2023 (12) TMI 1297 - AT - Income Tax

Validity of the order passed u/s. 92CA(3) - period of limitation - TPO will have to pass an order in time before 60 days prior to the date on which the period of limitation referred to in section 153 of the Act expires - HELD THAT - Though in section 92CA(3A) of the Act it states that the ld. TPO has to pass the order before 60 days of the limitation period mentioned in section 153 which though seems to be only directory and not mandatory but various courts have held that the time limit prescribed for passing of the order by the ld. TPO is mandatory which has to be adhered to strictly while passing the TP order. In the present case, the order of the TPO should have been passed on or before 31.10.2019 and the impugned order dated 01.11.2019 is beyond the time limit stipulated u/s. 92CA(3A) r.w.s. 153 of the Act. Appeal filed by the assessee is allowed.

Summary

Issues Involved:
1. Validity of the order passed by the Transfer Pricing Officer (TPO) as being barred by limitation.
2. Merits of the case related to transfer pricing and other corporate tax grounds.

Summary:

Issue 1: Validity of the TPO's Order as Time-Barred

The assessee challenged the order dated 01.11.2019 passed u/s 92CA(3) of the Income Tax Act, 1961, by the TPO, arguing it was time-barred. The assessee contended that the TPO's order should have been passed before 60 days prior to the limitation for passing the assessment order, which was 31.10.2019. Since the TPO's order was dated 01.11.2019, it was beyond the stipulated time limit u/s 92CA(3A) r.w.s. 153 of the Act. The assessee relied on several judicial precedents, including the case of Johnson & Johnson Private Ltd., which supported the contention that the time limit prescribed for passing the TPO's order is mandatory.

The Departmental Representative argued that the provision of section 92CA(3A) is directory and not mandatory, relying on the interpretation of the word "may" in the statute.

The Tribunal, after considering the submissions and relevant judicial precedents, held that the time limit prescribed u/s 92CA(3A) is mandatory. The TPO's order dated 01.11.2019 was quashed as it was passed beyond the statutory time limit. Consequently, the final assessment order dated 23.04.2021 was also deemed time-barred.

Issue 2: Merits of the Case

Since the order of the TPO was quashed on the grounds of being time-barred, the other grounds raised by the assessee related to transfer pricing and other corporate tax issues became academic and required no separate adjudication.

Conclusion:

The appeal filed by the assessee was allowed, and the order passed by the TPO was quashed as time-barred. The other grounds raised by the assessee were not adjudicated due to the quashing of the TPO's order. The decision was pronounced in the open court on 01.12.2023.