Shell India Markets Pvt. Ltd. Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that as per section 92CA(3) TPO order should be passed before 60 days prior to the date prescribed u/s 153 of the Act. Accordingly, in present case, TPO order passed on 30/01/2015 instead of 29/01/2015 is non-est and liable to be quashed as being barred by limitation.
Facts- The assessee company is engaged in business of marketing motor spirit (petrol) and high-speed diesel through retail outlets, providing shared services to its group companies worldwide. Trading and Manufacturing and selling of Modified Bitumen. Emulsion (Bitumen Business). Lubricants and Coolants (Lube Business), cost recharge to its group companies and providing IT Enabled Services in relation to Scientific and Technical consultancy.
It had electronically filed its Return 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. AO made a reference to the TPO u/s. 92CA(1) for determination of arm’s length price (ALP) in relation to the international transaction. TPO thereafter, passed the Transfer Pricing Order dated 30/01/2015 proposing adjustment of Rs. 231,97,25,209. Subsequently AO passed Draft Assessment Order dated 02/03/2015 u/s 143(3) w.s 144C(1) of the Act.
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. 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. Nil, after the same is adjusted against unabsorbed business loss. Assessed Long Term Capital Loss to be carried forward is Rs.38,62,584/-.
Against the Final Assessment Order (FAC) dated 26/02/2016, the assessee and the Revenue department filed the captioned appeals.
Conclusion- Held that the time limit for passing the ld. TPO order in the case of the assessee was 29/01/2015. Since the ld. TPO order has been passed on 30/01/2015 which is clearly barred by limitation by one day by virtue of time limit provided u/s.92CA (3) and consequently, the same has to be treated as bad in law and the same is hereby quashed. Thus, in such a situation, if there is no TPO order, consequently the entire transfer pricing adjustment proposed by the ld. TPO in international transaction becomes non-est and to be quashed and being barred by limitation.
Held that once the ld. TPO’s order is held to be nullity of cost on the ground of being barred by limitation, then the draft assessment order could not have been passed in the case of assessee because assessee would no longer be treated as eligible assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. The aforesaid cross appeals have been filed by the assessee as well as the department against final assessment order dated 26/02/20 16 passed u/s. 143(3) r.w.s. 144C(13) in pursuance of direction given by the ld. DRP vide order dated 29/12/2015.
2. Before us, the ld. Counsel for the assessee submitted that assessee has raised additional ground vide ground No.48 & 49 that:
> firstly, order dated 30/01/2015, passed by ld. TPO is bad in law, time barred by limitation and the same was passed beyond time limit prescribed u/s.92CA(13); and
> secondly, the assessment order dated 26/02/2016 passed by ld. AO u/s. 143(3) r.w.s. 144C is void-ab-initio being barred by limitation.
3. In support of the said additional ground, assessee has also filed chronology of events as well as relied heavily upon the judgment of Hon’ble Madras High Court in the case of M/s. Pfizer Healthcare India Pvt. Ltd. vs. JCIT (2021) 433 ITR 28 and the decision of the Co-ordinate Bench of Mumbai Tribunal in the case of Atos India Pvt. Ltd., in ITA No.1795/Mum/2017. Apart from that, Ld Counsel also submitted that in assessee’s own case for A.Y.2009-10, this Tribunal vide order dated 14/11/2022 on similar grounds and facts have not only quashed the transfer pricing adjustment but also the assessment order being barred by limitation.
4. The facts in brief qua the legal issue raised are that the assessee company is engaged in business of marketing motor spirit (petrol) and high-speed diesel through retail outlets, providing shared services to its group companies worldwide. Trading and Manufacturing and selling of Modified Bitumen. Emulsion (Bitumen Business). Lubricants and Coolants (Lube Business), cost recharge to its group companies and providing 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 3 1/07/2012.
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) 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. Nil, after the same is adjusted against unabsorbed business loss. Assessed Long Term Capital Loss to be carried forward is Rs.38,62,584/-.
8. Against the Final Assessment Order (FAC) dated 26/02/2016, the assessee and the Revenue department filed the captioned appeals
9. The Assessee has raised the following grounds in ITA No. 2933/Mum/2016:
