we do not find it necessary to deal with the contention raised before us on the merits of the addition on account of transfer pricing adjustment as they become infructuous. In view of this ground nos. 1 to 14 of the appeal are dismissed as infructuous. In the result, the appeal filed by the assessee stands allowed on the legal issue. The order passed u/s. 92CA has been held to be bad in law and the addition in respect of international transaction stands quashed. The appeal filed by the revenue becomes infructuous. Accordingly, the assessee’s appeal is allowed and revenue’s appeal is dismissed. In the result, the appeal filed by the assessee is allowed and the appeal of the revenue is dismissed. Order pronounced in open court on 30th December, 2021.

Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 30th December, 2021. /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