WORLD SPORT GROUP (INDIA) P . LTD, MUMBAI V. ACIT CC 3(2) CEN RG 3, MUMBAI

CO 267/MUM/2019

AI Insights

The case involves World Sport Group Pvt Ltd, which was subjected to an assessment order under Section 153A read with sections 143(3) and 144C(13) of the Income-tax Act, 1961, concerning the assessment year 2010-11. The Assessing Officer made adjustments to the assessee's income based on transfer pricing issues related to international transactions. Both the assessee and the Assessing Officer appealed against the order of the Commissioner of Income-tax (Appeals)-58, Mumbai. The Tribunal admitted additional grounds raised by the assessee regarding the limitation period for the transfer pricing order and the final assessment order, finding them to be barred by limitation and thus void ab initio.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299605 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 24-04-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2019
• Other Referred Cases: Atos India Private Limited Vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Period of limitation
• Section: 143(3); 153A; 144C; 153; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI RAHUL CHAUDHARY, JM ITA No. 5240/MUM/2017 (Assessment Year 2010-11) CO No. 267/Mum/2019 (Arising in ITA No.5329/Mum/2017 for A.Y. 2010-11) W orld Sport G roup Pvt Ltd. 201, Shree Yash raj CHS Ltd , Paranjpe A schem e, road No. 3, vile Pare le(E ) Mum bai 400057 Vs. ACIT(C)-20 Room No.1913, 19 th Floor, Air India building, Nariman Point, Mumbai-400021 (Appellant/ Cross Objector) (Respondent) PAN No. AAACW6355R ITA No. 5329/MUM/2017 (Assessment Year 2010-11) ACIT(C)-20 Room No.1913, 19 th Floor, Air India building, Nariman Point, Mumbai-400021 Vs. W orld Sport G roup Pvt Ltd. 201, Shree Yash raj CHS Ltd , Paranjpe A schem e, road No. 3, vile Pare le(E ) Mum bai 400057 (Appellant) (Respondent) Assessee by : Shri P. J. Pardiwala Shri Madhur Agrawal, AR Revenue by : Shri Purushottam Tripuri, DR Date of hearing: 25.04.2023 Date of pronouncement : 28.04.2023 Page | 2 ITA No. 5240, 5329/M/17, CO No.267/M/19 World Sport Group Pvt. Ltd.; A.Y. 10-11, O R D E R PER BENCH 01. ITA No. 5329/Mum/2013 [ By The Assessing Officer] and ITA No 5240/MUM/ 2013 and CO No. 267/Mum/2019 [ by Assessee] are filed against the appellate order of Commissioner of Income-tax (Appeals)-58, Mumbai [the learned CIT (A)] for A.Y. 2010-11, wherein appeal filed by the assessee against the assessment order passed under Section 153A read with section 143(3) read with section 144C (13) of the Income-tax Act, 1961 (the Act) dated 27 th May, 2014 passed by the Asst. Commissioner of Income Tax, Central Cirlce-20, Mumbai (the learned Assessing Officer), the appeal of the assessee was partly allowed. 02. Against this the learned Assessing Officer has preferred the appeal raising following four grounds of appeal:- “1. on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in rejecting the CUP method adopted by TPO for making adjustment of ₹ 5,979,23,256/- in respect of international transaction pertaining to grant of rest of the world rights 9excluding Indian sub-continent rights) not being at arm’s length in terms of the provision of section 92C(1) and 92c(2) of the Act r/w rule 10d of the IT Rules. Page | 3 ITA No. 5240, 5329/M/17, CO No.267/M/19 World Sport Group Pvt. Ltd.; A.Y. 10-11, 2. on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in adopting Profit Method instead of CUP method in the above international transaction not being at arm’s length 3. on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in rejecting the cUP method adopted by TPO on the ground that data pertaining to the year is not contemporaneous without appreciating that the same is contemporaneous as TPO has used the data of net present value of an uncontrolled price arrived at by applying a reasonable discount factor. 4. on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in considering the net present value arrived at after applying appropriate discount factor to be similar as undiscounted future value and thereby holding the data used to be non contemporaneous.” 03. Assessee has also filed appeal and Cross Objection No.267/mum/2019, assessee has raised a solitary ground against the sustenance of the addition of ₹2,84,75,705/-. 