Honda Trading Corporation, Japan, New Delhi V. DCIT, Noida

ITA 1132/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97361 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I1
• Next Hearing Date: 11-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 26-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ROHAN KHARE S
• Keywords: Value adopted by valuation officer; Transfer pricing; Double taxation relief; Opportunity of being heard; International transaction; Period of limitation; Non-deduction of tax; Fair market value; Procedural lapse; Competent authority; Revised return
• Section: 143(3); 144; 90; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I-1: NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.1132/DEL/2015 ASSESSMENT YEAR : 2010-11 HONDA TRADING CORPORATION , JAPAN, C/O A.T. PANDA, R/O 143/9, KISHAN GHAR, VASANT KUNJ, NEW DELHI. PAN: AACCH3171Q VS. DCIT, INTERNATIONAL TAXATION, ROOM NO.312, 3 RD FLOOR, AAYAKAR BHAWAN, A-2D, SECTOR-24, NOIDA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPAK CHOPRA & SHRI ROHAN KHARE, ADVOCATES. DEPARTMENT BY : SHRI AMRENDRA KUMAR, CIT, DR, MS KAVITA PANDEY, CIT, TP & SHRI ANURAG SHARMA, ADDL.CIT DATE OF HEARING : 11.09.2015 DATE OF PRONOUNCEMENT : 15.09.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E FINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) R EAD WITH SECTION 144C ITA NO.1132/DEL/2015 2 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLE D THE ACT) ON 29.1.2015 IN RELATION TO THE ASSESSMENT YEAR 2010-1 1. 2. THE FIRST MAJOR ISSUE IN THIS APPEAL IS A CHALLE NGE TO THE FINAL ASSESSMENT ORDER PASSED BY THE AO ON THE GROUND THA T THE DRAFT ORDER PASSED BY THE AO AND ALSO THE ORDER PASSED BY THE T RANSFER PRICING OFFICER (TPO) WERE BARRED BY LIMITATION. THE LD. AR ARGUED THAT SINCE THESE TWO ORDERS, CULMINATING INTO THE PASSING OF T HE FINAL ASSESSMENT ORDER, WERE TIME BARRED, THE RESULTANT ASSESSMENT O RDER ALSO BECAME NULL AND VOID. 3. SUCCINCTLY, THE FACTS OF THE CASE ARE THAT THE A SSESSEE, HONDA TRADING CORPORATION, JAPAN, WAS ESTABLISHED IN JAPA N ON 21.3.1972 TO ACT AS TRADING CORPORATION FOR DEVELOPING IMPORT/EX PORT OF OVERSEAS/DOMESTIC PRODUCTS THROUGH INTERNATIONAL DI STRIBUTION NETWORKS OF HONDA MOTOR CO. LTD. SUBSEQUENTLY, IT CHANGED I TS NAME TO HONDA TRADING CORPORATION. NOW, IT HAS 50 BASES WORLDWID E IN 20 COUNTRIES. THE ASSESSEE IS BASICALLY ENGAGED IN SUPPLYING PART S FOR MOTORCYCLE, AUTOMOBILE, POWER EQUIPMENTS, AUTOMOTIVE EQUIPMENTS AND MACHINERY, ITA NO.1132/DEL/2015 3 NON-FERROUS METALS, STEEL, PLASTIC AND WAREHOUSE OP ERATIONS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 13.10.2010. FIVE INTERNATIONAL TRANSACTIONS WERE REPORTED, BEING PAYMENT OF TECHNI CAL SUPERVISION FEES, SALE OF RAW MATERIAL AND SALE OF FIXED ASSETS TO HO NDA SIEL CARS INDIA LTD.; PAYMENT OF TECHNICAL SUPERVISION FEES TO RAJA STHAN PRIME STEEL PROCESSING CENTRE PVT. LTD.; AND PAYMENT OF TECHNIC AL SUPERVISION FEES TO HONDA MOTORCYCLE & SCOOTER INDIA PVT. LTD. ALL T HESE FIVE INTERNATIONAL TRANSACTIONS ARE WITH THREE INDIAN GR OUP COMPANIES. THE AO MADE REFERENCE DATED 22.3.2013 TO THE TRANSFER P RICING OFFICER (TPO) FOR DETERMINING THE ARMS LENGTH PRICE (ALP) OF THE ABOVE REFERRED INTERNATIONAL TRANSACTIONS. THE TPO, DURI NG THE COURSE OF PROCEEDINGS BEFORE HIM, MADE A REFERENCE DATED 8.1. 2014 THROUGH THE INDIAN COMPETENT AUTHORITY FOR EXCHANGE OF INFORMAT ION UNDER THE PROVISIONS OF EXCHANGE OF INFORMATION ARTICLE INDO- JAPAN DTAA, SEEKING CERTAIN DETAILS NECESSARY FOR COMPLETION OF THE DETERMINATION OF THE ALP OF THE INTERNATIONAL TRANSACTIONS REPORTED BY THE ASSESSEE. THE INDIAN COMPETENT AUTHORITY FORWARDED SUCH OFFICIAL REQUEST TO THE JAPANESE COMPETENT AUTHORITY VIDE ITS LETTER DATED 24.1.2014. THE ITA NO.1132/DEL/2015 4 DESIRED INFORMATION WAS RECEIVED BY THE DIRECTOR OF INCOME-TAX ON 2.4.2014 VIDE LETTER OF THE UNDER SECRETARY DATED 2 4.3.2014. TAKING INTO CONSIDERATION ALL THE RELEVANT MATERIAL INCLUDING T HE INFORMATION SO RECEIVED FROM THE JAPANESE COMPETENT AUTHORITY, THE TPO PASSED ORDER U/S 92CA (3) ON 31.5.2014 PROPOSING TRANSFER PRICIN G ADJUSTMENT TO THE TUNE OF RS.2,15,36,967. DRAFT ORDER WAS PASSED BY THE AO ON 11.7.2014 PROPOSING THE COMPUTATION OF TOTAL INCOME AT RS.7.2 7 CRORE, INCLUDING ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT AMOUNTING TO RS.2.15 CRORE. THE ASSESSEE RAISED OBJECTIONS AGAINST THE DRAFT ORDER BEFORE THE DISPUTE RESOLUTION PANEL (DRP) THROUGH FORM NO. 35A FILED ON 13.8.2014, WHICH WERE DISPOSED OF VIDE DIRECTION U /S 144C(5) DATED 24.12.2014. THE FINAL ASSESSMENT ORDER WAS PASSED BY THE AO ON 29.1.2015 DETERMINING TOTAL INCOME AT RS.7.27 CRORE , WHICH ALSO INCLUDES ADDITION OF RS.2.15 CRORE ON ACCOUNT OF TR ANSFER PRICING ADJUSTMENT. 