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TMI Blog2023 (9) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order as per Section 153(3) was 31/03/2014, i.e., 24 months from the end of the assessment year. The extension of period of limitation made u/s. 92CA (3) and also as per proviso to Section 153(1) was upto 31/03/2015 i.e. after a period of 12 months. The proceedings for the assessment have been completed before 31/03/2015 and prior to the date of which limitation expires as per Section 92CA(3A) was 29/01/2015 as the date prior to the date of which limitation expires is 30/03/2015 and 60 days expires on 31/02/2015. Accordingly, in view of the Section 92CA(3), ld. TPO s order which has been passed u/s. 92CA(3) on 29/12/2015 wherein in this case it has been passed on 30/01/2015. Ergo, the TPO can pass an order u/s 92CA of the Act at any time before 60 days prior to the date on which period of limitation referred to u/s 153 expires. Thus 60 days have to be counted prior to the date of last date of limitation u/s 153. The time limit for passing the ld. TPO order in the case of the assessee was 29/01/2015 as noted above which is not in dispute. Since the ld. TPO order has been passed on 30/10/2015 which is clearly barred by limitation by one day by virtue of time l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g IT Enabled Services in relation to Scientific and Technical consultancy. It had electronically filed its Return of Income on 29/11/2011 declaring loss of Rs. 105,77,29,782. The case was selected for scrutiny and notice u/s 143(2) vide notice dated 31/07/2012. 5. Thereafter, the ld. AO made a reference to the Transfer Pricing Officer (TPO) u 92CA(1) for determination of arm's length price (ALP) in relation to the international transaction for A 2011-12 vide letter dated 01/07/2013. The ld. TPO thereafter, passed the Transfer Pricing Order dated 30/01/2015 proposing adjustment of Rs. 231, 97,25,209. Subsequently the ld. AO passed Draft Assessment Order dated 02/03/2015 u/s 143(3) r.w.s 144C(1) of the Act. 6. The assessee thereafter filled its objections before the same Dispute Resolution Panel (DRP). The ld. DRP disposed the objections raised by the assessee vide its directions dated 29/12/2015. 7. After considering the directions given by the ld. DRP, the ld. AO made adjustments/ disallowance in the Final Assessment Order (FAO) dated 26/02/2016 passed u/s 143(3) rws 144C(13) of the Act and determined the assessed income as INR 95,11,65,902 The assessed income is Rs. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No. 1: Rejection of comparables Le, Jalan Agencies Limited. TCS e-serve International Limited and Castrol India Limited CORPORATE TAX GROUNDS: 2 Ground No. 2 Monthly Lease Rentals 3 Ground No. 3: Tax holiday benefit of 10A/10B 11. Apart from the grounds of appeals stated earlier, the Assessee has also filed additional grounds of appeal in ITA No. 2933/Mum/2016 which are as under: Sr. No. Particulars 1. Ground No. 46: Deduction on reversal of provision of service tax 2. Ground No. 47 Deduction of salary of real estate team. 3. Ground No. 48: Validity of Order passed under Section 92CA(3) of the Act On the facts and in the circumstances of the case and in law, the order dated 30th January 2015 passed by the learned Transfer Pricing officer is bad in law being barred by limitation as the same is passed beyond the time limit prescribed under Section 92 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Sec 153 of the Act 24 months from the end of Assessment Year i.e., 31.03.2014 3 Extension of period of limitation in case reference is made under Sec 92CA of the Act (as per section 153 (1) proviso as amended by Finance Act, 2012). 12 Months i.e. 31.03.2015 4 Proceeding for assessment should be completed on / before this date. 31.03.2015 5 A date prior to the date on which period of limitation expires. 30.03.2015 6 Sixty-day period expires on: 30.01.2015 7 Transfer Pricing order u/s 92CA(3) of the Act ought to be passed on /or before 29.01.2015 8 Date on which Transfer pricing order u/s 92CA(3) is passed. 30.01.2015 9. Delay in passing of Transfer Pricing Order for AY 2011-12 1 day 10. Draft Assessment order passed on: 02.03.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marked by terminus a quo and terminus ad quem, the canon of interpretation envisaged and Section 9 of the General Clauses Act, 1897 require to exclude the first day and to include the last day iv. Sec.92CA(3A) expressly provides for counting the last day ie. 31.03.2015 and therefore for counting the 60 days the last day has to be taken into account and thus the order passed by the TPO dated 30.01.2015 is well within the time: v. When the word to is specifically incorporated in Sec.92CA(3A), any other interpretation excluding the last day would be against the plain language of the statute and the intent of the legislature. vi. The Section 92CA(3A) states that an order u/s. 92CA(3) may be made at any time before 60 days prior to the date on which the period of limitation referred to in Section 153 expires . The Section refers that an order may be made at any time before 60 days and these 60 days have to be prior to the date on which Sec 153 limitation expires. It needs to be noted that the word used regarding limitation in Section 153 is expires that implies that the date on that particular time ceases to exist, that is not alive and it has expired. The last day exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of limitation for making the assessment order as per Section 153(3) was 31/03/2014, i.e., 24 months from the end of the assessment year. The extension of period of limitation made u/s. 92CA (3) and also as per proviso to Section 153(1) was upto 31/03/2015 i.e. after a period of 12 months. The proceedings for the assessment have been completed before 31/03/2015 and prior to the date of which limitation expires as per Section 92CA(3A) was 29/01/2015 as the date prior to the date of which limitation expires is 30/03/2015 and 60 days expires on 31/02/2015. Accordingly, in view of the Section 92CA(3), ld. TPO s order which has been passed u/s. 92CA(3) on 29/12/2015 wherein in this case it has been passed on 30/01/2015. 18. Sub-section 3A of section 92CA provides a time limit for passing of the order by the TPO u/s 92CA (3) in the following manner:- (3A) Where a reference was made under sub-section (l) before the 1st day of June, 2007 but the order under sub- section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (l) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of limitation applicable to TPO under Section 92CA(3A) and incidentally under Section 153. xxxx 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 from 31.12.2019 and not 30.12.2019 as has been rightly done by the learned Judge. 28. The word date in section 92CA(3A) would indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary 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 rightly held by the Learned Judge. 30. Even considering for the purpose of alternate interpretation, the scope of Section 9 of the General Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses (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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 limitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which is prejudicial to the interest of such assessee. . . . (15) For the purposes of this section, (a) Dispute Resolution Panel means (b) eligible assessee means, (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company. 31. The aforesaid section envisages that, AO in the first instance has to forward a draft of the proposed order of assessment to the eligible assessee , if he proposes to make any variation which is prejudicial to the interest of such assessee. The draft assessment order is to be forwarded to an eligible assessee , which means that, for this section to apply a person has to be an eligible assessee Here, the draft assessment order is to be forwarded only to an eligible assessee and not to every assessee under the Act. 32. Thus, under the aforesaid provision, the expression eligible assessee is followed by an expression means and there are two categories referred therein (i) any person in whose c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere from, the entailing consequence in instant case is that the appellant cannot be said to be an eligible assessee under section 144C(15)(b)(ii) of the Act. 35. Accordingly, once the assessee becomes an ineligible assessee , the very foundation for proceeding to pass the draft assessment order does not survive, meaning thereby, that the draft assessment order passed in the instant case becomes legally invalid and hence, all consequential proceedings on the basis of the said order fail. In the instant case, a reference was made by the Ld. AO to the Ld. TPO as per the provisions of section 92CA(1) of the Act and accordingly the timelines prescribed u/s 153 of the Act remain extended by a year in view of the 3rd proviso of section 153 of the Act. Accordingly, the time limit to complete assessment proceedings u/s 143(3) of the Act in the instant case expired on 31 March 2016. As on the date of passing draft assessment order u/s 144C(1) of the Act i.e. on 29 March 2016, the Ld. AO had already received the order passed by the Ld. TPO dated 31 January 2016, which as discussed above, is time barred, illegal and void ab initio, thereby making the Appellant not an eligible assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y lapse in treating an assessee as eligible assessee where it is otherwise not one and vice-versa results in fatality, since it becomes a jurisdictional defect and goes on to the roots in deciding the validity of the entire assessment proceedings against the revenue. In this context, on the issue of passing a correct assessment order in first instance (either a draft or a final one), the findings of the Hon ble Madras High Court in case of ACIT v. Vijay Television (P.) Ltd [2018] 95 taxmann.com 101 (Madras) are extremely critical which reads as follows: 47. The necessity for the Parliament to incorporate Section 144-C is not only to safeguard the Revenue, but also the assessee and any mistake committed by any one of them, the said party is supposed to face the consequences and cannot put the hands of the clock back and start afresh. 39. Further, in case of Zuari Cements Ltd. v. ACIT [Writ Petition No. 5557 of 2012, dated 21-2-2013] (Andhra Pradesh), the Division Bench (DB) of the Andhra Pradesh High Court categorically held that the failure to pass a draft assessment order under Section 144C (1) of the Act would result in rendering the final assessment order without juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble jurisdictional High Court in case of International Air Transport Association (supra) and Dimension Data Asia Pacific PTE Ltd. (supra) forties appellant s contentions and the irresistible conclusion that the draft assessment order imbibes a jurisdictional power in terms of Sec. 144C(1) of the Act and creates/ envisages special rights upon the eligible assessee . If such an order is passed on an assessee who is not an 'eligible assessee' as defined in section 144C(15)(b)(i) of the Act, then it would render the entire proceedings pursuant to such order null and void. 43. We find that section 153(1) of the Act, as it stood applicable for the AY 2012-13, provided a time limit of 3 years from the end of AY 2012-13 for completion of assessment under section 143(3) of the Act, i.e., on or before 31 March 2016. 44. In such a case if the Ld. AO invokes the provisions of section 144C of the Act and passes the final assessment order after 31 January 2016 i.e. beyond the period of limitation as stated above, such final assessment order u/s 143(3) r.w.s 144C of the Act is liable to be quashed as being barred by limitation. 45. In a recent decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dduced for adjudicating aforementioned additional grounds. Hence, the additional ground No.40 41 are admitted for adjudication on merits. 24. The assessee has furnished a table giving relevant dates for calculating limitation for passing order u/s. 92CA(3) of the Act. The same is reproduced herein below: Particulars Ground No.41 Validity of Order passed under section 92CA(3) of the Act Calculation of due date for passing transfer pricing order under section 92CA(3) Asst. Order due date as per section 153 of the Act for AY 2009-10 31 March 2013 Transfer Pricing Order due date: (At least sixty days before the period of limitation referred to in section 153 of the Act) Number of Days in March 2013 30 Number of Days in February 2013 28 Number of days in January 2013 2 Total Number of days 60 Deadline for passing TP Order for AY 2009 10 29 January 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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