04. At the time of hearing, assessee has raised an application for additional grounds of appeal, raising following two grounds:- “1. The Transfer Pricing Officer (ACIT-TP-II(6)) erred in passing the Transfer pricing order under Section 92CA(3) dated 30.01.2014, beyond the time limit prescribed under Section 92CA(3A). The appellants submit that the Transfer Page | 4 ITA No. 5240, 5329/M/17, CO No.267/M/19 World Sport Group Pvt. Ltd.; A.Y. 10-11, pricing order is barred by limitation and, therefore, void ab initio. The appellant pray that the same be quashed. 2. The Assessing Officer erred in passing the final order dated 27.05.2014, beyond the period of limitation prescribed under Section 153* of the Act. The appellants submit that the Assessment Order is barred by limitations and, therefore, void ab initio. The appellant pray that the same be quashed. *In the Additional Ground No.2, due to typographical error instead of 153B only 153 have been mentioned.” 05. After hearing, we find that the additional ground raised by the assessee goes to the root of the matter which is jurisdictional in nature, does not require any further investigation of facts and therefore, same are admitted. 06. In the present case, search was conducted by the Income Tax Department on 21 st April, 2010. Notice under Section 153A of the Act was issued on 21 st February, 2011. As assessee has entered into international transaction reference was made to the learned Transfer Pricing Officer who passed an order under Section 92CA (3) of the Act on 30 th January, 2014. Consequent to that draft Assessment order under Section 144C (1) of the Act was passed on 25 th March, 2014 and final order under Section 143(3) of the Act was passed on 27 th May, 2014. 07. For that assessment year the time limit for passing the order under Section 153B of the Act was 31 st March, 2014 and Page | 5 ITA No. 5240, 5329/M/17, CO No.267/M/19 World Sport Group Pvt. Ltd.; A.Y. 10-11, accordingly, the time limit for passing of the order of the learned Transfer Pricing Officer was available under Section 92CA(3) of the Act was 29 th January, 2014. 08. In the present case, the Transfer Pricing Officer has passed the order on 30 th January, 2014 which should have been passed on or before 29 th January, 2014 and therefore, there is delay of one day in passing the transfer pricing order. Therefore, the adjustment proposed by the learned Transfer Pricing Officer is barred by limitation. Accordingly, as held by the Hon'ble Madras High Court in 320 CTR 812 and 328 CTR 387 the order passed by the learned Transfer Pricing Officer is barred by the limitation. As the transfer pricing adjustment are invalid, the assessee is not falling in the definition of ‘eligible assessee’ as per provision of Section 144C (15) of the Act as assessee is not a foreign company. In view of this, the assessment order should have been passed on or before 31 st March, 2014 but has been passed on 27 th May, 2014. The final assessment order passed is also barred by limitation. 09. On identical facts and circumstances the co-ordinate Bench in ITA No.1795/Mum/2017 dated 23 rd February, 2023 in Atos India Private Limited Vs. DCIT reported in Manu/IU/0160/2023, wherein it has been held that when assessee does not remain eligible assessee there is no extension of time limit available for making order of TP to the learned Transfer Pricing Officer of further one year and therefore the final assessment order passed Page | 6 ITA No. 5240, 5329/M/17, CO No.267/M/19 World Sport Group Pvt. Ltd.; A.Y. 10-11, also becomes barred by limitation. Therefore, respectfully following the same, we hold that the assessment order passed by the learned Assessing Officer dated 27 th May, 2014 is also barred by the limitation and hence, quashed. In view of this, the additional ground of appeal filed by the assessee is allowed. 010. In view of our decision in above additional ground of the assessee, the other grounds of appeal in the appeal and CO as well as all the grounds in the appeal of the learned Assessing Officer become infructuous and therefore, same are dismissed. 011. In the result appeal of the assessee is allowed and CO as well as appeal of the learned Assessing Officer is dismissed. Order pronounced in the open court on 28.04.2023. Sd/- Sd/- (RAHUL CHAUDHARY ) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 28.04.2023 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Page | 7 ITA No. 5240, 5329/M/17, CO No.267/M/19 World Sport Group Pvt. Ltd.; A.Y. 10-11, Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai