REGUS BUSINESS CENTRE P. LTD, MUMBAI V. ITO 13(3)(1), MUMBAI

ITA 1110/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8603 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 16-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 92C; 143(3); 92D; 92B; 201; 144C; 13; 92CA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI . , '#,$%& BEFORE SHRI RAMESH C. SHARMA, ACCOUNTANT MEMBER & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 1110 / /201 7 (%,. . 2012-13 ) ITA NO.1110/MUM/2017 (A.Y.2012-13) REGUS BUSINESS CENTRE PVT. LTD. LEVEL -2, RAHEJA CENTRE POINT, NEAR MUMBAI UNIVERSITY, OPP. BANDRA KURLA COMPLEX, SANTACRUZ EAST, MUMBAI 400 098 PAN: AADCR1920Q ...... #. / APPELLANT , VS. INCOME TAX OFFICER 13(3)(1) MUMBAI. ..... /%0/ RESPONDENT #.1/ APPELLANT BY : SHRI PERCY PARDIWALLA WITH SHRI KETAN VED & MS. URVI MEHTA /%01/ RESPONDENT BY : SHRI UODAL RAJ SINGH ,2%0 #/ DATE OF HEARING : 10/02/2020 345 2%0 #/ DATE OF PRONOUNCEMENT : 16/07/2020 / ORDER PER VIKAS AWASTHY, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ASSESSMENT ORDER DATED 26/12/2016 PASSED UNDER SECTION 143(3) R.W.S. 144C (13) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR THE ASSESSME NT YEAR 2012-13. 2 ITA NO.1110/MUM/2017(A.Y.2012-13) 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ESTABLISHING OPERATIN G, MANAGING AND CONTROLLING BUSINESS CENTRES IN INDIA. DURING THE PERIOD RELEV ANT TO ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE ENTERED INTO INTERNATIONAL TRA NSACTIONS, AS WELL AS DOMESTIC TRANSACTIONS WITH ITS ASSOCIATED ENTERPRIS ES (AES). THE INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE DURING FI NANCIAL YEAR 2011-12 ARE AS UNDER:- S.NO. NATURE OF INTERNATIONAL TRANSACTION AMOUNT (RS.) 1. PAYMENT OF LICENCE FEES 17,63 ,132 2. USAGE FEES 13,76,708 3. REIMBURSEMENT OF EXPENSES 13 ,58,922 4. BUY BACK OF EQUITY SHARES 1,50, 81,250 5. REGIONAL HEADQUARTER CHARGES 43,20,433 6. MEDIA / ADVERTISEMENT COST 31,217 7. BROKERAGE/ COMMISSION 84,700 THE TRANSFER PRICING OFFICER (TPO) IN PROCEEDINGS U NDER SECTION 92CA OF THE ACT MADE ADJUSTMENT TO THE TUNE OF RS.2,64,83,673/- QUA INTERNATIONAL TRANSACTIONS. THE ADJUSTMENT MADE BY TPO INTER-ALIA INCLUDES, ADJUSTMENT IN RESPECT OF INTRA-GROUP SERVICES AND THE TRANSACTION S ENTERED INTO BY THE ASSESSEE WITH ITS DOMESTIC AES, WHICH WERE HELD AS DEEMED INTERNATIONAL TRANSACTION. BASED ON THE ADJUSTMENTS PROPOSED BY T HE TRANSFER PRICING OFFICER (TPO) VIDE ORDER DATED 27/01/2016, THE ASSESSING OF FICER PASSED DRAFT ASSESSMENT ORDER DATED 26/02/2016. THE ASSESSEE FI LED OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL (DRP) ASSAILING THE ADJUST MENTS MADE. THE DRP VIDE DIRECTIONS DATED 29/11/2016 DISMISSED THE OBJECTION S OF THE ASSESSE IN TOTO. IN LINE WITH THE DIRECTIONS OF DRP, THE ASSESSING OFFI CER PASSED THE CONSEQUENT 3 ITA NO.1110/MUM/2017(A.Y.2012-13) IMPUGNED ORDER. THE ASSESSEE IN APPEAL HAS ASSAILE D THE ASSESSMENT ORDER/ DIRECTIONS OF DRP ON THREE COUNTS:- (A) ADJUSTMENT ON ACCOUNT OF PAYMENT OF REGIONAL HEADQU ARTER CHARGES, MEDIA/ADVERTISEMENT COST, BROKERAGE COMM ISSION. THAT IS, THE ADJUSTMENT MADE ON ACCOUNT OF INTRA-GROUP SERVI CES. (B) ADJUSTMENT ON ACCOUNT OF REIMBURSEMENT OF EXPENSES. (C) ADJUSTMENT IN RESPECT OF SERVICES RENDERED TO DOMES TIC AES HELD AS DEEMED INTERNATIONAL TRANSACTIONS. 