2024 (9) TMI 145 - HC - Income Tax

Order passed u/s 92CA (3) as beyond the time prescribed - HELD THAT - While considering the said contention the Tribunal referred to Section 92CA (3A) and noticed that the period of limitation was 60 days prior to the expiry of limitation as per Section 153 (1) - Tribunal noticed the time limit as prescribed u/s 153 (1) of the Act for passing an order u/s 143 (3) of the Act and held that the order under Section 143 (3) for the AY 2011-12 should have been passed by 31.3.2015. Hence, the date on which the order u/s 92CA (3) of the Act was to be passed was on or before 28.1.2015. Hence, the order Section 92CA (3) having been passed on 30.1.2015, the Tribunal accepted the contention put forth by the assessee and passed the impugned order. As further forthcoming that before the Tribunal the contention of the revenue was that the delay was a curable defect and that although the order was passed on 28.1.2015, the same was dated as 30.1.2015. While noticing the said contention the Tribunal by relying on the judgment in the case of M/s. Pfizer Healthcare India Private Ltd. 2022 (4) TMI 808 - MADRAS HIGH COURT and also by noticing that the contention put forth by the revenue that the order was passed on 28.1.2015, but dated 30.1.2015 is not an irregularity of procedure rejected the said contention. As relevant to note that the learned Single Judge of the Madras High Court in the case of M/s. Pfizer Healthcare India Private Ltd., has held that the period of 60 days stipulated for passing an order of Transfer Pricing is mandatory. The said judgment has been upheld by the Division Bench of the Madras High Court in the case of Saint Gobain India Private Ltd. 2022 (4) TMI 808 - MADRAS HIGH COURT wherein it has been held that the time schedule is mandatory in nature. It is clear from the aforementioned that the question that arose for consideration before the Tribunal was a factual one as to whether the order u/s 92CA (3) was passed beyond the prescribed time limit and the Tribunal having recorded a finding of fact that the order passed u/s 92CA (3) of the Act ought to have been passed on or before 28.1.2015 and the same having been passed on 30.1.2015, is barred by limitation, no substantial question of law arises for consideration in the present appeals and the said appeals are dismissed at the stage of admission itself as being devoid of merit.

Summary

Issues:
1. Appeal filed by revenue challenging order passed by Income Tax Appellate Tribunal.
2. Transfer pricing adjustment made by Transfer Pricing Officer.
3. Objections filed by assessee before Dispute Resolution Panel.
4. Contention regarding limitation of passing order under Section 92CA (3) of the Income Tax Act.
5. Tribunal's decision based on time limitation under Section 153 (1) of the Act.
6. Arguments presented by counsels for both revenue and assessee.
7. Interpretation of time limit for passing order under Section 92CA (3).
8. Rejection of revenue's contention regarding the date of order.
9. Judicial precedents upholding the mandatory nature of time limits in transfer pricing assessments.
10. Tribunal's factual finding on the limitation issue.

Analysis:
The High Court of Karnataka heard an appeal filed by the revenue challenging the order passed by the Income Tax Appellate Tribunal. The case involved transfer pricing adjustments made by the Transfer Pricing Officer (TPO) under Section 92CA (3) of the Income Tax Act. The assessee, engaged in the business of manufacturing and selling solar products, filed objections before the Dispute Resolution Panel (DRP) against the draft assessment order. The main contention was the limitation period for passing the order under Section 92CA (3) of the Act. The Tribunal held that the order should have been passed before 28.1.2015, as per the time limit under Section 153 (1) of the Act. However, the order was passed on 30.1.2015, leading to the dismissal of the revenue's appeal and acceptance of the assessee's appeal.

During the proceedings, the revenue argued that the delay in passing the order was a curable defect as the order was dated 30.1.2015, despite being passed on 28.1.2015. The Tribunal rejected this argument, citing a judgment of the Madras High Court, which emphasized the mandatory nature of time limits in transfer pricing assessments. The court referred to the Madras High Court judgments in the cases of M/s. Pfizer Healthcare India Private Ltd. and Saint Gobain India Private Ltd., which upheld the strict adherence to time schedules in such assessments.

The High Court concluded that the issue before the Tribunal was factual, focusing on whether the order under Section 92CA (3) was passed within the prescribed time limit. Given the Tribunal's finding that the order was passed beyond the deadline, the court dismissed the revenue's appeal, stating that no substantial question of law arose for consideration. The appeals were dismissed at the admission stage for lacking merit, based on the factual determination made by the Tribunal regarding the limitation issue.