Vivimed Labs Limited Vs ACIT (ITAT Hyderabad)
Transfer Pricing Orders Invalid Because AO Missed Limitation Deadline Under Section 153; ITAT Sets Aside TP Adjustments Because Corporate Guarantee Directions Required Only Effect Giving; Consequential Assessment Orders on AE Advances and Corporate Guarantee Held Time-Barred by ITAT; ITAT Rejects Revenue’s Claim for Extended TP Limitation Because Remand Required Verification.
In Vivimed Labs Limited Vs ACIT, the Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) allowed all three appeals filed by the assessee for Assessment Years 2014-15, 2015-16, and 2018-19 by holding that the consequential assessment orders passed on 06.12.2024 pursuant to earlier ITAT remand directions were barred by limitation under Section 153 of the Income Tax Act.
The disputes related to transfer pricing adjustments involving interest on advances to Associated Enterprises (AEs), corporate guarantee commission, and interest on outstanding receivables. The assessee challenged the validity of the draft and final assessment orders, contending that the Assessing Officer (AO) passed the consequential orders beyond the prescribed limitation period after earlier ITAT remand orders dated 12.04.2022 and 30.01.2023.
For AYs 2014-15 and 2015-16, the Tribunal had earlier remanded issues relating to Arm’s Length Price (ALP) adjustment on advances made to AEs and corporate guarantee commission. The Tribunal had directed the AO/TPO to verify whether advances to subsidiaries were in the nature of equity investments or working capital advances and to make transfer pricing adjustment only where funds were found to be working capital advances. On the corporate guarantee issue, the Tribunal had already determined that a commission rate of 0.5% on the amount actually utilized would be appropriate.
