2022 (3) TMI 1510 - AT - Income Tax

Validity of order u/s 92CA(3) - period of limitation - Time limit for completion of assessments and reassessments - protection u/s. 292BB - HELD THAT - Hon ble Delhi Tribunal in case of Honda Trading Corporation Vs. DCIT 2015 (9) TMI 846 - ITAT DELHI 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. Thus we hold that the order of the Ld.TPO passed on 30.01.2015 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.

Issues Involved:
1. Validity of the Dispute Resolution Panel (DRP) directions.
2. Rejection of Transfer Pricing (TP) documentation.
3. Inclusion and exclusion of comparable companies for Transfer Pricing.
4. Use of data available at the time of assessment versus data available at the time of preparing TP documentation.
5. Aggregation approach in TP study.
6. Arm's length value of international transactions related to reimbursement of expenses.
7. Classification of interest income.
8. Addition due to unreconciled income.
9. Credit for Dividend Distribution Tax.
10. Charging of interest under sections 234B and 234C of the Income-tax Act.
11. Jurisdictional issues concerning the time limit for passing the Transfer Pricing Officer's (TPO) order.

Detailed Analysis:

1. Validity of DRP Directions:
The revenue contended that the directions of the DRP were opposed to law and facts, particularly in considering the average of both half-year margins to neutralize high Related Party Transactions (RPT) for AY 2010-11. The Tribunal did not find it necessary to address this issue due to the resolution of the jurisdictional issue.

2. Rejection of TP Documentation:
The assessee argued that the rejection of its TP documentation by the TPO and the subsequent adjustment to its transfer price were erroneous. The Tribunal did not delve into the merits of this contention due to the resolution of the jurisdictional issue.

3. Inclusion and Exclusion of Comparable Companies:
The assessee challenged the inclusion of Surana Ventures Limited and V-Guard (others segment) as comparables and the exclusion of Websol Energy. The Tribunal did not address these issues on merits due to the resolution of the jurisdictional issue.

4. Use of Data for TP Documentation:
The assessee contended that the TPO erred in using data available at the time of assessment proceedings rather than data available when preparing the TP documentation. This issue was rendered academic due to the resolution of the jurisdictional issue.

5. Aggregation Approach in TP Study:
The assessee argued against the TPO's rejection of the aggregation approach in its TP study. The Tribunal did not address this issue on merits due to the resolution of the jurisdictional issue.

6. Arm's Length Value of International Transactions:
The assessee contended that the TPO's approach of upholding the arm's length value of the international transaction related to reimbursement of expenses as NIL was erroneous. This issue was rendered academic due to the resolution of the jurisdictional issue.

7. Classification of Interest Income:
The assessee argued that the interest income should be reduced from Capital Work in Progress (CWIP) rather than classified as "Income from Other Sources." The Tribunal did not address this issue on merits due to the resolution of the jurisdictional issue.

8. Addition Due to Unreconciled Income:
The assessee challenged the addition made on account of unreconciled income as per Form 26AS and the income considered in the books. This issue was rendered academic due to the resolution of the jurisdictional issue.

9. Credit for Dividend Distribution Tax:
The assessee contended that the AO erred in not granting credit for the Dividend Distribution Tax paid and in charging interest under section 115P. The Tribunal did not address this issue on merits due to the resolution of the jurisdictional issue.

10. Charging of Interest under Sections 234B and 234C:
The assessee argued against the charging of interest under sections 234B and 234C. The Tribunal did not address this issue on merits due to the resolution of the jurisdictional issue.

11. Jurisdictional Issues Concerning Time Limit for TPO's Order:
The Tribunal admitted the additional ground raised by the assessee regarding the validity of the TPO's order being time-barred under section 92CA(3A) read with section 153. The assessee argued that the TPO's order dated 30.01.2015 was beyond the prescribed time limit, making it illegal, null, and void. The Tribunal agreed with the assessee, referencing various judicial precedents, including the decisions of the Delhi Tribunal in Honda Trading Corporation vs. DCIT and the Madras High Court in M/s. Pfizer Healthcare India Pvt. Ltd. vs. JCIT. The Tribunal concluded that the TPO's order was indeed time-barred and quashed it, rendering the subsequent proceedings and additions based on the TPO's order unsustainable.

Conclusion:
The Tribunal allowed the assessee's appeal on the jurisdictional issue, quashing the TPO's time-barred order and the consequent transfer pricing adjustments. As a result, the revenue's appeal became infructuous and was dismissed. The Tribunal did not find it necessary to address the other contentions on merits due to the resolution of the jurisdictional issue. The order was pronounced on 30th March 2022.

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