3. SHRI PERCY PARDIWALLA, APPEARING ON BEHALF OF TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PAID FOR INTRA-GROUP SERVICES RENDERED BY THE REGIONAL HEAD QUARTER. THE HEAD QUARTER CHARGES WERE PAID FO R PROVIDING SUPPORT SERVICES IN RESPECT OF FINANCE, MANAGEMENT AND OPER ATIONS, GLOBAL SALE, MARKETING AND PUBLIC RELATIONS, NEED BASED LEGAL SE RVICES, ETC. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE TPO APPLIED CUP TO BENCHMARK ARMS LENGTH PRICE (ALP) OF THE AFORES AID INTERNATIONAL TRANSACTION. THEREAFTER, THE TPO APPLIED BENEFIT TEST ON INTRA-GROUP SERVICES RENDERED AND HELD THAT THE ASSESSEE HAS FAILED TO S HOW THE BENEFIT DERIVED FROM THE SERVICES AND DETERMINED THE ALP OF SUCH SE RVICES AS NIL. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT NOW IT IS A WELL SETTLED LEGAL POSITION THAT THE ALP OF THE INTRA-GR OUP SERVICES CANNOT BE NIL. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE F URTHER CONTENDED THAT THE TPO HAD ERRED IN APPLYING BENEFIT TEST. THE TRIB UNAL IN VARIOUS DECISIONS HAS HELD THAT APPLYING BENEFIT TEST ON INTRA-GROUP SE RVICES IS UNJUSTIFIED. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PRAYED TH AT THE ISSUE CAN BE 4 ITA NO.1110/MUM/2017(A.Y.2012-13) RESTORED TO THE TPO FOR APPLYING MOST APPROPRIATE M ETHOD FOR DETERMINING ALP OF INTRA-GROUP SERVICES. 3.1. IN RESPECT OF GROUND NO.3, THE LD.AUTHORIZED R EPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ENTERED IN TO TRANSACTIONS WITH ITS DOMESTIC AES, THIS FACT HAS BEEN ACCEPTED BY THE TP O IN HIS ORDER. THE TPO TREATED THE DOMESTIC TRANSACTIONS AS DEEMED INTERNA TIONAL TRANSACTION ONLY FOR THE REASON THAT THE HOLDING COMPANY OF ASSESSEE AND THE DOMESTIC AES IS BASED IN MAURITIUS. THE LD. AUTHORIZED REPRESENTATI VE OF THE ASSESSEE SUBMITTED THAT THE REASON FOR TREATING THE DOMESTIC TRANSACTIONS AS DEEMED INTERNATIONAL TRANSACTION IS WITHOUT ANY BASIS AND ON WRONG INTERPRETATION OF THE LEGAL PROVISIONS. THE LD. AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE CONTENDED THAT EVEN IF SUBSTANTIAL SHAREHOLDING IN DOMESTIC COMPANIES ARE HELD BY A FOREIGN ENTITY, THE TRANSACTION CANNOT BE TERMED AS DEEMED INTERNATIONAL TRANSACTION. IN SUPPORT OF HIS CONTEN TION THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON T HE FOLLOWING DECISIONS:- I. CIT VS. KODAK INDIA P. LTD., 288 CTR 46 (BOM) II. RESEARCH DATA SERVICES INDIA PVT. LTD. VS. ITO, IN ITA NO. 1842/MUM/2017, FOR A.Y 2012-13 DECIDED ON 16/10/20 19. 4. PER CONTRA, SHRI UODAL RAJ SINGH, REPRESENTING T HE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER AND THE DI RECTIONS OF THE DRP. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE SERVICES RECEIVED AND THE BENEFIT DERIVED BY THE ASSESSEE FROM SUCH SERVICES. 