The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the Order passed by TPO under section 92CA(3A) of the Income Tax Act,1961 on 30 May 2014 is barred by limitation and deleted the Transfer Pricing Adjustment.
The Indian Hotels Company Limited, the Assessee is a domestic company engaged in the business of running hotels and resorts. The Assessee filed a return of income for the Assessment Year 2011-12 on 30.11.2011 declaring a loss of INR 2,79,87,412/- and paid tax under Section 115JB of the Act at the book profits of INR 1,05,29,82,190/-.
The Assessing Officer noted that the Assessee had entered into International Transactions with its Associated Enterprises (AEs) and therefore, a reference under Section 92CA(3) of the Income Tax Act was made to the Transfer Pricing Officer (TPO) for the determination of Arms Length Price (ALP) of the International Transactions.
The TPO, vide order dated 30.01.2015, passed under Section 92CA(3) of the Act proposed aggregate transfer pricing adjustments of INR 179,61,83,140/- which was incorporated by the Assessing Officer in the Draft Assessment Order, dated 31.03.2015 passed under Section 143(3) read with Section 144C of the Act.
The Assessing Officer also made disallowance/addition of INR 8,55,98,057/- under Section 14A of the Act read with Rule 8D of the Rules as proposed in the Draft Assessment Order. The DRP deleted the disallowance of INR 32,73,14,212/- under Section 36(1)(iii) of the Act and the disallowance of credit card commission expenses of INR 4,22,19,634/- proposed by the Assessing Officer in the Draft Assessment Order.
The Revenue has challenged the deletion of the aforesaid disallowance of INR 32,73,14,212/- under Section 36(1)(iii) of the Act, disallowance of INR 4,22,19,634/- under Section 40(a)(ia) of the Income Tax Act as well as deletion/reduction of the transfer pricing adjustment in appeal before the Tribunal.
It was contended by the assessee that the order passed by the Transfer Pricing Officer (TPO) on 30.01.2015 is barred by limitation in view of the judgment of the Madras High Court in the case of M/s Pfizer Healthcare India Pvt. Ltd. & Ors. Vs. DCIT passed on 07.09.2020. Further submitted that the limitation for passing an order by the TPO under Section 92CA(3A) of the Income Tax Act expired on 29.01.2015 whereas the order has been passed by the TPO on 30.01.2015.
A Coram comprising of Shri B R Baskaran, Accountant Member and Shri Rahul Chaudhary, Judicial Member observed that sub-section (3A) to section 92CA has been inserted w.e.f. 01.06.2007 providing time limit for the Transfer Pricing Officer to pass the order i.e. within a period of 60 days before the date of completion of assessment as per section 153.
In light of the case, M/s Emerson Electric (Company) India Pvt. Ltd. the Tribunal allowed the appeal of the assessee and set aside the order passed by the TPO which barred the limitation. The revenue’s appeal got dismissed.
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