2022 (8) TMI 1543 - AT - Income Tax

TP Adjustment - period of limitation - HELD THAT - As we hold that the order passed by the Transfer Pricing Officer on 01.11.2019 is barred by limitation and therefore, the transfer pricing adjustments made in the Final Assessment Order, are deleted. Ground No. 2 raised by the Appellant in the present appeal is, therefore, allowed.

Summary

Issues:
1. Validity of transfer pricing order passed by the Transfer Pricing Officer.

Detailed Analysis:
The appeal challenged the Final Assessment Order dated 29.04.2021 under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961 for the Assessment Year 2016-17, as directed by the Dispute Resolution Panel 1 (DRP). The main contention was regarding the validity of the transfer pricing order passed by the Transfer Pricing Officer (TPO) on 01.11.2019. The Appellant argued that the order was time-barred and bad in law, as per Section 92CA(3A) of the Act, which requires the transfer pricing order to be passed at least sixty days prior to the assessment order's timeline. The Appellant relied on the judgment of the Hon'ble Madras High Court in the case of M/s Pfizer Healthcare India Pvt. Ltd. & Ors. Vs. DCIT and subsequent Tribunal decisions to support their position.

The Tribunal noted that the issue before them was similar to a previous case involving M/s Emerson Electric (Company) India Pvt. Ltd., where the Tribunal had decided in favor of the Appellant. The Tribunal analyzed the provisions of Section 92CA(3) read with Section 153 of the Act, which sets the time limit for the TPO to pass the order. It was observed that the TPO was required to pass the order within sixty days before the expiration of the limitation period under Section 153, which was 21 months. Referring to the Madras High Court judgment, the Tribunal held that the period of sixty days should exclude the last date as per Section 153, which meant the transfer pricing order should have been passed by 31.10.2019. Since the order was passed on 01.11.2019, it was deemed to be barred by limitation.

Based on the above analysis and following the precedent set by the Madras High Court and the Tribunal in similar cases, the Tribunal concluded that the transfer pricing order dated 01.11.2019 was barred by limitation. Consequently, the transfer pricing adjustments made in the Final Assessment Order were deleted, and Ground No. 2 raised by the Appellant was allowed. The Tribunal disposed of other grounds related to transfer pricing issues, interest under Section 234B, claim of deduction under Section 37(1), and penalty accordingly.

In the final decision, the Tribunal partly allowed the appeal filed by the Appellant, pronouncing the order on 30.08.2022.