5 ITA NO.1110/MUM/2017(A.Y.2012-13) 5. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO CONSI DERED THE DECISIONS, ON WHICH THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSE SSEE HAS PLACED RELIANCE. 6. THE FIRST ISSUE IN APPEAL IS IN RESPECT OF ADJ USTMENT MADE ON ACCOUNT OF INTRA-GROUP SERVICES. THE ASSESSEE HAS PURPORTEDLY RECEIVED SUPPORT SERVICES FROM ITS REGIONAL HEADQUARTER PRIMARILY IN THE AREA S OF MANAGEMENT OF HUMAN RESOURCES, SALE, DEBT MANAGEMENT AND COLLECTION, AD VERTISEMENT AND MARKETING, LEGAL SERVICES, ETC. THE TPO APPLIED BE NEFIT TEST ON THE INTRA-GROUP SERVICES RECEIVED BY THE ASSESSEE AND DETERMINED TH E ALP OF SUCH SERVICES AT NIL. WE FIND THAT THE TPO HAS FAILED TO PROPERLY ANALYSE THE SUPPORT SERVICES RECEIVED BY THE ASSESSEE FROM ITS REGIONAL HEADQUAR TER. FURTHER, THE SETTLED LEGAL POSITION NOW IS THAT THE ALP OF INTRA GROUP S ERVICES CANNOT BE DETERMINED AT NIL. THE BENEFIT TEST ANALYSIS WHICH WAS EA RLIER ACCEPTED HAS NOW BEEN HELD TO BE REDUNDANT. THE TRIBUNAL IN THE CASE OF MERCK LTD. V. DY. CIT 179 TTJ 121 HAS HELD THE CONCEPT OF BENEFIT TEST AS IRRELEVAN T. THE TRIBUNAL HELD THAT BY APPLYING BEFIT TEST ALP OF INTRA-GROUP SERVICES CANNOT BE DETERMINED AT NIL. THEREAFTER, IN VARIOUS DECISIONS BY THE TRIBUNAL TH E APPLICATION OF BENEFIT TEST ANALYSIS HAS BEEN REJECTED. THUS, WE DEEM IT APPRO PRIATE TO RESTORE THE ISSUE BACK TO THE FILE OF TPO FOR FRESH ADJUDICATION AND FOR DETERMINATION OF ALP OF INTRA-GROUP SERVICES BY APPLYING MOST APPROPRIATE M ETHOD SPECIFIED IN SECTION 92C OF THE ACT. GROUND NO.1 OF THE APPEAL IS THUS, ALLOWED FOR STATISTICAL PURPOSES. 7. IN GROUND NO.2 OF THE APPEAL, THE ASSESSEE HAS ASSAILED ADJUSTMENT IN RESPECT OF REIMBURSEMENT OF EXPENSES. THE GROUND N O.2 IS CONNECTED TO 6 ITA NO.1110/MUM/2017(A.Y.2012-13) GROUND NO.1 AS THE ADJUSTMENT MADE ON ACCOUNT OF AL LEGED REIMBURSEMENT OF EXPENSES IS IN RESPECT OF INTRA-GROUP SERVICES. SI NCE WE HAVE RESTORED GROUND NO.1 TO THE TPO, WE DEEM IT APPROPRIATE TO RESTORE GROUND NO.2 OF THE APPEAL AS WELL, TO THE TPO FOR DE-NOVO ADJUDICATION AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDAN CE WITH LAW. IN THE RESULT, GROUND NO.2 OF THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. 8. THE GROUND NO.3 OF THE APPEAL IS AGAINST ADJUSTM ENT MADE IN RESPECT OF LOANS EXTENDED BY THE ASSESSE TO DOMESTIC GROUP COM PANIES, HELD AS DEEMED INTERNATIONAL TRANSACTION. IT IS AN UNDISPUTED FAC T THAT THE ASSESSEE HAD ENTERED INTO TRANSACTIONS FOR EXTENDING LOANS AND P ROVIDING SERVICES TO THE GROUP ENTITIES BASED IN INDIA. BEFORE PROCEEDING FU RTHER, IT WOULD BE RELEVANT TO REFER TO THE MEANING OF INTERNATIONAL TRANSACTI ON AS DEFINED UNDER THE ACT. THE EXPRESSION INTERNATIONAL TRANSACTION HAS BEEN DEFINED IN SECTION 92B OF THE ACT. THE PROVISIONS OF THE SECTION AS THEY WERE APPLICABLE IN AY 2012-13 ARE REPRODUCED HEREIN BELOW:- SECTION 92B (1) FOR THE PURPOSES OF THIS SECTION AND SECTIONS 92, 92C, 92D AND 