DEPUTY COMMISSIONER OF INCOMETAX, CHENNAI vs. SAINT - GOBAIN INDIA PRIVATE LIMITED, CHENNAI

The impugned assessment is liable to be quashed as invalid and without juri iction on account of being barred by limitation under Section 153(1) read with Section 153(4) of the Act, since the Appellant is not an eligible Assessee under Section 144C(1) of the Act as the transfer pricing proceedings have become void ab--initio subsequent to the order of the Madras High Court in WP NO 32669 of 2019 upheld by WA No. 1148 of 2021, followed by Chennai Tribunal in Verizon Data Services India Private Limited (TS825 ITAT 2022 Chny-TP) and Pfizer Healthcare India Private Limited in ITA No 641/Chny/2023 for the assessment year 2016-17 dated 03.06.2024. 2. Thus, the AO has erred in law, by passing the final assessment order on 28.02.2020 which is beyond the timeline for completion of proceedings provided under Section 153(1) read with Section 153(4) of the Act (i.e., beyond 33 months) and hence the final assessment order is invalid and unsustainable in law.

The Appellant prays the Hon'ble Tribunal to permit raising the above additional ground as part of the appeal filed for AY 2016-17. ITA Nos.1505 & 1672/Chny/2024 (AY 2016-17) M/s. Saint Gobain India Pvt. Ltd. :: 3 ::

Facts relevant to the legal issue are that the Assessee Company filed its ITR/RoI for the AY 2016-17 on 30.11.2016 admitting total income of Rs.245,63,06,280/- under the normal provisions and book profits of Rs.392,27,00,897/-. Subsequently, the Assessee filed a revised return on 30.03.2018, revising the total income to Rs.247,98,23,940/- under the normal provisions and book profits of Rs.392,77,40,155/- under section 115JB of the Act and claimed a refund of Rs.34,77,56,250/-. A reference u/s 92CA of the Act was made to the TPO-3, Chennai wherein the TPO, vide order dated 01-11-2019, proposed a downward adjustment of Rs. 67,83,46,826. 4. However, against the aforesaid TPO Order dated 01 November 2019 the Assessee-company, Saint Gobain India Pvt Ltd, filed Writ Petition before Hon’ble High Court of Madras in WP No. 33751 of 2019 [etc. a batch of Writs]. The Hon’ble Single Bench vide order dated 07.09.2020 held that the TP order as barred by limitation. In this common decision, [of similar Assessee’s] Hon’ble High Court held that the TPO order passed u/s 92CA(3) was barred by limitation by one day. It was noted that in terms of Sec.92CA(3A), an order has to be passed by TPO before 60 days prior to the last day on which the period of limitation referred to in Sec.153 for making assessment expires. And that the assessment is to be completed within 21 months from end of assessment

Meanwhile, the AO completed the assessment under section 143(3) r.w.s.144C of the Act on 28.02.2020 without incorporating the TPO additions in the Final Assessment Order, against which the Assessee preferred an appeal before the Ld. CIT (A).

Meanwhile, it is to be noted that the Revenue’s writ appeals against aforementioned Hon’ble Single Bench Order came up for hearing before the Division Bench of the Hon’ble Madras High Court in WA 1120 of 2021 etc. batch which was disposed-off vide order dated 31.03.2022 wherein the writ appeals were dismissed and the adjudication of the Ld. Single Bench was upheld/confirmed. This dismissal of Writ Appeal filed by Department has also been acknowledged by CIT(A) in his Order dated 22.03.2024 in Para 3.4 Page No. 12.[Copy of the order is placed before us for reference].

However, the Ld. CIT (A) proceed to adjudicate on the merits of the case, partly allowing the appeal. Aggrieved by this action of Ld CIT(A), the Assessee/Revenue has preferred this appeal before us. 8. During the course of hearing, the Assessee is noted to have filed additional grounds (supra), challenging the AO’s order as time-barred on the Juri ictional ground that the Transfer Pricing Order dated 01.11.2019 and Final assessment order passed u/s 143(3) r.w.s 144C (3) of the Act dated 28.02.2020 is barred by limitation under section 153(1) r.w.s 153 (4) of the Act. 9. The Ld AR, assailing the impugned action of AO passing the Final assessment order on 28.02.2020 passed u/s 143(3) r.w.s 144C (3) of the Act, as time-barred under section 153(1) r.w.s 153 (4) of the Act, brought to our notice the sequence of events to demonstrate that the assessment order is time barred. Particulars Date End of the Assessment Year 31/03/2017 Time limit for completion of assessment as per Section 153(1) of the Income Tax Act, 1961 ('the Act') - 21 months from the end of the Assessment year 31/12/2018 Time limit for completion of assessment as per Section 153(4) of the Act in case of the Appellant since transfer pricing reference was made additional 12 months 31/12/2019 Time limit for issuance of Transfer Pricing Order as per Section 92CA(3A) of the Act - as upheld by the Hon'ble Madras High Court in the case of the Appellant in WA No. 1120 of 2021 31/10/2019 Date of issuance of Transfer Pricing Order in the case of the Appellant 01/11/2019 Date of issuance of Draft Assessment Order in the case of the Appellant 31/12/2019 Date of issuance of Final Assessment Order in the case of the Appellant 28/02/2020

According to the Ld AR, since the transfer pricing proceedings were barred by limitation of time, the order dated 01.11.2019 is void-ab-initio and accordingly, the transfer pricing adjustment is non-est. Consequently, the Assessee cease to be an eligible assessee as defined under section 144C(15)(b) of the Act; and therefore, the machinery provisions of Section 144C of the Act wouldn’t get triggered in the present case. In such an event, the assessment in the case of the Assessee ought to have been completed within 33 months from the end of the Assessment year as per Section 153(1) read with Section 153(4) of the Act, i.e., on or before 31.12.2019. However, since the assessment was concluded vide the final assessment order dated 28.02.2020, the impugned assessment is barred by statutory limitation. Accordingly, the impugned assessment for the subject year is void-ab-initio. For such a proposition, the assessee relies upon the decision of this Tribunal in the case of M/s Pfizer Healthcare India Pvt. Ltd. (ITA No. 641/Chny/2023, order dated 03.06.2024), which the Ld AR points out to be pertaining to the same Assessment Year 2016–17 as in the present case and interestingly involves identical dates as of the present case (In the case of M/s Pfizer Healthcare India Pvt. Ltd. also the Transfer Pricing Order was dated 01.11.2019 and the Final Assessment Order was dated 28.02.2020). In that case, the Ld AR pointed out that this Tribunal held that since the Transfer Pricing proceedings were barred by limitation, the corresponding

The appeal stand allowed in terms of our above order.”

The Ld AR brought to our notice that in the case of M/s Pfizer Healthcare (cited supra) the Tribunal had relied upon the case of M/s Verizon Data Services India Pvt Ltd, IT (TP) A No. 37/Chny/2021 dated 18.11.2020 wherein this Tribunal took similar view for the same Assessment Year 2016–17 and held as under: “8. The undisputed position that emerges is that now the division bench has dismissed the Writ appeals of the revenue and confirmed the adjudication of Hon'ble Single Judge. Accordingly, the legal plea as raised by Ld. Sr. Counsel squarely favors the case of the assessee. Therefore, we would hold that considering the statutory time limit, the order passed by Ld. TPO u/s 92CA(3) on 01.11.2019 would be barred by limitation and consequence as mentioned in para-4 would follow. In other words, this order would be time barred as a result of which the ITA Nos.1505 & 1672/Chny/2024 (AY 2016-17) M/s. Saint Gobain India Pvt. Ltd. :: 8 ::

Based on the above position of law and judicial precedents, the Assessee pleads that the assessment concluded vide order dated 28.02.2020 to be held as barred by limitation and accordingly, as void- ab-initio.

Per contra, Ld.DR supported the action of the TPO/AO and opposed the contentions raised by assessee and submitted that unless TPO determines Arms Length Price (ALP) of the transaction referred to him, the AO couldn’t have passed the assessment order. According to the Ld.DR, the AO can’t be said to be clairvoyant (meaning have the power to predict the future). Therefore, the AO couldn’t have predicted the order passed by the Hon’ble High Court and pass assessment orders. According to the Ld.DR, hence the contention raised by the assessee is akin to AO being asked to perform an impossible task. Therefore, according to him, it is illogical to raise such a plea and therefore wants us to dismiss the legal issue and also referred to the following decisions of the Hon’ble Supreme Court:- (a) Shyamal Sarkar v. Commissioner of Income-tax, Siliguri reported in 250 Taxman 18 (SC) (b) VLS Finance Ltd v. Commissioner of Income-tax, reported in 239 Taxman 404(SC) 15. In the light of the aforesaid submission, the Ld.DR wants us to dismiss the legal issue. 16. We have heard both parties and perused the records and we note that the assessee in this case had filed the ITR/ROI for the AY 2016-17 on 30.11.2016 admitting total income of Rs.2,45,63,06,280/- under the normal provisions and book profits of Rs.3,92,27,00,897/-. Subsequently, the Assessee filed a revised return on 30.03.2018 by revising the total

In the result, appeal filed by the assessee is allowed and appeal filed by the Revenue is dismissed.