May 2023
International transactions Draft assessment order Limitation Effect of sections 153 and 144 Issue of directions by Commissioner has no effect on limitation Direction of Commissioner does not extend limitation.
K. B. Bhujle, Advocate
10 Pfizer Healthcare India Pvt Ltd vs. Dy. CIT
[2023] 452 ITR 187 (Mad)
A. Y. 2015-16
Date of order: 11th November, 2022
Sections 144, 144C and 153 of ITA 1961
International transactions Draft assessment order Limitation Effect of sections 153 and 144 Issue of directions by Commissioner has no effect on limitation Direction of Commissioner does not extend limitation.
The assessee was engaged in the business of manufacture, research, development and export to its group entities. It had filed its return for the A. Y. 2015-16. The time limit for completion of regular assessment in terms of section 153(1) of the Act, being 21 months from the end of the relevant assessment year, was 31st December, 2017. A reference was made to the Transfer Pricing Officer, since the business of the assessee included transactions that related to entities abroad for which a proper determination of arms length price was to be made. There was a request by the Transfer Pricing Officer for exchange of information and a reference was made to the competent authority in terms of section 90A of the Act. The reference for exchange of information was made by the Transfer Pricing Officer on 29th October, 2018 and the last of the information sought was received by him on 27th March, 2019. The order of the Transfer Pricing Officer was passed on 24th May, 2019. The draft assessment order dated 26th July, 2019, was passed in terms of section 143(3) r.w.s 144C(1).
The assessee filed a writ petition challenging the draft assessment order. The Madras High Court allowed the writ petition and held as under:
i) Section 92CA of the Income-tax Act, 1961, is only a machinery provision that provides for the procedure for passing of a transfer pricing order and does not constitute a prescription for computing limitation. Section 153 deals exclusively with limitation and the statutory extensions and exclusions therefrom, as set out under the Explanation thereto. Section 92CA(3A) sets out the specific time periods to be adhered to in completion of the transfer pricing proceedings and works as limitation within the period of overall limitation provided u/s. 153 for the completion of assessment. The limitations set out under sub-section (3A) of section 92CA are to be construed in the context of, and within the overall limitation provided for, u/s. 153. There is no situation contemplated that would alter the limitation set out u/s. 153C save the exclusions set out under Explanation 1 to section 153C itself. The time limits set out under sub-section (3A) of section 92CA are thus subject to the limitation prescribed u/s. 153 that can, under no circumstances, be tampered with.
ii) The second proviso to Explanation 1 to section 153 states that the period of limitation available to the Assessing Officer for making an order of assessment shall be extended to 60 days. The 60 days peri
[2023] 452 ITR 187 (Mad)
A. Y. 2015-16
Date of order: 11th November, 2022
Sections 144, 144C and 153 of ITA 1961
International transactions Draft assessment order Limitation Effect of sections 153 and 144 Issue of directions by Commissioner has no effect on limitation Direction of Commissioner does not extend limitation.
The assessee was engaged in the business of manufacture, research, development and export to its group entities. It had filed its return for the A. Y. 2015-16. The time limit for completion of regular assessment in terms of section 153(1) of the Act, being 21 months from the end of the relevant assessment year, was 31st December, 2017. A reference was made to the Transfer Pricing Officer, since the business of the assessee included transactions that related to entities abroad for which a proper determination of arms length price was to be made. There was a request by the Transfer Pricing Officer for exchange of information and a reference was made to the competent authority in terms of section 90A of the Act. The reference for exchange of information was made by the Transfer Pricing Officer on 29th October, 2018 and the last of the information sought was received by him on 27th March, 2019. The order of the Transfer Pricing Officer was passed on 24th May, 2019. The draft assessment order dated 26th July, 2019, was passed in terms of section 143(3) r.w.s 144C(1).
The assessee filed a writ petition challenging the draft assessment order. The Madras High Court allowed the writ petition and held as under:
i) Section 92CA of the Income-tax Act, 1961, is only a machinery provision that provides for the procedure for passing of a transfer pricing order and does not constitute a prescription for computing limitation. Section 153 deals exclusively with limitation and the statutory extensions and exclusions therefrom, as set out under the Explanation thereto. Section 92CA(3A) sets out the specific time periods to be adhered to in completion of the transfer pricing proceedings and works as limitation within the period of overall limitation provided u/s. 153 for the completion of assessment. The limitations set out under sub-section (3A) of section 92CA are to be construed in the context of, and within the overall limitation provided for, u/s. 153. There is no situation contemplated that would alter the limitation set out u/s. 153C save the exclusions set out under Explanation 1 to section 153C itself. The time limits set out under sub-section (3A) of section 92CA are thus subject to the limitation prescribed u/s. 153 that can, under no circumstances, be tampered with.
ii) The second proviso to Explanation 1 to section 153 states that the period of limitation available to the Assessing Officer for making an order of assessment shall be extended to 60 days. The 60 days peri
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