92E, INTERNATIONAL TRANSACTION MEANS A TRANSACTION BET WEEN TWO OR MORE ASSOCIATED ENTERPRISES, EITHER OR BOTH OF WHOM ARE NON-RESIDEN TS, IN THE NATURE OF PURCHASE, SALE OR LEASE OF TANGIBLE OR INTANGIBLE PROPERTY, OR PRO VISION OF SERVICES, OR LENDING OR BORROWING MONEY, OR ANY OTHER TRANSACTION HAVING A BEARING ON THE PROFITS, INCOME, LOSSES OR ASSETS OF SUCH ENTERPRISES, AND SHALL INC LUDE A MUTUAL AGREEMENT OR ARRANGEMENT BETWEEN TWO OR MORE ASSOCIATED ENTERPRI SES FOR THE ALLOCATION OR APPORTIONMENT OF, OR ANY CONTRIBUTION TO, ANY COST OR EXPENSE INCURRED OR TO BE INCURRED IN CONNECTION WITH A BENEFIT, SERVICE OR F ACILITY PROVIDED OR TO BE PROVIDED TO ANY ONE OR MORE OF SUCH ENTERPRISES. (2) A TRANSACTION ENTERED INTO BY AN ENTERPRISE WI TH A PERSON OTHER THAN AN ASSOCIATED ENTERPRISE SHALL, FOR THE PURPOSES OF SU B-SECTION (1), BE DEEMED TO BE A TRANSACTION ENTERED INTO BETWEEN TWO ASSOCIATED ENTERPRISES, I F THERE EXISTS A PRIOR AGREEMENT IN RELATION TO THE RELEVANT TRANSACTION B ETWEEN SUCH OTHER PERSON AND THE 7 ITA NO.1110/MUM/2017(A.Y.2012-13) ASSOCIATED ENTERPRISE, OR THE TERMS OF THE RELEVANT TRANSACTION ARE DETERMINED IN SUBSTANCE BETWEEN SUCH OTHER PERSON AND THE ASSOCIA TED ENTERPRISE THE SUB-SECTION (2) TO SECTION 92B WAS AMENDED BY T HE FINANCE (NO.2) ACT, 2014 W.E.F. 1-4-2015. BY WAY OF AMENDMENT THE WORDS DEEMED TO BE A TRANSACTION WERE REPLACED WITH DEEMED TO BE AN IN TERNATIONAL TRANSACTION. AFTER THE AMENDMENT, THE TRANSACTIONS THAT ESCAPED DEEMING PROVISIONS HITHERTO WERE BROUGHT WITHIN THE REALM OF DEEMED I NTERNATIONAL TRANSACTION. THE INSTANT CASE PERTAINS TO PERIOD PRIOR TO AMENDM ENT. THUS, THE PROVISIONS OF SECTION 92B (2) AS THEY WERE APPLICABLE IN THE I MPUGNED ASSESSMENT YEAR, WOULD BE RELEVANT. 9. A BARE PERUSAL OF THE MEANING OF INTERNATIONAL TRANSACTION DEFINED IN SECTION 92B (1) WOULD SHOW THAT A TRANSACTION WOULD FALL WITHIN THE AMBIT OF INTERNATIONAL TRANSACTION IF, EITHER OR BOTH THE AS SOCIATED ENTERPRISES ARE NON- RESIDENT. IN THE PRESENT CASE NONE OF THE AES I.E. NEITHER THE ASSESSEE NOR THE DOMESTIC GROUP COMPANIES WITH WHICH THE ASSESSEE HA D ENTERED INTO TRANSACTION ARE NON-RESIDENTS. ALL THE COMPANIES AR E DOMESTIC ENTITIES AND ARE SUBJECT TO TAX UNDER THE PROVISIONS OF THE ACT. SECTION 92B (2) OF THE ACT DEALS WITH THE DEEMING P ROVISIONS. THE SUBSECTION WOULD GET ATTRACTED IF: - THE TRANSACTION IS BETWEEN AN ENTERPRISES AND N ON-AE; AND - THERE IS PRIOR AGREEMENT IN RELATION TO THE TRAN SACTION OR THE TERMS OF THE TRANSACTION ARE DETERMINED IN SUBSTANCE BETWEEN THE NON-AE AND AE. 8 ITA NO.1110/MUM/2017(A.Y.2012-13) FOR INVOKING DEEMING PROVISIONS, SUBSECTION (2) HAS TO BE READ IN CONJUNCTION WITH SUBSECTION (1) OF SECTION 92B OF THE ACT. THUS , FOR SUBSECTION (2) TO GET ATTRACTED, THE PRIMARY CONDITION WOULD BE THAT AT L EAST ONE OF THE ENTITY WITH WHICH THE ASSESSE HAS ENTERED INTO TRANSACTION SHOU LD BE NON-RESIDENT. IN THE PRESENT CASE, THE AUTHORITIES BELOW HAVE FAILED TO TAKE NOTE OF THE FACT THAT THE TRANSACTIONS