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Facts
The assessee, Pioneer India Electronics Pvt. Ltd., is in appeal against the CIT(A)'s order for AY 2009-10. The core issue revolves around the Transfer Pricing Officer's (TPO) adjustment related to Advertising, Marketing & Promotion (AMP) expenses, and whether the TPO's order was passed within the prescribed limitation period.
Held
The Tribunal held that the TPO's order was barred by limitation by one day, rendering it invalid. Consequently, the assessment proceedings based on this invalid order were also deemed without jurisdiction.
Key Issues
The primary issue was whether the TPO's order under Section 92CA(3) of the Income Tax Act was passed within the statutory limitation period, considering the calculation of the 60-day period prior to the assessment order's expiry.
Sections Cited
92CA, 153, 144C, 271(1)(c), 274
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Income Tax Appellate Tribunal, DELHI BENCH ‘I’: NEW DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI AVDHESH KUMAR MISHRA
This appeal of the assessee for the Assessment Year (‘AY’) 2009-10 is directed against the order dated 13th March, 2017 of the Commissioner of Income Tax (appeal)-2, Gurgaon [‘CIT(A)’].
The assessee has raised following grounds:
“1. The Commissioner of Income Tax (Appeals), Gurgaon ("CIT (A)) based on the order passed by the Deputy Commissioner of Income Tax, Circle 2, Gurgaon (learned AO) and Additional Director of Income Tax (Transfer Pricing-II (1) ('learned TPO) under Section 92CA(3) of the income-Tax Act, 1961 ('the Act"), have erred in law and on facts of the case in framing the assessment at a total loss of INR 1,44,90,845/- as against total loss of 5,95,14,495/-computed by the Appellant.
2. The learned CIT (A)/AO/TPO erred in law and on the facts and circumstances of the case in making adjustment of INR 4,50,23,650/- to 1 Pioneer India Electronics Pvt. Ltd. the total income of the appellant on account of adjustment in relation to Advertising, Marketing & Promotion Expenses (AMP) which is contrary to catena of decisions of Hon'ble High courts/Tribunal and is bad in law (herein after referred to as the "impugned transactions").
3. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in holding that the AMP expenditure incurred by the Appellant in India, being payments made to third parties, can be characterized as an international transaction' as per the provisions of the Act.
4. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case to the extent it confirms adjustment under Transfer Pricing Regulations with reference to imaginary and non-existent international transactions of AMP, is bad in law as it is not in accordance with provisions of law.
5. On the facts and in circumstances of the case and in law, even if the word transaction is given its widest connotation, the learned CIT(A)/AO/TPO has failed to show the existence of an 'understanding' or an 'arrangement' or 'action in concert between the appellant and its AE as regards AMP spend for brand promotion:
6. The learned CIT(A) erred in upholding the transfer pricing adjustment on account of AMP expenses incurred by Appellant completely disregarding various decisions of Hon'ble High Court and coordinate benches of Hon'ble Tribunal.
7. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in making adjustment based on Brightline Test disregarding decisions of Hon'ble Delhi High Court.
8. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in failing to appreciate and apply the principles laid down by Hon'ble Delhi High Court and various tribunal decisions in letter and spirit, thereby proceeding to make separate adjustments towards AMP expenditure by reference to the very same comparables used for benchmarking other international transaction of import of finished goods. Thus, this duplicative approach that has been used is ultra vires under the law and should be held as invalid.
Pioneer India Electronics Pvt. Ltd. 9. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in not appreciating that the Appellant has benefitted by using Pioneer brand without paying fee/royalty for the same.
10. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case by falling to appreciate that AMP is a function performed by Appellant and is closely linked to overall business activities.
11. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case while computing the adjustment by considering selling and promotion expenses, and such expenditure while calculating the AMP expenditure of the Appellant. Without prejudice, the conclusions reached are contrary to the very same decisions which are rated upon by the tax authorities
The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in not appreciating that the Appellant had used Transactional Net Margin Method (“TNMM”) to benchmark its international transactions, and thus, no separate arm's length analysis was required in respect of the alleged international transaction relating to AMP.
13. The learned CIT(A) erred in law and on the facts and circumstances of the case in upholding TPO's action, issued much beyond legitimate jurisdiction, in questioning the reasonableness. quantum, and commercial expediency of AMP expenditure incurred by the Appellant.
14. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in alleging that the AMP expenses incurred by the Appellant in India, were not wholly and exclusively for purposes of its business and resulted in creation of marketing intangibles for the AEs.
15. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in not appreciating that the benefit arising from the incurrence of AMP expenses by the Appellant has been received by the Appellant and benefit, if any, resulting to the AEs is merely incidental.
16. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in not appreciating that the AMP expenses
17. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case in not appreciating the nature of industry and business realities of the Appellant that require and demand the incurrence of such AMP expenditure for creating and enhancing the sale of its products in the relevant market.
18. The learned CIT(A)/AO/TPO erred in law and on the facts and circumstances of the case while computing the adjustment by arbitrarily levying a further mark-up on the AMP expenses incurred over and above the so-called 'bright-line' limit, for determination of the arm's length price of the alleged brand-promotion services rendered by the Appellant to its AEs.
The learned AO erred in law and on the facts and circumstances of the case in initiating penalty proceedings under Section 271(1)(c) read with Section 274 of the Act.
All the above grounds are without prejudice to each other. The Appellant craves leave to add, 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.
The Appellant prays that appropriate relief be granted based on the above grounds of appeal and the facts and circumstances of the case.”
2.1 The assessee has raised an additional ground as under:
“20. The learned AO/TPO has erred in issuing an order under section 92CA (3) of the Act, after expiry of time limit provided under section 92CA(3A) read with section 153 of the Act, rendering such order void, bad in law and not enforceable under the act and consequently, all subsequent proceedings invalid.”
2.2 Furthermore, the assessee has raised another additional ground that whether the order passed under section 92CA(3) of the Act is not barred by the limitation as per section 153 of the Act.
The relevant facts giving rise to this appeal are that the appellant assessee (‘Pioneer India’), a subsidiary of Pioneer Electronics Asiacentre PTE.
Ltd. Singapore, formed on 17th October, 2008, is a distributor of a variety of Car audio visuals, car entertainment accessories, etc. The assessee e-filed its Income Tax Return (‘ITR’) of the relevant year on 24th September, 2009 declaring a loss of INR 59,514,495/-. The case was selected for scrutiny.
During the relevant year, the assessee has entered into following international transactions with its Associated Enterprise (“AE”):
S. Nature of International Value of Most Appropriate No. Transaction Transaction (in INR) Method 1. Import of car audio 278,770,471 TNMM 2. Purchases of fixed Assets 229,879 3. Reimbursement of pre- 15,960,055 Benchmarking not incorporation expenses required 4. Reimbursement of 15,411,279 Benchmarking not expenses paid required 5. Reimbursement of 28,547 Benchmarking not expenses received required 3.1 The assessee selected Transactional Net Margin Method (‘TNMM’) as the Most Appropriate Method (‘MAM’) and the ratio of net operating margin computed by taking Operating Profit as a percentage of Operating Cost (OP/OC) as the Profit Level Indicator (‘PLI’). The Ld. Assessing Officer (‘AO’) referred the appellant assessee’s case to the Ld. Transfer Pricing Officer (‘TPO’) for determining the Arm’s Length Price (‘ALP’), who proposed adjustment of INR 56,200,462 vide order dated 30th January, 2013 passed under section 92CA(3) of the Act. Consequentially, the assessment was completed at loss of INR 3,314,033 vide order dated 21st May 2013 passed appellant assessee filed appeal before the Ld. CIT(A), who restricted the Transfer Pricing adjustment to INR 45,023,650 vide impugned order. Thus, this appeal is before us.
Shri Nageswar Rao, Advocate, appearing on behalf of the assessee submitted that he would be pressing only additional grounds mentioned above, at this stage, challenging validity of not only the assessment order but also the TPO’s order dated 30th January, 2013. The Ld. Counsel submitted that both of these orders were barred by limitation. The Ld. Counsel further submitted that since additional grounds were legal grounds and went to the root of validity of assessment; therefore, the additional grounds should be admitted for adjudication on merits as the relevant facts required for adjudication of these additional grounds were already on the record. Further, he drew our attention to the fact that no fresh evidence was required for adjudication of these legal grounds though raised subsequently as additional grounds. He further asserted that legal/jurisdictional issues could be raised at appellate stage even if such issues were not raised before the Authorities below.
On the other hand, Shri Bhopal Singh, Sr. DR, representing the Revenue vehemently opposed admission of additional grounds of appeal on the reasoning that the said additional grounds had been raised in 2022, after 5 years from the date of filing of the said appeal.
We have heard both parties and have perused material available on the record. A perusal of substantive grounds of appeal and the application for admission of additional grounds clearly indicate that these are legal grounds assailing the validity of the assessment order and the order of the Ld. TPO.
The Hon'ble Supreme Court of India in the case of National Thermal Power Company, 229 ITR 383 has held that the Tribunal has jurisdiction to examine a question of law which arises from the facts on record and have a bearing on the tax liability of the assessee. In the instant case, the additional grounds of appeal raised by the assessee challenges the validity of assessment order and the order of the Ld. TPO on the ground of limitation.
No further documentary evidence is required to be adduced for adjudicating these grounds. We; therefore, admit the said additional grounds of appeal for adjudication.
The Ld. Counsel submitted that he would be confining his submissions only with respect to the additional grounds at this stage, without prejudice to the original grounds/other additional grounds of appeal.
If the additional grounds challenging the validity of assessment order and the order of the Ld. TPO were decided favourably, the original grounds/other additional grounds would become academic and, specific adjudication of the original grounds/other additional grounds might not be required.
The Ld. Counsel submitted that the order passed by the Ld. TPO dated 30th January, 2013 was barred by limitation by one day. Narrating the section 92CA(3) of the Act on 30th January, 2013. Further, it was submitted that the draft assessment order was passed on 25th March, 2013 and the final assessment order on 25th May, 2013. The Ld. Counsel submitted that the Ld. TPO had to pass the order in accordance with the provisions of section 92CA(3A) of the Act, where reference had been made to him, at any time before sixty days prior to the date on which the period of limitation referred to in section 153 of the Act for making the draft assessment order was going to expire. The Ld. Counsel contended that the day on which limitation to pass assessment order was going to expire; here in the present case 31st March, 2013, had to be excluded while calculating 60 days prior to the date on which the period of limitation referred to in section 153 of the Act for making the draft assessment order was going to expire. Thus, the last date for passing the order under section 92CA(3) of the Act was 29th January, 2013 and not 30th January, 2013. Therefore, the Ld. TPO’s order passed under section 92CA(3) of the Act on 30th January, 2013 was barred by limitation by one day.
The Ld. Counsel placed reliance on the decisions of the hon’ble Madras High Court in the case of Pfizer Healthcare India (P) Ltd., W A No. 1148 & 1149 of 2021 dated 21st March 2023 (DB) and W P No. 32699 of 2019 dated 7th September, 2020 (SB) and coordinate bench of the Tribunal in the cases of Louis Dreyfus Commodities India Pvt. Ltd. and Honda Trading Corp. ITA No. 1132/Del/2015. Further reliance was placed 899/Mum/2018, Swiss Re Global Business Solution India Pvt. Ltd. IT(TP)A No. 290/Bang/2015 and Unisys India Pvt. Ltd. ITA No. 2025/Bang/2017.
The Ld. Counsel submitted that the Single Judge of the Hon'ble Madras High Court in the case of bunch of appeals, lead case being Pfizer Healthcare India (P) Ltd. (supra) had decided the similar issue. The order of the Single Judge was challenged by the Revenue in writ appeal before the Division Bench of Hon'ble Madras High Court. The Division Bench in the case titled DCIT vs. Saint Gobain India (P) Ltd.,Writ Appeal Nos. 1120, 1115, 1139, 1148, 1149, 2035, 2036, 2039, 2043 and 2066 of 2021 and CMP Nos.7069, 7014, 7170, 7199, 7212, 12990, 12999, 13006, 13017 and 13070 of 2021 confirmed the findings of Single Judge Bench. Thereafter, Tribunal, in similar set of facts, have decided this issue in favour of the assessees and against Revenue by holding orders passed by the Ld. TPOs barred by limitation.
The Ld. Counsel further submitted that the draft/final assessment order, once the order passed by the Ld. TPO barred by limitation, also became barred by limitation as the assessee did not come in the purview of the "eligible assessee" in accordance with the provisions of section 144C of the Act because there was no valid order under section 92CA(3) of the Act in the case of assessee. Therefore, the assessment framed on such time barred order of the Ld. TPO was unsustainable. vehemently submitted that the order passed by the Ld. TPO was a valid order passed within the period of limitation. The Ld. DR submitted that the CBDT vide Circular No.3/2008 dated 12.03.2008. He drew our attention to the Explanatory Notes on the provisions of the Finance Act, 2007 extending the time limit specified in section 153 of the Act by 12 months, where reference made to the TPO. Further, it had also been provided therein that the TPO should determine the ALP at least two months before the expiry of statutory time limit for making the assessment. In this appeal, due date for completion of the draft assessment under third proviso of section 153(1) of the Act was 31st March, 2013 and the time limit for passing an order under section 92CA(3) of the Act was two months prior to the date of limitation. The Ld. TPO passed the order on 30th January, 2013 which was two months prior to 31st March, 2013; therefore, the order passed by the Ld. TPO was within the period of limitation. The Ld. Sr. DR submitted a report, dated 26.05.2025, of the Ld. TPO-1(3)(2), New Delhi before us, which submitted that the said order of the Ld. TPO was not barred by limitation. The Ld. Sr. DR submitted that in line with the CBDT’s Central Action Plan, the Ld. TPO had passed the order within the period of limitation. The Ld. Sr DR placed reliance on the decision of the Hon’ble Gauhati High Court in the case of Sardar Harvinder Singh Sehgal [1997] SCC Online Gau 62.
