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TMI Blog2023 (8) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... 2779/Mum/2016 is filed by the assessee against the assessment order passed under Section 143(3) read with section 144C (13) of the Income-tax Act, 1961 (the Act), on 26th February, 2016. 03. The brief facts of the case shows that Assessee Company is subsidiary of M/s Johnson & Johnson, USA, engaged in the business of manufacturing and marketing of various consumer care, healthcare and diagnostic products. It has five different divisions in India. 04. Assessee filed its return of income on 30th November, 2011, declaring total income of Rs. 100,83,58,812/- under the normal computation provision and computed the book profit under Section 115JB of the Act at Rs. 221,99,47,090/-. The return of income was picked up for scrutiny. As assessee has entered into several international transactions, the learned Assessing Officer referred them to the learned Jt. Commissioner of Income Tax, Transfer Pricing officer, 2(2), Mumbai (the learned TPO) for determination of Arm's Length Price. The learned Transfer Pricing Officer passed order under Section 92CA (3) of the Act on 30th January, 2015, proposing an adjustment of Rs. 320,13,82,586/-. The learned Assessing Officer incorporating the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be met for Indian companies to be an "eligible assessee" under the provisions of Section 144C of the Act is not met and hence, the order passed under Section 143(3) read with Section 144C(13) is also barred by limitation and ought to be quashed. Final assessment order barred by limitation 42. On the facts and circumstances of the case and in law, the learned AO erred in not appreciating that the time limit prescribed under section 153 is the outer time limit for passing the final assessment order and hence, the final assessment order dated 26 February 2016 is time barred and liable to be quashed. The Appellant craves leave to add, alter, modify or delete or modify the above grounds of appeal 07. The additional grounds were filed by letter dated 29th September, 2022, stating that all the above additional grounds are jurisdictional in nature, those are available to the assessee based on the judicial precedents later on. It does not require any further investigation of facts and therefore, those should be admitted. 08. The learned Authorized Representative reiterated the application for admission of additional grounds relying on the decision of the Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this proposition. He relied upon the decision of the Hon'ble Madras High Court in case of Saint Gobain India Pvt. Ltd. (2022) 444 ITR 636 (Mad) (HC). He further submitted that as the order of the learned Transfer Pricing Officer barred by limitation, according to provision of Section 144C (15)(b) of the Act, assessee ceases to be an 'eligible assessee' for the purpose of Section 144C of the Act and therefore, the time limit available for making an assessment in the case of the assessee expires on 31st March, 2015. However, the final assessment order is passed on 26th February, 2016. Therefore, the final assessment order passed is also barred by limitation. Therefore, the assessment order passed by the learned Assessing Officer is also required to be quashed. For this proposition, he relied heavily on the decision of the co-ordinate Bench in ITA No.1795/Mum/2017 for A.Y. 2012-13 dated 23rd February, 2023 in case of ATOS India Private Limited Vs. DCIT 14(1)(1), Mumbai. In view of this, it was submitted that the whole assessment order passed by the learned Assessing Officer deserves to be quashed. He further submitted that if the above view is accepted then other grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12/2013. By virtue of second proviso if a reference u/s 92CA is made then this time limit is further extended to 33 months from the end of the Assessment year. Thus for A Y 2011-12, it would be 33 months from 31/12/2013 i.e. 31/3/2015. The ld TPO as per provisions of section 92CA (3A) of the Act is bound to pass the T P Order at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires. Therefore, 60 days period from 31/3/2015 expires on 29 January 2015. But the ld TPO has passed TP Assessment order u/s 92CA (3) of the Act on 30th January 2015. Thus, the order of ld TPO is passed beyond statutory time available. 017. Hon'ble Madras HC in case of Saint Gobain India Pvt. Ltd. 444 ITR 636 [2022] 137 taxmann.com 215 (Madras) where in it has been held :- "28. The word "date" in section 92CA(3A) would indicate 31-12-2019. But the preceding words "prior to" would indicate that for the purpose of calculating the 60 days, 31-12-2019 must be excluded. The usage of the word "prior" is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rightly held by the Learned Judge. 30. Even considering for the purpose of alternate interpretation, the scope of section 9 of the General Clauses Act, it is to be noted that an inverted calculation of the period of limitation takes place here. If the last date is taken to be the first date from which the period of 60 days is to be calculated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 above, also automatically extends the period of assessment to 60 days as per the second proviso to section 153. 35. Also, but for the reference to the TPO, the time limit for completing the assessment would only be 21 months from the end of the assessment year. It is only if a reference is pending, the department gets another 12 months. Once reference is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 an order within 60 days and it gave a discretion. Therefore, the learned Judge rightly held the orders impugned in the writ petitions as barred by limitation, as the Board, in the Central Action Plan, has specified 31-10-2019 as the date on which orders are to be passed by the TPO, reiterating the time limit to be mandatory." 018. Therefore, the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has raised the ground of appeal no. 3 and additional ground no 95 on the identical facts and circumstances except the changes in relevant dates challenging the assessment order stating that it is barred by limitation. Ground no. 3 is raised in the original moratorium of appeal stating that the order of the learned Transfer Pricing Officer is barred by limitation and therefore, all transfer pricing additions/ adjustments are invalid. 026. Ground no.95 is raised by application of additional grounds of appeal challenging that as the transfer pricing order is barred by limitation, the assessee ceases to be 'eligible assessee' and therefore, the final assessment order passed by the learned Assessing Officer on 9th May, 2021 is also barred by limitation. 027. After hearing the parties, as there is no change in facts and circumstances of case compared to AY 2011-12, we admit the additional ground raised by the assessee for the reasons given by us, admitting additional grounds of the assessee for A.Y. 2011-12. 028. The arguments of the assessee and the Revenue against the additional ground admitted as well as on the validity of the order of the learned Transfer Pricing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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