IN QUESTION ARE WITHIN DOMESTIC ENTITI ES ONLY. NO OVERSEAS ENTITY IS INVOLVED IN THE TRANSACTION. UNLESS THE CONDITIONS SET OUT IN SUBSECTION (1) ARE SATISFIED, THE PROVISIONS OF SUBSECTION (2) CANNOT BE INVOKED. THE AUTHORITIES BELOW IN THE PRESENT CASE HAVE ERRED IN INVOKING DE EMING FICTION SOLELY ON THE PREMISE THAT SINCE SHAREHOLDERS OF OVERSEAS HOLDING COMPANY ARE HOLDING SHARES OF THE ASSESSE AND AES, IN SUBSTANCE THE T RANSACTION BETWEEN THE ASSESSE AND THE DOMESTIC GROUP ENTITIES WOULD FALL WITHIN THE AMBIT OF DEEMED INTERNATIONAL TRANSACTION. DEEMING PROVISI ONS CANNOT BE INVOKED BY EXPANDING THE LATITUDE OF EXPRESSIONS USED IN THE S ECTION. THE AUTHORITIES BELOW HAVE FAILED TO TAKE INTO CONSIDERATION THE FA CT THAT ALL GROUP ENTITIES ARE COMPANIES INCORPORATED IN INDIA HAVING SEPARATE LEG AL EXISTENCE. EXCEPT FOR COMMON SHAREHOLDING, NO MATERIAL HAS BEEN RELIED ON BY THE TPO/DRP TO SUBSTANTIATE THAT THE TRANSACTION BETWEEN THE ENTIT IES WAS INFLUENCED BY THE OVERSEAS HOLDING COMPANY. 10. IN THE CASE OF CIT VS. KODAK INDIA (P) LTD. (S UPRA), THE ASSESSE HAD SOLD ITS IMAGING BUSINESS TO M/S. CARESTREAM HEALTH INDIA LT D. DURING THE PERIOD RELEVANT TO AY 2007-08. THE TRANSACTION WAS BETWEE N TWO DOMESTIC NON ASSOCIATED ENTERPRISES. THE TPO HELD THAT THE TRANS ACTION IS INTERNATIONAL TRANSACTION WITHIN THE MEANING OF SECTION 92B (2) A S THE OVERSEAS HOLDING COMPANY OF THE ASSESEE AND CARESTREAM HEALTH INDIA LTD. HAD ENTERED INTO 9 ITA NO.1110/MUM/2017(A.Y.2012-13) GLOBAL AGREEMENT FOR SALE OF BUSINESS PRIOR TO SALE OF IMAGING BUSINESS BY THE ASSESSE TO CARESTREAM HEALTH INDIA LTD. THE TRIBUNA L OBSERVED THAT THE TRANSACTION IS NOT COVERED BY THE DEFINITION OF IN TERNATIONAL TRANSACTION AND HENCE, THE PROVISIONS OF SECTION 92B (2) WOULD NOT GET ATTRACTED. THE TRIBUNAL INTER ALIA HELD THAT PRIOR TO AMENDMENT TO SECTION 92B (2) OF THE ACT W.E.F. 1-4- 2015 SUCH A TRANSACTION WAS NOT DEEMED TO BE AN INT ERNATIONAL TRANSACTION. THE FINDINGS OF THE TRIBUNAL WERE UPHELD BY THE HON BLE HIGH COURT. 11. IN OUR CONSIDERED VIEW THE FINDINGS OF THE LOW ER AUTHORITIES ARE BASED ON CONJECTURES AND SURMISES. THE AUTHORITIES BELOW HAV E TRAVELLED TOO FAR TO BRING THE TRANSACTIONS BETWEEN THE ASSESSE AND DOMESTIC E NTITIES WITHIN THE DOMAIN OF DEEMED INTERNATIONAL TRANSACTION UNDER SECTION 92B (2) OF THE ACT (PRIOR TO AMENDMENT). WE FIND MERIT IN GROUND NO.3 OF THE AP PEAL, ACCORDING THE SAME IS ALLOWED. 12. THE GROUND NO.4 OF THE APPEAL IS GENERAL IN NAT URE AND HENCE REQUIRES NO ADJUDICATION. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 14. THIS APPEAL WAS HEARD ON 10/02/2020. AS PER RU LE 34(5) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, (ITAT RULES, 1963), THE ORDER WAS REQUIRED TO BE ORDINARILY PRONOUNCED WITHIN A PER IOD OF 90 DAYS FROM THE DATE OF CONCLUSION OF THE HEARING OF APPEAL. THE IN STANT APPEAL WAS HEARD PRIOR TO THE LOCKDOWN DECLARED BY THE HONBLE PRIME MINIS TER ON 24-03-2020 IN VIEW OF COVID-19 PANDEMIC. THE LOCKDOWN WAS FORCED DUE T O EXTRA ORDINARY CIRCUMSTANCES CAUSED BY WORLD WIDE SPREAD OF COVID- 19. THEREAFTER, THE 10 ITA NO.1110/MUM/2017(A.Y.2012-13) LOCKDOWN WAS EXTENDED FROM TIME TO TIME. THEREFORE , THE PRONOUNCEMENT OF ORDER BEYOND THE PERIOD OF 90 DAYS FROM THE DATE OF HEARING IS NOT UNDER ORDINARY CIRCUMSTANCES. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD., ITA NO.6264/MUM/2018 FOR A.Y 201 3-14 DECIDED ON 14/05/2020, UNDER IDENTICAL CIRCUMSTANCES, AFTER CO NSIDERING THE PROVISIONS OF RULE 34(5) OF THE ITAT RULES, 1963, JUDGEMENTS REND ERED BY HONBLE APEX COURT AND THE HONBLE BOMBAY HIGH COURT ON THE ISSU E OF TIME LIMIT FOR PRONOUNCEMENT OF ORDERS BY THE TRIBUNAL AND THE CIR CUMSTANCES LEADING TO LOCKDOWN HELD:- 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING P RONOUNCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDING THE IMPORTANT FACT THAT THE ENTI RE COUNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING A T LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND RE ALITIES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL OR DER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO ASSIGNED BY US IS NOT ONLY INCONS ONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TI ME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPREC EDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBT EDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)], HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VID E JUDGMENT DATED 15TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIME- BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY . THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY HONBLE J URISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIO D OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE WORDS ORDINA RILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PERIOD DURING W HICH ITA NO. 6103 AND LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIM ITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EX CEPTION, TO 90-DAY TIME-LIMIT FOR PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANNOT BE A NY, BAR ON THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BEC AUSE OF CONSIDERABLE TIME LAG 11 ITA NO.1110/MUM/2017(A.Y.2012-13) BETWEEN THE POINT OF TIME WHEN THE HEARING IS CONCL UDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACTS OF THIS CASE. THUS, IN LIGHT OF ABOVE FACTS AND THE DECISION OF C OORDINATE BENCH, THE PRESENT ORDER IS PRONOUNCED BEYOND THE PERIOD OF 90 DAYS. 15. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) R ULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD. ORDER PRONOUNCED ON THURSDAY THE 16 TH DAY OF JULY, 2020. SD./- SD./- (R. C. SHARMA) (VIKAS AWASTHY) / ACCOUNTANT MEMBER $% / JUDICIAL MEMBER / MUMBAI, 6,/ DATED 16/07/2020 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. #. / THE APPELLANT , 2. /%0! / THE RESPONDENT. 3. 70 ( )/ THE CIT(A)- 4. 70 CIT 5. '!89 /%0%, , . . . , / DR, ITAT, MUMBAI 6. 9: ;< / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI