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TMI Blog2023 (5) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. AO is directed to compute foreign tax credit that is due to the assessee in accordance to the law after affording a reasonable opportunity of hearing to the assessee. Assessee has claimed credit of tax deducted at source while computing the tax liability for the year, which also requires verification at the end of the AO and the AO to verify the same and grant credit of tax in accordance to the law after hearing the assessee. Ground allowed for statistical purposes. - I.T.A. No.1256/Mum/2015 - - - Dated:- 22-12-2022 - Shri B. R. Baskaran, AM And Shri Aby T. Varkey, JM For the Assessee : Shri Nishant Thakkar For the Revenue : Dr. Samuel Pitta (Sr. AR) ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Assessing Officer (hereinafter AO ) dated 30.01.2015 for AY. 2010-11 passed u/s 143(3) read with section 144C(13) of the Income Tax Act, 1961 (hereinafter the Act ). 2. At the outset, the Ld. AR of the assessee drew our attention to the legal ground raised by the assessee challenging the action of the Transfer Pricing Officer (TPO) to have passed the Transfer Pricing [TP] order beyond the time limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed by Section 92CA(3) of the Act. Therefore, we are inclined to admit this additional grounds of appeal raised by the assessee. 7. Having admitted the legal grounds nos. 23 24 (Ground no. 24 will be reproduced infra) we would first of all look into the merits of the legal issue raised by ground no. 23 (supra) which is reproduced again as under: - 2. Without prejudice to Ground nos. 1 to 23, the order dated 30.01.2014 passed under section 92CA(3) is without jurisdiction and bad in law since the same is passed beyond the time limit provided under section 92CA(3A) of the Act. 8. Briefly stated the facts relevant to adjudicate the aforesaid legal issues are that the assessee M/s. Culver Max Entertainment Pvt. Ltd. formerly known as M/s. Sony Pictures Networks India Pvt. Ltd. erstwhile Multi Screen Media Pvt. Ltd. (hereinafter M/s. CMEPL ) had filed the return of income on 14.10.2010 for AY. 2010-11 declaring total income of Rs.73,48,87,289/-. The AO notes that the assessee later on filed revised return of income on 28.03.2012 declaring total income of Rs.73,48,87,289/-and claimed total TDS credit of Rs.34,53,46,215/-. Later, the case of assessee was selected for scruti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time limit prescribed under the Act. Hence, according to assessee, the same is barred in terms of section 92CA(3A) r.w.s. 153 of the Act. In this context, the Ld AR relied on the judgment of the Hon ble Madras High Court in the case of DCIT v. M/s.Pfizer Healthcare India Pvt. Ltd. (Writ Petition Nos.1148 and 1149 of 2021 judgment dated 31st March, 2022). The AR also placed reliance on the following orders of the Tribunal:- (i) DCIT v. Tata Power Solar Systems Ltd. [IT(TP)A Nos. 548 699/Bang/2016 (order dated 30.03.2022)] (ii) M/s.Swiss Re Global Business Solutions India Pvt. Ltd. v. DCIT [IT(TP)A No.290/Bang/2015 (order dated 30.12.2021)] (iii) ECL Finance Ltd. v. ACIT [ITA No.899/Mum/2018 (order dated 22.09.2021)] 10. Per contra the Ld. DR drew our attention to the Circular issued by the CBDT which is as under: - 43. Extension of Time limitation for making assessment where a reference is made to the Transfer Pricing Officer 1. The existing provisions of the Act does not provide any additional time to the Assessing Officer for completing assessment or reassessment in cases where a reference is made by him under sub-section 92CA to the Transfer Pricing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order. Section 153 of the Act (as applicable to A.Y.2010-11) prescribes a time limit of 36 (Thirty Six) months from the end of the assessment year for completion of assessment (where a reference is made to the TPO for determination of ALP). Accordingly, the due date for passing the assessment order in the case of the assessee for assessment year 2010-2011 is 31st March, 2014. Consequently, in terms of section 92CA(3A) of the Act, the 60th day prior to 31st March, 2014 (i.e., 60th day from 30th March, 2014) falls on 30th January, 2014 (counting 30 days in March, 28 days in February and 02 days in January). Accordingly, the due date for the TPO to pass the transfer pricing order for assessment year 2010-2011 should be at any time before 30th January, 2014, i.e., on or before 29th January, 2014. In the present case, the TPO has passed the transfer pricing order on 30th January, 2014, i.e., beyond the time limit prescribed under the Act. Hence, the same is barred by limitation in terms of section 92CA(3A) r.w.s. 153 of the Act. In this context, we note that an identical/ similar question came up before the Hon ble Madras High Court (D.B) in the case of DCIT v. M/s.Pfizer Healthca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ambiguity, specification of an event as occurring on a particular day at 11:59 p.m. or 12:01 a.m. is a good idea, especially legal documents such as contracts and insurance policies. Another option would be to use 24-hour clock, using the designation of 0000 to refer to midnight at the beginning of a given day (or date) and 2400 to designate the end of a given day (or date). 16. As per the International Standards Organization, ISO 8601-1:2019 midnight may only be referred to as 00:00 , corresponding to the beginning of a calendar day. The earlier use of reference to 24.00 hours to mark the end of the day, was dropped. 17. In India, the midnight or 00.00 hours has been always used to denote the beginning of the next date. A reference could be made to our Independence day, wherein the stroke of midnight at 00.00 hours on 15.08.1947 is considered as the moment of Independence as per the Indian Independence Act, 1947. 18. Also, it is not out of place to mention here that the new year eve of every year, through out the world is celebrated at 00.00 hours and it is regarded as the beginning of a new day and not as an extension of the previous day. 19. A reference can also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itration Tribunal. The General Clauses Act, 1897 provides that unless the contrary is expressed, an Act shall be construed as coming into operation immediately on the expiration of the day preceding its commencement. There being no contrary indication in the Act, it must be held that the said Act came into force on the midnight on the expiration of the day preceding its commencement, i.e., the midnight between 25-3-1983 and 26-3-1983. There can be no doubt that if the second expression in which no award has been made by the said date was not also present in sub-section (7), then the undoubted result of the first expression would be that an arbitration proceeding in which no award had been made up to the midnight between 25-3-1983 and 26-3-1983 would be a pending arbitration proceeding which automatically stood transferred to the Arbitration Tribunal. The question, therefore, is whether the further words used in the second expression in sub-section (7) must lead to a different conclusion. The construction of the first expression being unambiguous, the second expression must be construed harmoniously unless that is not a permissible construction of the expression by the said date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... text and since the word by means before also, in this context it must be held to mean before and not on the date of commencement of the Act. So construed, the second expression would read as in which no award has been made before the said date i.e. in which no award has been made before the date of commencement of the Act, namely, 26-3-1983. This would be the harmonious construction of the two expressions in the provision. 10. Obviously, an award made on 26-3-1983 cannot be said to be an award made before 26-3-1983 and, therefore, the award in the present case having been made on 26-3-1983 and not before 26-3-1983, the date of commencement of the Act, the arbitrator had no jurisdiction to make the award as it was a pending arbitration proceeding which automatically stood transferred to the Arbitration Tribunal. 22. From Section 153, the regular time for passing the assessment order ends on 31.12.2018 and with extension on the matter being referred to TPO, the time limit to pass assessment order would lapse on 31.12.2019. What is not to be forgotten, while interpreting a taxing statute, is the explicit and clear language used by the parliament while enacting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parliament/Legislature in the clear, distinct and express language with an intention to convey a certainty as to how time is to be calculated. The ratio laid down by the Constitutional Bench of the Apex Court is squarely applicable to this case. 26. Further, the general interpretation by resorting to the meaning conveyed under the General Clauses Act cannot be adopted while interpreting 92CA (3A), because, the context and the language employed therein are completely different and it is pertinent to note that the words from and to have not been used. Even the employment of the General Clauses Act will not aid the Revenue, the reason of which will be disclosed a little later in this judgment. But, right now, it is relevant to consider the scope of the word to . 27. The word to is used as a preposition or as an adverb. In popular sense, it is used to express the direction in which a person, thing, or time travels. The flow of direction is to be gauged from the preceding word or words used, like prior to or upto . Keeping the same in mind, if we look at the wording of Section 92CA (3A), we cannot accept the contention of the Revenue that the time to be reckoned is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary for deciding the particular case. This principle is too well settled and reference to a few decisions of this Court would suffice. (See : Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests [1990 Supp SCC 785 : AIR 1990 SC 1747] , Union of India v. Deoki Nandan Aggarwal [1992 Supp (1) SCC 323 : 1992 SCC (L S) 248 : (1992) 19 ATC 219 : AIR 1992 SC 96] , Institute of Chartered Accountants of India v. Price Waterhouse[(1997) 6 SCC 312] and Harbhajan Singh v. Press Council of India [(2002) 3 SCC 722 : JT (2002) 3 SC 21] .) 29. The language employed is simple. 31.12.2019 is the last date for the assessing officer to pass his order under Section 153. The TPO has to pass order before 60 days prior to the last date. The 60 days is to be calculated excluding the last date because of the use of the words prior to and the TPO has to pass order before the 60th day. In the present case, the word before used before 60 days would indicate that an order has to be passed before 1/11/2019 i.e on or before 31.10.2019 as rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Panel, the Panel is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. Sub-Section (13) of Section 144C of the Act provides that upon receipt of directions issued under sub-section (5) of Section 144C of the Act, the Assessing Officer shall in conformity with the directions complete the assessment proceedings. It goes without saying that if no objections are filed by the Assessee either before the DRP or the assessing officer to the determination by the TPO, section 92CA(4) would come into operation. Therefore, it is very clear that once a reference is made, it would have an impact on the assessment unless a decision on merits is taken by DRP rejecting or varying the determination by the TPO. 33. It would only be apropos to note that as per proviso to Section 92CA (3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining period shall be extended to 60 days. This implies that not only is the time frame mandatory, but also that the TPO has to pass an order within 60 days. 34. Further, the extension in the proviso referred abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order to be passed by the Assessing Officer, for which an outer time limit has been prescribed under Sections 144C and 153 and is hence mandatory. What is also not to be forgotten, considering the scheme of the Act, the inter-relatability and inter-dependency of the provisions to conclude the assessment, is the consequence or the effect that follows, if an order is not passed in time. When an order is passed in time, the procedures under 144C and 92CA(4) are to be followed. When the determination is not in time, it cannot be relied upon by the assessing officer while concluding the assessment proceedings. 39. Upon consideration of the judgments and the scheme of the Act, we are of the opinion that the word may used therein has to be construed as shall and the time period fixed therein has to be scrupulously followed. The word may is used there to imply that an order can be passed any day before 60 days and it is not that the order must be made on the day before the 60th day. The impact of the proviso to the sub-section clarifies the mandatory nature of the time schedule. The word may cannot be interpreted to say that the legislature never wanted the authority to pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2025/Bang/2017 for AY. 2017-18 dated 16.06.2022. 15. Since the impugned order passed by the TPO u/s 92CA of the Act is beyond the period of limitation it is held to be bad in law. Therefore the addition in respect of TP adjustments stands quashed. Therefore, grounds on merits on TP adjustments, both in assessee s and revenue s appeals have become academic. 16. Coming to the Corporate Tax Issues, the grounds that are surviving are only ground nos. 15 to 18 which reads as under: - Non-grant of Foreign Tax Credit under India-Singapore Treaty 15. On the facts and circumstances of the case, the learned AO erred in not granting a tax credit of Rs.41,063,711/-in terms of Article 25(2) of the India-Singapore Tax Treaty, read with Section 90 of the Act, before computing the tax liability for the year. Non-grant of TDS Credit 16. On the facts and circumstances of the case, the learned AO erred in not granting a credit of tax deducted at source (TDS) of Rs.6,477,178/-while computing the tax liability for the year. 17. On the facts and circumstances of the case, the learned AO erred in levying excess interest under section 234B of the Act. 18. On the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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