9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 1112 - AT - Income TaxValidity of order u/s 92CA - time limit for passing of the TPO order - period of limitation - HELD THAT - As relying on M/s. Pfizer Healthcare India Private Limited 2021 (2) TMI 1152 - MADRAS HIGH COURT time limit for passing the TPO order in the case of assessee would expire on mid-night of 30th January 2016 i.e. (00 00 Hrs of 30th January 2016). Here in this case, the order of TPO has been passed on 31st January 2016 and accordingly, the TPO order is clearly barred by limitation by one day by virtue of time limit provided under section 92CA(3). The TPO order admittedly has been passed after the limitation has expired and consequently, the same has to be treated as bad in law and is hereby quashed. Thus, in such a situation it has to be reckoned, as if there is no TPO order and consequently, the entire transfer pricing adjustment proposed by the TPO on the international transaction becomes non-est and liable to be quashed. Assessment u/s 144C - eligible assessee - whether, once the TPO order is held to be nullity or quashed on the ground of being barred by limitation, then could AO have passed the draft order treating it to be as eligible assessee ? - Section 144C was brought on the statute as special scheme of assessment and to provide alternative dispute resolution scheme to certain categories of eligible assessee . Section 144C provides that the AO has to pass and forward a draft assessment order in the case of eligible assessee if he proposes to make any variation which is prejudicial to the interest of such assessee, Sub-section 15 has defined eligible assessee for the purpose of section 144C. The issue being fairly settled and the intent of legislature in strictly interpreting the provision of section 144C of the Act being repeatedly held so, the act of the Ld. AO in proceeding to pass a draft assessment order on the basis of an order by the Ld. TPO which is barred by limitation and thus bad in law/ non-est, results in an incurable illegality which is liable to be held as null and void, and thus, consequentially holding the final assessment order to be bad in law as well. Thus, despite the fact that the reference made to the Ld. TPO is valid, in absence of a legally valid transfer pricing order and a valid draft assessment order, the Ld. AO cannot assume jurisdiction to proceed with the assessment under Section 144C of the Act and pass the consequential final assessment order. The decisions of the Hon ble jurisdictional High Court in case of International Air Transport Association 2016 (2) TMI 897 - BOMBAY HIGH COURT and Dimension Data Asia Pacific PTE Ltd. 2018 (7) TMI 1256 - BOMBAY HIGH COURT forties appellant s contentions and the irresistible conclusion that the draft assessment order imbibes a jurisdictional power in terms of Sec. 144C(1) of the Act and creates/ envisages special rights upon the eligible assessee . If such an order is passed on an assessee who is not an 'eligible assessee' as defined in section 144C(15)(b)(i) of the Act, then it would render the entire proceedings pursuant to such order null and void. We find that section 153(1) of the Act, as it stood applicable for the AY 2012-13, provided a time limit of 3 years from the end of AY 2012-13 for completion of assessment under section 143(3) of the Act, i.e., on or before 31 March 2016. In such a case if the Ld. AO invokes the provisions of section 144C of the Act and passes the final assessment order after 31 January 2016 i.e. beyond the period of limitation as stated above, such final assessment order u/s 143(3) r.w.s 144C of the Act is liable to be quashed as being barred by limitation. Thus we hold that the final assessment order passed on 31 January 2017 is beyond the prescribed period of limitation under section 153 of the Act expiring on 31 March 2016, thus, barred by limitation and is hereby quashed. Decided in favour of assessee.
Issues Involved:
1. Transfer Pricing (TP) adjustment related to software development services and intra-group services. 2. Various corporate grounds including lesser deduction under section 10AA, denial of depreciation on goodwill, disallowances under section 40(a) for non-deduction of TDS, and delay in payment of employee's ESIC and PF contributions. 3. Additional grounds challenging the period of limitation for passing the TPO order and the validity of the entire assessment proceedings. Detailed Analysis: 1. Transfer Pricing (TP) Adjustment: The assessee challenged the TP adjustments made by the TPO concerning the provision of software development services and intra-group services. The TPO had proposed adjustments of Rs. 68,37,05,578 for software development services and Rs. 10,51,45,309 for intra-group services, totaling Rs. 78,88,50,887. After the DRP's directions, the final adjustment was reduced to Rs. 63,87,42,448. The assessee contended that the TPO order was time-barred under section 92CA(3A) of the Act, making the entire TP adjustment invalid. 2. Corporate Grounds: The assessee raised several corporate grounds: - Lesser Deduction under Section 10AA: The assessee claimed a lesser deduction of Rs. 48,53,467 under section 10AA. - Denial of Depreciation on Goodwill: The claim for depreciation on goodwill amounting to Rs. 2,92,19,122 was denied. - Disallowance Under Section 40(a): Disallowances were made for non-deduction of TDS on software purchase (Rs. 16,65,932) and payments to foreign parties (Rs. 64,45,907). - Delay in Payment of Employee's ESIC and PF Contributions: A disallowance of Rs. 1,74,35,513 was made for delayed payments. 3. Additional Grounds: The assessee raised additional grounds challenging the period of limitation for passing the TPO order and the validity of the assessment proceedings: - Period of Limitation for TPO Order: The assessee argued that the TPO order was passed beyond the prescribed time limit under section 92CA(3A) r.w.s 153, making it illegal and void. - Validity of Assessment Proceedings: In the absence of a valid TPO order, the entire proceedings initiated by the AO under section 144C were contended to be bad in law. The assessee argued that the AO should have completed the assessment within the due date prescribed under section 153, and since no final assessment was passed within the time limit, the assessment order was barred by limitation. Judgment: The Tribunal admitted the additional grounds raised by the assessee as they went to the root of the issues involved. The Tribunal noted that the TPO order was passed on 31.01.2016, which was beyond the statutory time limit of 60 days prior to the date prescribed under section 153 (i.e., 30.01.2016). Consequently, the TPO order was held to be time-barred and quashed. The Tribunal further held that in the absence of a valid TPO order, the assessee could not be treated as an "eligible assessee" under section 144C. Therefore, the draft assessment order passed by the AO was also invalid. The Tribunal quashed the entire assessment proceedings, including the corporate grounds, as they were based on an invalid draft assessment order. Conclusion: The Tribunal allowed the appeal filed by the assessee on the additional grounds, quashing the TPO order, the draft assessment order, and the final assessment order as barred by limitation and invalid. The Tribunal emphasized the mandatory nature of the time limits prescribed under sections 92CA and 144C, and the necessity for strict adherence to these provisions.
|