We have heard both parties and have perused the material available on the record. Since, the Ld. Counsel has restricted his submissions to the deciding the legal issues raised in additional grounds. The contention of the assessee is that the order passed u/s.92CA(3) of the Act is barred by limitation by one day. The period of limitation for passing the assessment order under section 153(1) of the Act (i.e. 3 years from the end of AY) and the time limit for passing the order under section 92CA(3A) of the Act 60 days prior to the assessment order. The dispute here is that whether the 31st March, 2013 would be excluded/included for counting the 60 days prior to the date on which the assessment gets barred by limitation. As per the Ld. Counsel the 31st March, 2013 has to be excluded, whereas, as per the Ld. Sr.
DR, it has to be included.
The relevant provisions of sections 92CA(3A) and 153(1) of the Act and the third proviso as was applicable to the impugned AY read as under:
“Section 92CA (3A): "(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:"
“Section 153(1): Time limit for completion of assessment and reassessments- (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of - Pioneer India Electronics Pvt. Ltd. (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 xxxxxxxxxxx Provided further xxxxxxxxxx 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 is made, 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"
A conjoint reading of the relevant provisions of sections 92CA(3A) and 153(1) of the Act show that the Ld. TPO is required to pass order under section 92CA(3A) of the Act at any time before sixty days prior to the date on which the period of limitation referred to in section 153 of the Act for making assessment order expires. The Division Bench of the Hon'ble Madras High Court in the case of Saint Gobain India (P) Ltd. (supra) has upheld the decision of Single Judge observing as under:
"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 this 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:
Pioneer India Electronics Pvt. Ltd. "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 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] .)"
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 "before" 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.
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.
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.
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 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 Pioneer India Electronics Pvt. Ltd. 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.
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.
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.
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 pending, 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.
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 on the overall scheme and object of the provisions would have to be considered while determining whether it is mandatory or directory.
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.
Pioneer India Electronics Pvt. Ltd. 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".'
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 in 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.
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 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."
The period of limitation for passing the assessment order in the instant case expires on 31st March, 2013. The time limit for passing the order under limitation referred in section 153 of the Act expires. Thus, the limitation in the present case for passing the order under section 92CA(3A) of the Act expires on 29th January, 2013. The Ld. TPO passed the order under section 92CA(3A) of the Act expires on 29th January, 2013. A perusal of clause 43 of Circular No.3/2008 dated 12/03/2008 shows that the word ‘month’ has been used therein instead of ‘days’ used in the Act. Undoubtedly, to months may not necessarily be equal to sixty days always as specified in the Act.
"Two months" as mentioned in Circular can be more or even less than sixty days. Therefore, expression issued to evaluate limitation period as specified in the Act has to be strictly followed.
Following the reasoning of the decision of the of the Hon'ble Madras High Court in the case of Saint Gobain India (P) Ltd. (supra) and decisions of the Tribunal in above cited cases, we are of the considered view that the order of Ld. TPO in the present case is barred by limitation by one day.
Ordered accordingly. Thus, the order of Ld. TPO in the present case is held as invalid order being barred by limitation. Therefore, the appellant assessee is not an "eligible assessee" in terms of the definition provided in section 144C(15) of the Act. Once the substratum for making the assessment in this case erodes due to invalid TPO’s order, the subsequent proceedings emanating from flawed foundation is held without jurisdiction. In the light of the above-mentioned facts and decisions relied upon by the Ld. Counsel, we find merit in the additional grounds. The assessee therefore, succeeds on the impugned order is set aside as the same is not valid in the eyes of law. Since the case was not heard on merit and other grounds; therefore, these are left open for adjudication, if the need arises.
In the result, the appeal of the assessee is allowed.
Order pronounced in open Court on 19th September, 2025