2023 (7) TMI 401 - AT - Income Tax

Validity of order u/s 92CA (3) on the ground of limitation as contemplated u/s 153 - Time limit for completing the assessment u/s 153 - assessee has TP issues and AO makes reference to the Ld. TPO for determination of Arm s Length Price of international transaction - computation of period of limitation is 21 months further time of 12 months is available for passing of the order due to TP issues HELD THAT - As the extended time limit available to the AO for passing the final order in the present case is 33 months ending on 31st December, 2016. According to the provisions of Sec.92CA(3) such order should be passed at any time before 60 days prior to the date on which the period of limitation be prescribed u/s 153 expires. In this case, the period of limitation expires on 30th December, 2016, therefore, the Ld. TPO should have passed an order u/s 92CA(3) of the Act on or before 31/10/2016, however, such TP order is passed on 01/11/2016, therefore, naturally the order passed by the Ld. TPO is barred by limitation. In such a situation,in the case of M/s Pfizer India Healthcare Pvt. Ltd. 2021 (2) TMI 1152 - MADRAS HIGH COURT as the order dated 07/09/2020 has quashed the TPO order. Accordingly, we respectfully following the decision of Hon ble Madras High Court which has been further affirmed by in DCIT Vs. Saint Gobain India Pvt. Ltd 2022 (4) TMI 808 - MADRAS HIGH COURT quash the T P order . As the order of the Ld. TPO is barred by limitation, there is no variation to the income of the assessee pursuance to the reference made the Ld. TPO. Accordingly, assessee does not qualify to be an eligible assessee u/s 144C(15)(b). Thus, the moment the order of the TPO is quashed the assessee ceases to be an eligible assessee . Therefore, in that circumstances the time limit for completion of the assessment reverts back to 21 months. However, in this case the final assessment order is passed on 26th October, 2017, same is also time barred. Accordingly, the final assessment order is also quashed. Decided in favour of assessee.

Summary

Issues:
The appeal against the assessment order passed under sections 144C (13) r.w.s 143(3) of the Act, 1961 for Assessment Year 2013-14.

Details of the Judgment:

Issue 1: Assessment Order and Time Limit
The assessee, engaged in distribution of Asus Group products in India, filed a return of income for Assessment Year 2013-14, picked up for scrutiny. The Transfer Pricing Officer (TPO) made an upward adjustment to Marketing Service Fees. The draft assessment order determined the total income lower than the return. The Dispute Resolution Panel passed directions, and the final assessment order was passed. The assessee raised an additional ground challenging the time limit of the assessment order, arguing it was beyond the prescribed time limit. The AR contended that the order was time-barred, relying on judicial precedents. The Departmental Representative opposed, stating the grounds were not raised earlier. The Tribunal admitted the additional ground, considering it jurisdictional. The AR argued that the TPO's order was passed beyond the prescribed time, making the draft and final assessment orders time-barred. The DR supported the AO and TPO, claiming the orders were within the prescribed limit. The Tribunal found that the TPO's order was passed beyond the limitation period, following the decision of the Madras High Court, and quashed the TP order.

Issue 2: Eligible Assessee Status
As the TPO's order was barred by limitation, the assessee did not qualify as an eligible assessee under section 144C(15)(b). Consequently, the final assessment order was also time-barred. Citing decisions of the Delhi High Court and coordinate benches, the Tribunal quashed the final assessment order. The additional ground raised by the assessee was allowed, leading to the allowance of the appeal.

Conclusion:
The Tribunal allowed the appeal, quashing the final assessment order due to being time-barred as a result of the TPO's order exceeding the prescribed time limit. The decision on the additional ground rendered the normal grounds raised in the appeal unnecessary for adjudication.