9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (3) TMI 563 - AT - Income TaxPeriod of limitation for palling an order passed by the TPO u/s 92CA (3) read with section 153 - how the period of 60 days prior to the date of TP order i.e. 31.03.2013 is to be computed? - HELD THAT - Hon ble Madras High Court in case of M/s. Pfizer Healthcare India Pvt. Ltd. 2021 (2) TMI 1152 - MADRAS HIGH COURT while dealing with the issue held that for computing the period of 60 days, the last date as per section 153 should be excluded. Computation of period of 60 days given by the taxpayer extracted in the preceding para no.20 cannot be faulted with on any ground because from 31.03.2013, the date of passing order of the AO, 60 days was to be computed by excluding the date of order i.e. 31.03.2013. So, while excluding the date 31.03.2013, the day of passing the order, the order was required to be passed by the TPO by 29.01.2013 whereas the impugned order has been passed on 31.01.2013 which is barred by limitation. Following the order passed by the coordinate Bench of the Tribunal in cases of M/s. Pfizer Healthcare India Pvt. Ltd. and Honda Trading Corporation 2015 (9) TMI 846 - ITAT DELHI respectively and mandate of section 92CA (3) read with section 153 of the Act, impugned order passed by the ld. TPO is barred by limitation which was required to be passed by 29.01.2013 and as such is hereby quashed. Consequent additions made on account of transfer pricing adjustment by way of determining the ALP transaction by the TPO are also not sustainable in the eyes of law, the order of the TPO being barred by limitation. Since vide assessment order dated 24.02.2014 AO has made addition on account of determination of ALP of international transaction, such addition stands deleted being order of ld. TPO barred by limitation, but the assessment order u/s 143 (3) passed by AO is in time, it stands except those additions proposed by ld. TPO. Thus, additions made by AO, based on order of ld. TPO, stand deleted without entering into grounds raised on merits by the taxpayer.
Issues Involved:
1. Validity of the Assessment Order based on directions from the Dispute Resolution Panel (DRP). 2. Arm's length principle for international transactions related to trade facilitation services, deferred payment interest, and business support services. 3. Computation of interest under sections 234B, 234D, and 244A of the Income-tax Act. 4. Initiation of penalty proceedings under Section 271 (1) (c) of the Income-tax Act. 5. Jurisdictional issue regarding the time limit for passing the Transfer Pricing Officer's (TPO) order. Detailed Analysis: 1. Validity of the Assessment Order: The taxpayer argued that the assessment order passed by the AO, based on the directions from the DRP, was vitiated as the DRP erred both on facts and in law. The DRP partially confirmed the addition made by the AO without proper appreciation of the facts and law. 2. Arm's Length Principle for International Transactions: - Provision of Trade Facilitation Services: The DRP classified the transaction as a 'trading' activity rather than understanding its exact nature and the functions performed, assets employed, and risks assumed by the taxpayer. The DRP's decision was based on the incorrect conclusion that the credit risk was borne by the taxpayer, despite the taxpayer receiving the entire outstanding amount including interest. - Interest on Deferred Payments: The DRP disregarded the taxpayer's comparability analysis and upheld the TPO's use of lending rates to benchmark the transaction based on the risks assumed. The DRP also incorrectly assumed that the facility provided by the taxpayer was 'unsecured,' affecting the credit rating determination. - Business Support Services: The DRP rejected the taxpayer's comparables and search methodology without providing any cogent reasons. The DRP selected companies that were not comparable in terms of functions performed, assets employed, and risks assumed. It included supernormal profit-making companies in the final comparables' set and disregarded prior years' data, insisting on current year data which was not available to the taxpayer at the time of preparing its TP documentation. 3. Computation of Interest: The AO proposed to compute interest under sections 234B, 234D, and 244A of the Act, which the taxpayer contested as erroneous. 4. Initiation of Penalty Proceedings: The AO initiated penalty proceedings under Section 271 (1) (c) of the Act, which the taxpayer argued was grossly erroneous. 5. Jurisdictional Issue Regarding Time Limit: The taxpayer raised an additional ground, arguing that the TPO's order was barred by limitation, rendering the final assessment order null and void. The taxpayer contended that the TPO's order dated 31.01.2013 was beyond the prescribed time limit, as the last date to pass the order was 29.01.2013. The Tribunal agreed with the taxpayer, referencing the Hon'ble Madras High Court's decision in M/s. Pfizer Healthcare India Pvt. Ltd. vs. JCIT, which held that the period of 60 days should be computed by excluding the last date. Tribunal's Decision: The Tribunal allowed the taxpayer's application for raising the additional ground on the jurisdictional issue. It held that the TPO's order dated 31.01.2013 was barred by limitation, as it should have been passed by 29.01.2013. Consequently, the transfer pricing adjustments made by the TPO were not sustainable, and the additions based on the TPO's order were deleted. The assessment order u/s 143 (3) passed by the AO was upheld except for the additions proposed by the TPO. The appeal filed by the taxpayer was allowed. Order pronounced in open court on 11th March 2021.
|
