2024 (12) TMI 481 - AT - Income Tax

Validity of TP order as barred by limitation - interpretation of section 92CA(3A) read with section 153/153B - computation of period of 60 days - case of the assessee is that this order of the Transfer Pricing Officer is barred by limitation as it is not passed within 60 days from the date of the final assessment order which is 26.02.2020 - HELD THAT - Transfer Pricing Officer was required to pass order on or before 31.10.2019 i.e., 60 days prior to the date of limitation, therefore the order dated 01.11.2019 is barred by limitation and since the order of the Transfer Pricing Officer is non-est and since this foundation has been removed the final order passed by the Assessing Officer without the order of the Transfer Pricing Officer dated 26.02.2020 becomes barred by limitation. See Pfizer Healthcare India (P.) Ltd 2021 (2) TMI 1152 - MADRAS HIGH COURT Section 153 states that no order of assessment shall be made at any time after the expiry of 21 months from the end of the assessment year in which the income was first assessable. The submission of the revenue is to the effect that limitation expires only on 12 am of 01.01.2020. However, this would mean that an order of assessment can be passed at 12 a m on 01.01.2020, whereas, in our view, such an order would be held to be barred by limitation as proceedings for assessment should be completed before 11.59.59 of 31.12.2019 and The period of 21 months therefore, expires on 31.12.2019 that must stand excluded since Section 92CA(3A) states 'before 60 days prior to the date on which the period of limitation referred to Section 153 expires'. Decided against revenue.

Summary

Issues:
Interpretation of section 92CA(3A) of the Income-tax Act, 1961 in relation to the date of the Transfer Pricing Officer's order and the limitation period.

Analysis:
The appeal by the revenue and the cross objection by the assessee were against the order of the Commissioner of Income-Tax (Appeals) for the assessment year 2016-17. The revenue raised several grievances regarding the interpretation of section 92CB(3A) of the IT Act, deletion of adjustment on technical grounds, and the failure to adjudicate Transfer Pricing issues on merit. The main contention revolved around the date of the Transfer Pricing Officer's order and whether it was within the limitation period. The revenue argued that the order was passed within the prescribed time limit as per Section 9 of the General Clauses Act, which excludes the first day and includes the last day in computing the time limit.

The dispute centered on the timeline for completion of assessment proceedings and the passing of the Transfer Pricing order. The assessee contended that the Transfer Pricing Officer's order dated 01.11.2019 was barred by limitation as it was not passed within 60 days from the final assessment order date of 26.02.2020. The revenue's argument was that the order was within the time limit as per Section 9 of the General Clauses Act. The Tribunal analyzed the timelines and concluded that the Transfer Pricing Officer's order was indeed barred by limitation as it was passed after the prescribed 60-day period.

Referring to a judgment by the Madras High Court, the Tribunal emphasized that the period of 60 days should exclude the last day mentioned in Section 92CA(3A). Following the decision of the High Court, the Tribunal dismissed the revenue's appeal, as the Transfer Pricing orders were held to be barred by limitation. Since the appeal was dismissed on a point of law, the Tribunal did not delve into the merits of the case. Consequently, both the appeal by the revenue and the cross objection by the assessee were dismissed.

In conclusion, the Tribunal upheld the decision of the Commissioner of Income-Tax (Appeals) based on the interpretation of the relevant provisions and the timeline for passing the Transfer Pricing order. The judgment highlights the importance of adhering to statutory timelines and the correct computation of limitation periods in tax assessments.