4. THE ASSESSEE HAS SET UP A CASE THAT THE FINAL AS SESSMENT ORDER BE DECLARED NULL AND VOID ON THE GROUND THAT THE DRAFT ORDER OF THE AO AS ITA NO.1132/DEL/2015 5 WELL AS THE ORDER PASSED BY THE TPO U/S 92CA(3) OF THE ACT, WERE PASSED BEYOND THE TIME LIMIT PRESCRIBED UNDER THE A CT. WE WILL ESPOUSE BOTH THE CONTENTIONS ONE BY ONE FOR DETERMINATION. A. TIME LIMIT FOR PASSING OF THE DRAFT ORDER BY AO 5.1. THE LD. AR CONTENDED THAT THE DRAFT ORDER WA S PASSED BY THE AO ON 11.7.2014, WHICH IS BARRED BY LIMITATION IN TERMS O F THE TIME LIMIT GIVEN IN SECTION 153(1). THIS WAS VIGOROUSLY COUNTERED BY THE LD. DR. 5.2. TO EVALUATE THE RIVAL CONTENTION IN THIS RE GARD, WE DEEM IT FIT TO NOTE DOWN THE MANDATE OF SECTION 153(1), THE RELEVA NT PART OF WHICH IS AS UNDER : - TIME LIMIT FOR COMPLETION OF ASSESSMENTS AND REASS ESSMENTS. 153. (1) NO ORDER OF ASSESSMENT SHALL BE MADE UNDER SECTION 143 OR SECTION 144 AT ANY TIME AFTER THE EXPIRY OF (A) TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE ; OR (B) ONE YEAR FROM THE END OF THE FINANCIAL YEAR I N WHICH A RETURN OR A REVISED RETURN RELATING TO THE ASSESSMENT YEAR COMMENCING O N THE 1ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT YEAR, IS FILED UNDER SUB- SECTION (4) OR SUB-SECTION (5) OF SECTION 139 , WHICHEVER IS LATER : ITA NO.1132/DEL/2015 6 . 5.3. IT IS NOBODYS CASE THAT CLAUSE (B) OF THE AB OVE PROVISION IS APPLICABLE. GOING BY CLAUSE (A) OF SECTION 153(1), IT IS CLEAR THAT NO ORDER OF ASSESSMENT CAN BE MADE AFTER THE EXPIRY OF TWO Y EARS FROM THE END OF THE ASSESSMENT YEAR. ACCORDINGLY, AN ORDER OF ASSE SSMENT FOR THE A.Y. 2010-11, AS IS THE YEAR UNDER CONSIDERATION, CAN BE MADE UP TO 31.3.2013. 5.4. THEN 3 RD PROVISO TO SECTION 153(1) IS RELEVANT FOR OUR PURP OSE, WHICH AT THE MATERIAL TIME, STOOD AS UNDER:- `PROVIDED ALSO THAT IN CASE THE ASSESSMENT YEAR IN WHICH THE INCOM E WAS FIRST ASSESSABLE IS THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 2009 OR ANY SUBSEQUENT ASSESSMENT YEAR AND DURING THE COURSE OF THE PROCEEDING FOR THE ASSESSMENT OF TOTAL INCOME, A REFERENCE UNDER SUB-S ECTION (1) OF SECTION 92CA (I) IS MADE BEFORE THE 1ST DAY OF JULY, 2012, BUT AN OR DER UNDER SUB-SECTION (3) OF THAT SECTION HAS NOT BEEN MADE BEFORE SUCH DATE; OR (II) IS MADE ON OR AFTER THE 1 ST DAY OF JULY, 2012, THE PROVISIONS OF CLAUSE (A) SHALL, NOTWITHSTANDIN G ANYTHING CONTAINED IN THE FIRST PROVISO, HAVE EFFECT AS IF FOR THE WORDS 'TWO YEARS ', THE WORDS 'THREE YEARS' HAD BEEN SUBSTITUTED. ITA NO.1132/DEL/2015 7 5.5. COMMAND OF THIS PROVISO, TO THE EXTENT IT IS A PPLICABLE TO THE FACTS OF THE INSTANT CASE, IS THAT FOR THE ASSESSMENT YEA R COMMENCING ON FIRST DAY OF APRIL, 2009 (ASSESSMENT YEAR UNDER CONSIDERA TION IS 2010-11), WHERE ANY REFERENCE IS MADE ON OR AFTER THE FIRST D AY OF JULY, 2012 (REFERENCE MADE BY THE AO ON 22.3.2013 IN THE INSTA NT CASE), THE TIME LIMIT FOR THE PASSING OF ORDER OF ASSESSMENT SHALL BE THREE YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE. GOING BY THE 3 RD PROVISO READ WITH CLAUSE (A) OF SECTION 153(1), NO ORDER OF ASSESSMENT CAN BE MADE AFTER THE EXPIRY OF THREE YEARS FROM THE END OF THE ASSESSMENT YEAR. IT MEANS THAT FOR THE A.Y. 2010-11, AN ORDER OF ASSESSMENT CAN BE MADE UP TO 31.3.2014. 5.6. FURTHER, EXPLANATION 1 TO SECTION 153 PROVI DES THAT IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF THIS S ECTION, THE TIME TAKEN IN THE CIRCUMSTANCES GIVEN IN CLAUSES (I) TO (IX) SHAL L BE EXCLUDED. CLAUSE (VIII), WHICH IS RELEVANT FOR OUR PURPOSE, READS A S UNDER:- `EXPLANATION 1. IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURP OSES OF THIS SECTION . ITA NO.1132/DEL/2015 8 (VIII) THE PERIOD COMMENCING FROM THE DATE ON WHICH A REFERENCE OR FIRST OF THE REFERENCES FOR EXCHANGE OF INFORMATION IS MADE BY A N AUTHORITY COMPETENT UNDER AN AGREEMENT REFERRED TO IN SECTION 90 OR SEC TION 90A AND ENDING WITH THE DATE ON WHICH THE INFORMATION REQUESTED IS LAST RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER OR A PERIOD OF ONE YE AR, WHICHEVER IS LESS, OR SHALL BE EXCLUDED : 5.7. THIS CLAUSE MANDATING THE EXCLUSION OF TIME IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SECTION 15 3, PROVIDES THAT THE PERIOD COMMENCING FROM THE DATE ON WHICH A REFERENC E OR FIRST OF THE REFERENCES FOR EXCHANGE OF INFORMATION IS MADE BY T HE INDIAN COMPETENT AUTHORITY AND ENDING WITH THE DATE ON WHICH THE INF ORMATION REQUESTED IS LAST RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMM ISSIONER, OR A PERIOD OF ONE YEAR, WHICHEVER IS EARLIER, SHALL BE EXCLUDED. IN THE INSTANT CASE, THE INFORMATION WAS RECEIVED BY THE DIT ON 2. 4.2014. 5.8. THE LD. DR MADE TWO CONTENTIONS ON THIS ASPE CT OF THE MATTER. IT WAS FIRSTLY CONTENDED THAT THE TIME LIMIT IS TO BE RECKONED FROM THE DATE ON WHICH THE INFORMATION IS RECEIVED BY THE PRINCIP AL COMMISSIONER OR COMMISSIONER AND NOT THE DIRECTOR OF INCOME-TAX, AS HAS BEEN THE CASE UNDER CONSIDERATION. ITA NO.1132/DEL/2015 9 5.9. WE DO NOT FIND ANY SUBSTANCE IN THIS ARGUMEN T. INCOME-TAX AUTHORITIES HAVE BEEN DEFINED UNDER SECTION 116 OF THE ACT. THIS SECTION PROVIDES THAT THERE SHALL BE CERTAIN CLASSES OF INC OME-TAX AUTHORITIES FOR THE PURPOSES OF THIS ACT. DESCRIPTION OF THE CLASS OF INCOME-TAX AUTHORITY GIVEN IN CLAUSE (C) OF THIS SECTION IS : `DIRECTOR S OF INCOME-TAX OR COMMISSIONERS OF INCOME-TAX OR COMMISSIONERS OF INC OME-TAX (APPEALS). THIS INDICATES THAT COMMISSIONER OF INC OME-TAX AND DIRECTOR OF INCOME-TAX ARE AUTHORITIES OF THE SAME CLASS. IT IS NOT THE CASE OF THE LD. DR THAT THE DESIRED INFORMATION WAS AT A LL RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER. AS COMMIS SIONER IS EQUAL IN RANK WITH THE DIRECTOR OF INCOME-TAX AND THE IN FORMATION HAS BEEN RECEIVED BY THE DIT ONLY, WE HOLD THAT SUCH RECEIP T OF INFORMATION BY THE DIT HAS THE SAME EFFECT AS THE RECEIPT BY THE C OMMISSIONER OF INCOME-TAX. THIS CONTENTION, THEREFORE, FAILS. 5.10. THE OTHER CONTENTION MADE BY THE LD. DR WA S THAT THE `PERIOD OF ONE YEAR AS STIPULATED IN CLAUSE (VIII) OF THE EXP LANATION 1 TO SECTION 153, SHOULD BE CONSIDERED FOR THE PURPOSES OF EXCLU SION AND NOT THE ITA NO.1132/DEL/2015 10 PERIOD BETWEEN THE DATE ON WHICH FIRST REFERENCE WA S MADE AND THE DATE ON WHICH THE INFORMATION WAS RECEIVED BY THE DIT. T HE REASON ADVANCED IN SUPPORT OF THIS ARGUMENT WAS THAT SINCE THE JAPA NESE COMPETENT AUTHORITY SENT INCOMPLETE INFORMATION, HENCE THE DA TE OF RECEIPT OF INFORMATION BY THE DIT SHOULD BE IGNORED AND THE EX TENDED PERIOD OF ONE YEAR SHOULD BE TAKEN INTO CONSIDERATION. IT WAS PUT FORTH THAT IF THE SUCH PERIOD OF ONE YEAR IS TAKEN INTO CONSIDERATION IN TERMS OF CLAUSE (VIII) OF THE EXPLANATION 1 TO SECTION 153, THEN TH E TIME LIMIT WILL GET EXTENDED TO 31.3.2015 AND HENCE THE DRAFT ORDER AS WELL AS THE FINAL ASSESSMENT ORDER AND ALSO THE ORDER OF THE TPO WILL BE SAVED BY THE LIMITATION. ON A SPECIFIC QUERY THAT IF THE INFORMA TION SENT BY THE JAPANESE COMPETENT AUTHORITY WAS NOT COMPLETE AS DE SIRED, THEN DID THE TPO SEEK ANY FURTHER INFORMATION OR CLARIFICATION I N THIS REGARD FROM THE JAPANESE COMPETENT AUTHORITY THROUGH PROPER CHANNEL , THE LD. DR CONTENDED THAT NO FURTHER INFORMATION WAS CALLED FO R FROM THE JAPANESE COMPETENT AUTHORITY BUT THE TPO TOOK UPON HIMSELF T HE HAZARDOUS TASK OF COMPLETING THE ASSESSMENT IN SUCH CIRCUMSTANCES WITH THE NECESSARY HANDICAP. ITA NO.1132/DEL/2015 11 5.11. WE ARE UNABLE TO COUNTENANCE THE CONTENTI ON OF THE LD. DR URGING THE CONSIDERATION OF AN EXTENDED PERIOD OF O NE YEAR FOR THE PURPOSES OF EXCLUSION FROM THE TIME LIMIT AS GIVEN U/S 153. IT IS MANIFEST FROM THE LANGUAGE OF THE PROVISION THAT THE SUCH PE RIOD COMMENCES WITH THE DATE ON WHICH A REFERENCE OR FIRST OF THE REFER ENCES FOR EXCHANGE OF INFORMATION IS MADE AND ENDS WITH THE DATE ON WHICH THE INFORMATION REQUESTED IS LAST RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER OR A PERIOD OF ONE YEAR, WHICHEVER IS LESS. IT MEANS THAT IF THE DESIRED INFORMATION IS RECEIVED IN DIFFERENT INSTALLMENTS OR THE DESIRED INFORMATION IS INCOMPLETE IN THE FIRST GO A ND AGAIN A REQUEST IS MADE FOR SENDING THE COMPLETE INFORMATION, WHICH IS RECEIVED LATER ON, THEN THE TERMINATING POINT WILL BE THE DATE ON WHIC H THE INFORMATION COMPLETE IN ALL RESPECTS IS LAST RECEIVED. WHERE TH E TPO GETS SATISFIED WITH THE INFORMATION SUPPLIED BY THE COMPETENT AUTH ORITY OF THE OTHER COUNTRY OR IF HE IS UNSATISFIED WITH THE INFORMATIO N BUT CHOOSES NOT TO FURTHER PERSUE THE MATTER WITH SUCH COMPETENT AUTH ORITY, THEN THE PERIOD LIABLE TO BE EXCLUDED ENDS WITH THE RECEIPT OF LAST INFORMATION BY THE COMMISSIONER. THE CRUCIAL WORDS USED IN THE PROVIS ION ARE `THE DATE ON ITA NO.1132/DEL/2015 12 WHICH THE INFORMATION REQUESTED IS LAST RECEIVED . IT MEANS THAT ONCE INFORMATION IS SOUGHT AND THE PROCESS OF RECEIVING SUCH INFORMATION HAS FINALLY CONCLUDED, IRRESPECTIVE OF THE ULTIMATE SAT ISFACTION OF THE TPO, THE DATE ON WHICH THE LAST INFORMATION WAS RECEIVED BECOMES THE TERMINATING POINT, IF IT IS NOT BEYOND A PERIOD OF ONE YEAR. IT IS ONLY WHERE THE PROCESS OF RECEIVING OF LAST INFORMATION IS NOT OVER WITHIN A PERIOD OF ONE YEAR, THAT THE PERIOD OF EXCLUSION GE TS RESTRICTED TO ONE YEAR. IF THE INFORMATION IS RECEIVED WITHIN ONE YEA R, THEN IT IS THE ACTUAL TIME CONSUMED IN THE PROCESS WHICH IS SOUGHT TO BE CONSIDERED FOR THE PURPOSE. THE ARGUMENT OF THE LD. DR FOR CONSIDERING A PERIOD OF ONE YEAR WOULD HAVE CARRIED WEIGHT, IF THE TPO, NOT SAT ISFIED WITH THE INFORMATION RECEIVED FROM THE JAPANESE COMPETENT AU THORITY, HAD ONCE AGAIN SOUGHT CLARIFICATION AND THE RECEIPT OR NON-R ECEIPT OF SUCH CLARIFICATION HAD BREACHED ONE YEAR. SINCE THE TPO DID NOT TAKE UP THE MATTER ANY FURTHER AND ALLOWED THE PROCESS TO COME TO AN END WITH THE DATE OF RECEIPT OF INFORMATION, THE PERIOD OF ONE Y EAR CANNOT BE TAKEN INTO CONSIDERATION. ITA NO.1132/DEL/2015 13 5.12. ADMITTEDLY, ONLY ONE REFERENCE WAS MADE IN THE INSTANT CASE FOR EXCHANGE OF INFORMATION BY THE INDIAN COMPETENT AUT HORITY WHICH IS DATED 24.1.2014. ON MAKING SUCH A REFERENCE, THE J APANESE COMPETENT AUTHORITY SENT THE DESIRED INFORMATION, ALBEIT INCO MPLETE AS PER THE VERSION OF THE REVENUE, WHICH WAS RECEIVED BY THE D IT IN ONE GO ON 2.4.2014. NEITHER ANY FURTHER INFORMATION WAS REQU IRED NOR DEFICIENCY IN THE RECEIPT OF THE DESIRED INFORMATION, AS ARGUE D BEFORE US, WAS FURTHER PRESSED. IN SUCH CIRCUMSTANCES, THERE IS NO WARRANT FOR CONSIDERING THE EXTENDED PERIOD OF ONE YEAR. WHEN WE CONSIDER THE PERIOD FROM 24.1.2014 (BEING THE DATE ON WHICH THE INDIAN COMPE TENT AUTHORITY SOUGHT INFORMATION) TO 2.4.2014 (BEING, THE DATE O N WHICH THE DIT RECEIVED THE INFORMATION), THE FURTHER TIME LIABLE TO BE EXCLUDED COMES TO 68 DAYS. 5.13. AN OVERVIEW OF SECTION 153(1)(A) READ WIT H 3 RD PROVISO AND ALSO CLAUSE (VIII) TO THE EXPLANATION TO SECTION 153, BR INGS OUT THAT IN A CASE WHERE REFERENCE IS MADE BY THE AO TO THE TPO FOR DE TERMINATION OF THE ALP OF INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE, WHO, IN ITA NO.1132/DEL/2015 14 TURN, ALSO SEEKS INFORMATION FROM THE COMPETENT AUT HORITY OF ANOTHER COUNTRY THROUGH THE INDIAN COMPETENT AUTHORITY, THE PERIOD OF LIMITATION FOR PASSING OF THE ORDER IS THREE YEARS FROM THE EN D OF THE ASSESSMENT YEAR AS INCREASED BY THE PERIOD COMMENCING FROM THE DATE ON WHICH REFERENCE IS MADE BY THE INDIAN COMPETENT AUTHORITY FOR EXCHANGE OF INFORMATION ENDING WITH THE DATE ON WHICH THE INFOR MATION REQUESTED IS LAST RECEIVED BY THE PRINCIPAL COMMISSIONER OR THE COMMISSIONER, SAVE AND EXCEPT WHERE SUCH PERIOD IS MORE THAN ONE YEAR. AS THE A.Y. UNDER CONSIDERATION IS 2010-11, A PERIOD OF THREE YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR, GIVES US THE DATE OF 31.3 .2014. WHEN WE FURTHER ADD A PERIOD OF 68 DAYS ( 30 DAYS OF APRIL, 2014 + 31 DAYS OF MAY + 7 DAYS OF JUNE, 2014), THE DATE OF LIMITATION AS PER SECTION 153 OF THE ACT GETS DETERMINED AT 7 TH JUNE, 2014. 5.14. BEFORE PROCEEDING FURTHER, WE RECAPITULATE THE RELEVANT DATES IN CONNECTION WITH THE EXTANT ASSESSMENT, AS UNDER : - DATE OF FILING RETURN - 13.10.2010 DATE ON WHICH REFERENCE WAS MADE BY THE AO TO THE T PO - 22.3.2013 ITA NO.1132/DEL/2015 15 DATE OF TPO SEEKING INFORMATION UNDER THE EXCHANGE OF INFORMATION 8.1.2014 DATE OF INDIAN COMPETENT AUTHORITY, IN TURN, SEEK ING INFORMATION 24.1.2014 DATE OF RECEIPT OF INFORMATION BY THE DIT - 2.4.201 4 DATE OF PASSING OF THE ORDER BY THE TPO - 31.5.201 4 DATE OF PASSING THE DRAFT ORDER 11.7.2014 DATE OF THE DIRECTION ISSUED BY THE DRP 24.12.201 4 DATE OF PASSING THE FINAL ASSESSMENT ORDER 29.1.2 015 5.15. THE LD. AR ARGUED THAT SINCE THE DRAFT ORDE R IN THIS CASE WAS PASSED BY THE AO ON 11.7.2014, THE SAME IS BARRED B Y THE TIME LIMIT PROVIDED U/S 153, WHICH EXPIRED ON 7.6.2014. THIS W AS FORCEFULLY OPPOSED BY THE LD. DR, WHO CONTENDED THAT THE DATE OF DRAFT ORDER IS IRRELEVANT FOR THE PURPOSES OF SECTION 153 AND THE LIMITATION CONTAINED IN THIS PROVISION SHOULD BE SEEN QUA THE DATE OF PASSING OF THE FINAL ASSESSMENT ORDER. 5.16. WE HAVE HEARD THE MARATHON ARGUMENTS ADVANC ED BY BOTH THE SIDES ON THE POINT. THE CONTROVERSY WHICH LOOMS LAR GE BEFORE US IS TO DECIDE THE NATURE OF ORDER REFERRED TO IN SECTION 1 53, THAT IS, WHETHER IT IS DRAFT ORDER AS CONTENDED BY THE LD. AR OR THE FINAL ASSESSMENT ORDER AS ITA NO.1132/DEL/2015 16 PUT FORTH BY THE LD. DR. WE HAVE SET OUT SUPRA THE LANGUAGE OF SECTION 153, WHOSE TITLE IS : TIME LIMIT FOR COMPLETION OF ASSESSMENTS AND REASSESSMENTS. THEN SUB-SECTION (1) OF SECTION 1 53 STARTS WITH THE WORDS : `NO ORDER OF ASSESSMENT SHALL BE MADE UNDER SECTION 143 OR SECTION 144 AT ANY TIME AFTER THE EXPIRY OF TWO/THREE YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE. ALBEIT A MARGINAL NOTE CANNOT CONTROL THE LANGUAGE OF A PROVISION, YET IT THROWS SOME LIGHT ON THE SCOPE OF THE SECTION. MARG INAL NOTE OF A SECTION CAN BE TAKEN HELP OF TO INTERPRET A PROVISION, IF T HE LANGUAGE AS PER THE BODY OF THE PROVISION ACCORDS WITH THE SAME. IF OF THE OTHER HAND, THE LANGUAGE OF A SECTION DOES NOT CONCUR WITH ITS HEAD ING, THEN OBVIOUSLY IT IS THE LANGUAGE OF THE SECTION WHICH RULES RATHER T HAN THE MARGINAL NOTE. REVERTING TO THE HEADING AND LANGUAGE OF SECTION 15 3, WE FIND THAT BOTH ARE IN COMPLETE HARMONY WITH EACH OTHER. WHAT HAS B EEN MANDATED AT BOTH THE PLACES IS THE TIME LIMIT FOR COMPLETION OF ASSESSMENT BY MEANS OF PASSING AN ASSESSMENT ORDER. AN ASSESSMENT CAN B E SAID TO BE COMPLETED WHEN AN ASSESSMENT ORDER IS PASSED DETERM INING THE TOTAL INCOME AND ALSO THE AMOUNT OF TAX PAYABLE OR REFUND ABLE, AS THE CASE ITA NO.1132/DEL/2015 17 MAY BE. THE HONBLE SUPREME COURT IN KALYAN KUMAR RAY VS. CIT (1991) 191 ITR 634 (SC) HAS HELD THAT AN ASSESSMENT ORDER INVOLVES DETERMINATION OF INCOME AND TAX. IT HAS BEEN LAID DOWN THAT : ASSESSMENT' IS ONE INTEGRATED PROCESS INVOLVING NO T ONLY THE ASSESSMENT OF THE TOTAL INCOME BUT ALSO THE DETERMI NATION OF THE TAX. THE LATTER IS AS CRUCIAL FOR THE ASSESSEE AS THE FORMER . IT TRANSPIRES THAT ANY ORDER WHICH DOES NOT DETERMINE THE TOTAL INCOME COU PLED WITH THE AMOUNT OF TAX PAYABLE/REFUNDABLE, CANNOT BE EQUATED WITH AN ORDER OF ASSESSMENT AND TILL THEN IT CANNOT BE SAID THAT THE STAGE OF COMPLETION OF ASSESSMENT HAS ARRIVED. 5.17. UNDER THE TRANSFER PRICING PROVISIONS, AS T HEY EXIST FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE AO INITIA LLY MAKES A REFERENCE TO THE TPO FOR THE DETERMINATION OF THE ALP OF THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE. THEN THE TPO PASSES ORDER U/S 92CA(3) DETERMINING THE ARMS LENGTH PRICE OF THE I NTERNATIONAL TRANSACTIONS. SUCH ORDER GOES TO THE AO, WHO PASS ES A DRAFT ORDER IN CONFORMITY WITH THE ALP OF THE INTERNATIONAL TRANSA CTION DETERMINED BY ITA NO.1132/DEL/2015 18 THE TPO. THE TERM `DRAFT ORDER HAS BEEN STATUTOR ILY EXPLAINED IN SECTION 144C(1), WHICH PROVIDES THAT: `THE ASSESSIN G OFFICER SHALL, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ACT, IN THE FIRST INSTANCE, FORWARD A DRAFT OF THE PROPOSED ORD ER OF ASSESSMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE DRAFT ORDER) TO THE ELIGIBLE ASSESSEE IF HE PROPOSES TO MAKE, ON OR AFTER THE 1S T DAY OF OCTOBER, 2009, ANY VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSESSEE. THE ABOVE PROVISION NOT ONLY REVEALS THAT A ` DRAFT ORDER IS NOTHING BUT ` A DRAFT OF THE PROPOSED ORDER OF ASSESSMENT, BUT ALSO THAT IT IS FORWARDED ` IN THE FIRST INSTANCE IF THE AO PROPOSES TO MAKE . ANY VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSESSEE AND FURTHER IT DOES NOT FINALLY DETERMINES THE TAX LIABILITY ALONG WITH THE AMOUNT OF TAX DUE OR REFUNDABLE. AFTER THE PASSING OF THE DRAFT ORDER, AN ASSESSEE, INTER ALIA , GETS AN OPPORTUNITY TO FILE BEFORE THE DRP HIS OBJE CTIONS, IF ANY, TO THE VARIATION IN THE INCOME PROPOSED THROUGH THE DRAFT ORDER. SECTION 144C DEALS WITH: REFERENCE TO DISPUTE RESOLUTION PANEL. SUB-SECTION (2) OF SECTION 144C PROVIDES THAT ON RECEIPT OF THE DRAFT ORDER, THE ELIGIBLE ITA NO.1132/DEL/2015 19 ASSESSEE SHALL WITHIN 30 DAYS OF RECEIPT BY HIM OF THE DRAFT ORDER EITHER FILE HIS ACCEPTANCE TO THE VARIATIONS IN THE INCOME OR LOSS PROPOSED IN SUCH DRAFT ORDER WITH THE AO OR FILE OBJECTIONS, IF ANY, TO SUCH VARIATIONS WITH THE DRP AND ALSO THE AO. SUB-SECTION (3) OF S ECTION 144C PROVIDES THAT THE AO SHALL COMPLETE THE ASSESSMENT ON THE BASIS OF THE DRAFT ORDER, IF EITHER THE ASSESSEE INTIMATES TO H IM THE ACCEPTANCE OF VARIATIONS OR NO OBJECTION IS RECEIVED WITHIN THE S TIPULATED TIME. THE TIME LIMIT FOR PASSING OF THE ASSESSMENT ORDER IN S UCH CIRCUMSTANCES HAS BEEN SET OUT IN SUB-SECTION (4) OF SECTION 144C, W HICH PROVIDES AS UNDER:- `(4) THE ASSESSING OFFICER SHALL, NOTWITHSTANDING A NYTHING CONTAINED IN SECTION 153 OR SECTION 153B, PASS THE ASSESSMENT ORDER UNDER SUB-SECTION (3) WITHIN ONE MONTH FROM THE END OF THE MONTH IN W HICH, (A) THE ACCEPTANCE IS RECEIVED; OR (B) THE PERIOD OF FILING OF OBJECTIONS UNDER SUB-S ECTION (2) EXPIRES. 5.18. THIS SUB-SECTION MANDATES THAT THE AO SHAL L PASS THE ASSESSMENT ORDER UNDER SUB-SECTION (3) WITHIN ONE MONTH FROM T HE END OF THE MONTH IN WHICH EITHER THE ACCEPTANCE IS RECEIVED TO THE P ROPOSED VARIATIONS IN ITA NO.1132/DEL/2015 20 THE INCOME AS PER THE DRAFT ORDER OR THE PERIOD OF FILING OBJECTIONS UNDER SUB-SECTION (2) EXPIRES. WHEN WE READ SUB-SECTION (3) IN CONJUNCTION WITH SUB-SECTION (4), THE POSITION WHICH EMERGES IS THAT THE AO IS OBLIGED TO PASS ASSESSMENT ORDER WITHIN THE STIPULA TED TIME ON HAPPENING OF EITHER OF THE EVENTS, NAMELY, WHERE THE ASSESSEE ACCEPTS VARIATION IN THE INCOME AND CONVEYS THE SAME TO THE AO OR WHERE NO OBJECTION IS FILED BY THE ASSESEE AGAINST THE DRAFT ORDER WITHIN THE PRESCRIBED PERIOD. 5.19. LET US EXAMINE THE POSSIBILITIES THAT CAN H APPEN ON THE RECEIPT OF A DRAFT ORDER BY THE ASSESSEE. EITHER THE ASSESSEE CAN ACCEPT THE VARIATION IN THE INCOME AS PER THE DRAFT ORDER OR DOES NOT AC CEPT. IN THE FIRST SCENARIO, WHERE THE ASSESSEE CHOOSES TO ACCEPT THE DRAFT ORDER, HE MAY EITHER CONVEY HIS ACCEPTANCE TO THE AO OR SIT SILEN T WITHOUT CONVEYING IT. IN THE SECOND SCENARIO WHERE THE ASSESSEE DOES NOT ACCEPT THE VARIATION, THERE CAN AGAIN BE TWO POSSIBILITIES, THAT IS EITHE R, THE ASSESSEEE MAY OBJECT TO THE SAME BEFORE THE DRP OR CHOOSE TO FOLL OW THE ROUTE OF CIT(APPEALS) FOR THE REDRESSAL OF HIS GRIEVANCES. NON-CONVEYING OF ACCEPTANCE TO THE DRAFT ORDER BY THE ASSESSEE WITHI N THE STIPULATED PERIOD ITA NO.1132/DEL/2015 21 MAY BE EITHER DUE TO ACCEPTING THE DRAFT ORDER OR N OT ACCEPTING THE DRAFT ORDER BUT CHOOSING THE ROUTE OF CIT(A), INSTEAD OF FILING OBJECTIONS BEFORE THE DRP. IN BOTH SUCH SITUATIONS, THAT IS, WHERE EITHER THE ASSESSEE GIVES HIS CONSENT TO THE AO TO THE DRAFT O RDER OR NO REPLY IS GIVEN AND THE ASSESSEE DOES NOT CHOOSE TO FILE OBJE CTIONS BEFORE THE DRP, THE AO IS REQUIRED TO PASS THE ASSESSMENT ORDE R IN TERMS OF SUB- SECTION (4) OF SECTION 144C, PAVING THE WAY FOR THE COMPLETION OF ASSESSMENT ENABLING THE ASSESSEE TO EITHER ACCEPT T HE DRAFT ORDER OR MAKE PITCH FOR FILING APPEAL BEFORE THE CIT(A). IN A CA SE, WHERE THE ASSESSEE DOES NOT ACCEPT THE DRAFT ORDER AND CHOOSES TO OBJ ECT TO IT BEFORE THE DRP, THEN THE AO IS REQUIRED TO PASS THE FINAL ASSE SSMENT ORDER AS PER THE TIME ALLOWED UNDER SUB-SECTION (13) OF SECTION 144C, WHICH PROVIDES AS UNDER : - `(13) UPON RECEIPT OF THE DIRECTIONS ISSUED UNDER S UB-SECTION (5), THE ASSESSING OFFICER SHALL, IN CONFORMITY WITH THE DIR ECTIONS, COMPLETE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 153 OR SECTION 153B, THE ASSESSMENT WITHOUT PROVIDI NG ANY FURTHER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WITHIN ONE MONTH FROM THE END OF THE MONTH IN WHICH SUCH DIRECTION IS RECEIVED. ITA NO.1132/DEL/2015 22 5.20. A PERUSAL OF THE ABOVE PROVISION DIVULGES THAT SUB-SECTION (5) OF SECTION 144C STIPULATES THAT THE DRP SHALL, IN A CA SE WHERE OBJECTION IS RECEIVED UNDER SUB-SECTION (2), ISSUE SUCH DIRECTIO NS AS IT THINKS FIT FOR THE GUIDANCE OF THE AO TO ENABLE HIM TO COMPLETE TH E ASSESSMENT. WHERE SUCH A DIRECTION IS ISSUED BY THE DRP U/S 144 C(5), THEN, THE AO IS OBLIGED TO COMPLETE THE ASSESSMENT IN CONFORMITY WITH THE DIRECTIONS ISSUED BY THE DRP U/S 144C(5) WITHIN ONE MONTH FROM THE END OF THE MONTH IN WHICH SUCH DIRECTION IS RECEIVED IN TERMS OF SUB-SECTION (13). 5.21. IT FOLLOWS FROM THE ABOVE DISCUSSION THAT W HERE A DRAFT ORDER HAS BEEN PASSED, THEN IN ALL THE POSSIBLE OPTIONS AVAIL ABLE WITH THE ASSESSEE, THAT IS, EITHER ACCEPTING DRAFT ORDER OR CHALLENGIN G IT BEFORE THE DRP OR PROPOSING TO CHALLENGE THE FINAL ORDER BEFORE THE C IT(A), THE FINAL ASSESSMENT ORDER IS INVARIABLY REQUIRED TO BE PASSE D WITHIN THE TIME LIMIT AS PRESCRIBED UNDER EITHER SUB-SECTIONS (4) OR (13) OF SECTION 144C. THUS IT IS PALPABLE THAT A DRAFT ORDER HAS TO BE NECESSA RILY FOLLOWED BY A FINAL ASSESSMENT ORDER, WHICH EVENTUALLY DETERMINES THE T OTAL INCOME ALONG WITH THE COMPUTATION OF TAX PAYABLE OR REFUNDABLE. THIS DEMONSTRATES ITA NO.1132/DEL/2015 23 THAT ALL ORDERS PASSED PRIOR TO THE FINAL ASSESSMEN T ORDER ARE INTERIM IN NATURE, NAMELY, AN ORDER PASSED BY THE TPO CANNOT B E CHARACTERIZED AS COMPLETION OF ASSESSMENT AS IT SIMPLY DETERMINES TH E ALP OF INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESS EE; A DRAFT ORDER PASSED BY THE AO CAN ALSO NOT BE CONSIDERED AS COMP LETION OF ASSESSMENT AS IT IS SIMPLY `A DRAFT OF THE PROPOSED ORDER OF ASSESSMENT; AND THE DIRECTION ISSUED BY THE DRP ALSO CANNOT BE EQUATED WITH THE COMPLETION OF ASSESSMENT, WHICH SIMPLY DECIDES ON T HE DISPUTES RAISED BY THE ASSESSEE AGAINST THE DRAFT ORDER. IN FACT, I T IS ONLY AFTER THESE PROCEEDINGS AND WITH THE HELP OF SUCH ORDERS THAT A FINAL ASSESSMENT ORDER IS PASSED BY THE AO, WHICH TANTAMOUNTS TO THE COMPLETION OF ASSESSMENT AND DRAWS CURTAIN ON THE ASSESSMENT PROC EEDINGS. AS SECTION 153 REFERS TO THE COMPLETION OF ASSESSMENT AND PASS ING OF THE ASSESSMENT ORDER, THE NATURAL COROLLARY WHICH FOLLOWS IS THAT IT HAS NO RELATION WHATSOEVER WITH THE PASSING OF DRAFT ORDER. 5.22. NOW, WE TAKE UP AN IMPORTANT POINT RAISED B Y THE LD. AR THAT IF THE TIME LIMIT FOR THE PASSING OF THE FINAL ASSE SSMENT ORDER IS GOVERNED ITA NO.1132/DEL/2015 24 BY SECTION 144C, THEN, THE TIME LIMIT GIVEN IN SECT ION 153 MUST BE INFERRED FOR THE PASSING OF THE DRAFT ORDER BECAUSE THERE CANNOT BE TWO SIMULTANEOUS TIME LIMITS FOR THE COMPLETION OF ASSE SSMENT. IT WAS STATED THAT THE PRESENCE OF TIME LIMIT FOR COMPLETION OF A SSESSMENT U/S 144C WOULD, IN THE ABSENCE OF LINKING THE LIMIT GIVEN U/ S 153 WITH THE DRAFT ORDER, MAKE THE TIME LIMIT U/S 153 AS A REDUNDANT P IECE OF LEGISLATION. WE FIND THAT THE POSER OF THE LD. AR. IS DEFINITELY IMPORTANT THAT NO PROVISION IN THE ACT CAN BE CONSIDERED AS IRRELEVAN T OR UNNECESSARY. EVERY PROVISION CARRIES SOME SIGNIFICANCE AND HAS T HE UNDERLYING PRESUMPTION OF ITS APPLICABILITY TO ONE SITUATION O R THE OTHER. THOUGH THE QUESTION POSED BY THE LD. AR THAT IF THE TIME LIMIT FOR PASSING OF THE FINAL ASSESSMENT ORDER IS CONTAINED IN SECTION 144C THEN SECTION 153 CANNOT COVER THE SAME THING ONCE AGAIN, IS NOTEWORTHY, BU T WE FIND THAT THE INFERENCE DRAWN BY HIM THAT IN SUCH CIRCUMSTANCES, THE TIME LIMIT GIVEN U/S 153 SHOULD BE CONSTRUED AS THAT FOR PASSING TH E DRAFT ORDER, DEFIES ALL LOGICS. ITA NO.1132/DEL/2015 25 5.23. AT THIS JUNCTURE, WE NOTE THAT CHAPTER X C ONTAINING THE PROVISIONS RELATING TO THE COMPUTATION OF INCOME FR OM INTERNATIONAL TRANSACTIONS HAVING REGARD TO THE ALP WAS INSERTED BY THE FINANCE ACT, 2001 W.E.F. 1.4.2002. ON SUCH INSERTION, IT BECAME INCUMBENT UPON THE AO TO DETERMINE THE ALP OF THE INTERNATIONAL TRANSA CTIONS. FOR THE A.Y. 2002-03, THE TIME LIMIT FOR COMPLETION OF ASSESSMEN T, AFTER DETERMINING THE ALP, AS WAS EARLIER APPLICABLE ALSO, CONTINUED TO BE GOVERNED BY SECTION 153(1)(A) WHICH STOOD AT TWO YEARS FROM THE END OF THE ASSESSMENT YEAR. SECTION 92CA WITH THE CAPTION `REF ERENCE TO THE TRANSFER PRICING OFFICER WAS BROUGHT INTO EXISTEN CE BY THE FINANCE ACT, 2002 W.E.F. 1.6.2002. UNDER THIS PROVISION, T HE ONUS OF COMPUTING ALP OF THE INTERNATIONAL TRANSACTIONS IN CERTAIN CA SES WAS SHIFTED TO THE TPO, WHO WAS SUPPOSED TO PASS HIS ORDER UNDER SUB-S ECTION (3). THERE WAS NO SEPARATE TIME LIMIT FOR PASSING OF THE ORDER BY THE TPO. THE AO WAS OBLIGED TO PASS THE ASSESSMENT ORDER HAVING REG ARD TO THE ALP, WITHIN THE OVERALL TIME LIMIT PERMITTED BY SECTION 153, THAT IS, TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THIS POSITION CONTINUED TILL THE FINANCE ACT, 2007, WHEN SUB-SECTION (3A) TO SEC TION 92CA WAS ITA NO.1132/DEL/2015 26 INSERTED W.E.F. 1.6.2007 PROVIDING A DISTINCT TIME LIMIT FOR THE PASSING OF THE ORDER BY THE TPO, BEING A PERIOD OF SIXTY DAYS PRIOR TO THE DATE OF COMPLETION OF ASSESSMENT AS PER SECTION 153. SIMUL TANEOUSLY, THE TIME LIMIT FOR PASSING OF ORDER U/S 153 IN CASES WHERE A REFERENCE IS MADE TO THE TPO, WAS ALSO ENHANCED TO THIRTY THREE MONTHS. HERE, WE WOULD LIKE TO MENTION THAT LATER ON THIS TIME LIMIT U/S 153 WA S ENHANCED TO THREE YEARS. IT MEANS THAT WITH THE INSERTION OF SECTION 92CA(3A), THE TIME LIMIT FOR PASSING OF THE ASSESSMENT ORDER CONTINUED TO BE STILL GOVERNED BY SECTION 153, THOUGH THE TIME LIMIT FOR PASSING O F THE ORDER BY THE TPO WAS ALSO SET WITHIN THE OVERALL TIME LIMIT PRESCRIB ED U/S 153 FOR THE PASSING OF THE ASSESSMENT ORDER. THE PROVISIONS OF SECTION 144C ABOUT `REFERENCE TO THE DISPUTE RESOLUTION PANEL, WERE INSERTED BY THE FINANCE (NO.2) ACT, 2009 W.R.E.F. 1.4.2009. THIS L ED TO THE USHERING IN THE ERA OF PASSING THE DRAFT ORDER. IT MEANS THAT UP TO THE A.Y. 2008-09, WHEN THE MECHANISM OF DRP AND THE PASSING OF DRAFT ORDER WAS NOT IN PLACE, THE FINAL ASSESSMENT ORDER PURSUANT TO THE O RDER OF THE TPO WAS REQUIRED TO BE PASSED WITHIN THE TIME LIMIT GIVEN I N SECTION 153. HOWEVER, WHEN THE INSTITUTION OF THE DRP AND THE CO NCEPT OF PASSING A ITA NO.1132/DEL/2015 27 DRAFT ORDER CAME INTO BEING W.E.F. THE A.Y. 2009-10 , THE TIME LIMIT FOR THE COMPLETION OF ASSESSMENT CAME TO BE GOVERNED B Y SUB-SECTIONS (4) OR (13) OF SECTION 144C. THIS SHOWS THAT UPON THE INTRODUCTION OF SECTION 144C, THERE EMERGED TWO SIMULTANEOUS TIME L IMITS FOR COMPLETION OF ASSESSMENTS, VIZ., THE ONE WHICH WAS ALREADY EXISTING AS PER SECTION 153 AND THE LATEST ONE, WHICH CAME TO B E INTRODUCED THROUGH SECTION 144C. AT THIS STAGE, IT IS SIGNIFICANT TO NOTE ONE SALIENT FEATURE IN THE TIME LIMITS ENSHRINED UNDER SUB-SECTIONS (4) AN D (13) OF SECTION 144C. SUCH COMMON THREAD IS THAT THE TIME LIMITS G IVEN IN BOTH THE SUB- SECTIONS ARE ` NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 153 OR . THIS TRANSPIRES THAT THE TIME LIMITS FOR COMPL ETION OF ASSESSMENT AS PRESCRIBED IN SUB-SECTIONS (4) AND (1 3) OF SECTION 144C HAVE BEEN SUPERIMPOSED ON THE TIME LIMIT AS GIVEN UNDER THIRD PROVISO TO SECTION 153(1) FOR THE PASSING OF THE ASSESSMENT ORDER. EFFECT OF THE INSERTION OF THIS NON-OBSTANTE CLAUSE IN SUB-SECTIO NS (4) AND (13) OF SECTION 144C IS THAT THE HITHERTO APPLICABLE TIME L IMIT GIVEN IN SECTION 153 CAME TO EXPRESSLY EXCLUDED FOR THE PURPOSES OF COMPLETION OF THE FINAL ASSESSMENT ORDER PURSUANT TO THE DRAFT ORDER. UNDER THIS SCENARIO, AS ITA NO.1132/DEL/2015 28 IS ALSO INSTANTLY PREVALENT, THE TIME LIMIT FOR THE PASSING OF THE FINAL ASSESSMENT ORDER FINDS ITS PLACE UNDER SUB-SECTIONS (4) OR (13) OF SECTION 144C. ON HAVING COVERED THE TIME LIMIT FOR COMPLET ION OF ASSESSMENT U/S 144C, NOW IT BECAME NECESSARY FOR THE LEGISLATU RE TO REMOVE THE TIME LIMIT FOR COMPLETION OF ASSESSMENT AS CONTAINED IN SECTION 153. THIS COULD HAVE BEEN POSSIBLY DONE BY OMITTING SECTION 1 53, WHICH WAS NOT POSSIBLE AS THIS SECTION AB INITIO CONTAINS GENERAL TIME LIMIT FOR COMPLETION OF ALL ASSESSMENTS AND REASSESSMENTS AND IT IS/WAS NEVER CONFINED ONLY TO THE ORDERS PASSED PURSUANT TO THE DETERMINATION OF THE ALP BY THE TPO. THEN THE COURSE OPEN WAS EITHER TO INSERT A SUNSET CLAUSE IN THIS REGARD IN SECTION 153 ITSELF OR ADD A NON-OBSTANTE CLAUSE IN SECTION 144C(4) AND (13). THE LEGISLATURE CHOSE THE SECOND OPTION AND MADE IT UNEQUIVOCAL BY MENTIONING IN SUB-SECTIONS ( 4) AND (13) THAT THE PROVISIONS OF SECTION 153 SHALL NOT APPLY. THERE IS A REASON FOR NOT ADDING A SUNSET CLAUSE IN SECTION 153. THE REASON IS THAT SECTION 92CA MANDATING THE TPO TO PASS ORDER DETERMINING THE ALP OF INTERNATIONAL TRANSACTIONS, ALSO CONTAINS SUB-SECTION (3A), WHICH PROVIDES TIME LIMIT FOR THE PASSING OF THE ORDER BY THE TPO. AS PER TH IS PROVISION INSERTED ITA NO.1132/DEL/2015 29 BY THE FINANCE ACT, 2007 W.E.F. 1.6.2007, THE TPO MAY PASS ORDER U/S 92CA(3) `AT ANY TIME BEFORE SIXTY DAYS PRIOR TO THE DATE ON WHICH THE PERIOD OF LIMITATION REFERRED TO IN SECTION 153 ,.. FOR MAKING THE ORDER OF ASSESSMENT OR REASSESSMENT OR RECOMPUTATION OR FRESH ASSESSME NT, AS THE CASE MAY BE, EXPIRES . SINCE THE TIME LIMIT FOR PASSING OF THE ORDER BY THE TPO IS NOT DIRECT BUT IS LINKED WITH THE TIM E LIMIT AS PER SECTION 153, THE LEGISLATURE DID NOT INSERT ANY SUNSET CLAU SE IN SECTION 153, WHICH WOULD HAVE OTHERWISE MADE THE PROVISION OF SUB-SECT ION (3A) OF SECTION 92CA UNWORKABLE WITHOUT THE INSERTION OF A SEPARATE CORRESPONDING PROVISION GIVING TIME LIMIT FOR THE PASSING OF THE ORDER BY THE TPO. THIS IS THE ANSWER TO THE LD. ARS POSER THAT WHEN THE T IME LIMIT FOR COMPLETION OF ASSESSMENT IS CONTAINED IN SECTION 14 4C, THEN THE PROVISIONS OF SECTION 153 CANNOT BE READ AS MEANING LESS EXCEPT FOR LINKING IT WITH DRAFT ORDER. IN OUR CONSIDERED OPI NION, IT IS OVERT THAT THE TIME LIMIT U/S 153 IS NOT MEANINGLESS AS THE SAME H AS BEEN RETAINED FOR KEEPING ALIVE THE TIME LIMIT GIVEN TO THE TPO FOR P ASSING HIS ORDER. ITA NO.1132/DEL/2015 30 5.24. WE HAVE NOTICED ABOVE THAT THE TERM `DRAFT ORDER HAS BEEN STATUTORILY COINED U/S 144C(1). IT MEANS THAT THE T ERM `DRAFT ORDER HAS BEEN RECOGNIZED AS AND IS ACTUALLY DIFFERENT IN AMB IT FROM THE TERM `ASSESSMENT ORDER. WITH THE INSERTION OF SECTION 1 44C, WHICH LED TO THE BIRTH OF THE DRAFT ORDER, THE LEGISLATURE DID NOT S UBSTITUTE THE TERM `ORDER OF ASSESSMENT WITH THE TERM `DRAFT ORDER IN SECTI ON 153. IF THE INTENTION OF THE LEGISLATURE HAD BEEN TO SUBSTITUTE THE HITHE RTO TIME LIMIT FOR PASSING OF THE ASSESSMENT ORDER AS THE TIME LIMIT F OR THE PASSING OF DRAFT ORDER HENCEFORTH, ON SHIFTING THE TIME LIMIT FOR PA SSING OF THE FINAL ASSESSMENT ORDER TO SECTION 144C(4) OR (13), THEN I T WOULD HAVE MADE NECESSARY CHANGES IN SECTION 153 BY SUBSTITUTING T HE TERM `DRAFT ORDER WITH THE TERM `ORDER OF ASSESSMENT. IN FACT, THE TERM `DRAFT ORDER IS TOTALLY ABSENT IN SECTION 153, WHICH INDICATES THAT IT HAS BEEN TREATED AS ALIEN TO SECTION 153. IF WE ACCEPT THE CONTENTION OF THE LD. AR THAT AFTER THE INTRODUCTION OF SECTION 144C, THE TIME LIMIT PR OVIDED U/S 153 APPLIES ONLY TO THE DRAFT ORDER, IT WOULD AMOUNT TO RE-WRIT ING SECTION 153 WHICH FALLS IN THE EXCLUSIVE DOMAIN OF THE PARLIAMENT. WE ARE UNABLE TO READ ITA NO.1132/DEL/2015 31 THE TERM `DRAFT ORDER INTERCHANGEABLY WITH THE TER M `ASSESSMENT ORDER IN THE CONTEXT OF SECTION 153 OR PRACTICALLY FOR AN Y OTHER PURPOSE. 5.25. NOW WE TAKE UP THE NEXT ARGUMENT OF THE LD . AR THAT IF THE TIME LIMIT PRESCRIBED U/S 153 IS CONSIDERED AS RELATING TO THE COMPLETION OF ASSESSMENT, THIS WILL LEAVE NO OTHER PROVISION SETT ING OUT THE TIME-FRAME FOR PASSING OF THE DRAFT ASSESSMENT ORDER. HE ARGU ED THAT IT CANNOT BE CONTEMPLATED THAT THE LEGISLATURE HAS GIVEN UNLIMIT ED TIME FRAME TO THE AO FOR PASSING A DRAFT ORDER. WE FIND THAT, IN FACT , NO TIME LIMIT HAS BEEN PRESCRIBED FOR THE PASSING OF THE DRAFT ORDER. IT I S ALSO EQUALLY RELEVANT TO NOTE THAT PRIOR TO THE INTRODUCTION OF SUB-SECTION (3A) TO SECTION 92CA BY THE FINANCE ACT, 2007, THERE WAS NO TIME LIMIT F OR THE PASSING OF THE ORDER BY THE TPO, THOUGH SUB-SECTION (3) REQUIRING THE PASSING OF ORDER BY THE TPO, WAS INSERTED BY THE FINANCE ACT, 2002 . IT MEANS THAT DURING THE INTERREGNUM, THOUGH THERE WAS A REQUIREM ENT FOR THE PASSING OF ORDER BY THE TPO, BUT THERE WAS NO SPECIFIC TIME LIMIT FOR THE PASSING SUCH ORDER. THE MERE FACT THAT NO TIME LIMIT HAS B EEN PRESCRIBED FOR THE PASSING A DRAFT ORDER, DOES NOT AND CANNOT MEAN THA T THE TIME LIMIT FOR ITA NO.1132/DEL/2015 32 THE COMPLETION OF ASSESSMENT GIVEN U/S 153 SHOULD B E INFERRED AS THAT FOR PASSING A DRAFT ORDER. 5.26. IT IS A SETTLED LEGAL POSITION THAT WHERE NO TIME LIMIT IS PRESCRIBED FOR PASSING AN ORDER, THEN SUCH ORDER SHOULD BE PAS SED WITHIN A REASONABLE TIME. SECTION 201 REQUIRES THE PASSING O F ORDER UNDER SUB- SECTION (1) TREATING A PERSON RESPONSIBLE AS AN ASS ESSEE IN DEFAULT IN CASE THERE IS A FAILURE TO DEDUCT TAX AT SOURCE OR AFTER DEDUCTION, THERE IS A FAILURE TO PAY TAX AT SOURCE. PRIOR TO INSERTION OF SUB-SECTION (3) OF SECTION 201 BY THE FINANCE (NO.2) ACT, 2009 W.E.F. 1.4.2010, NO TIME LIMIT WAS PRESCRIBED FOR THE PASSING OF SUCH AN ORD ER. THE HONOURABLE HIGH COURTS AND THE BENCHES OF THE TRIBUNAL ACROSS THE COUNTRY HAVE RECOGNIZED THE POSITION THAT NO TIME LIMIT HAS BEEN PRESCRIBED FOR PASSING AN ORDER TREATING A PERSON RESPONSIBLE AS A SSESSEE IN DEFAULT. WHEREAS THE HONBLE CALCUTTA HIGH COURT IN BRITISH AIRWAYS VS. CIT (1992) 193 ITR 439 (CAL) HAS HELD THAT SINCE NO PERIOD OF LIMITATION FOR LIABILITY HAS BEEN STATUTORILY GIVEN, EVEN THE ORD ER PASSED AFTER 6 YEARS IS VALID, THE HONBLE DELHI HIGH COURT IN CIT VS. NHK JAPAN ITA NO.1132/DEL/2015 33 BROADCASTING CORPORATION (2008) 305 ITR 137 HAS HELD SUCH ORDER IN THE ABSENCE OF THE EXPRESS TIME LIMIT SHOULD BE PAS SED WITHIN A PERIOD OF FOUR YEARS. LEGISLATURE STEPPED IN BY WAY OF I NSERTION OF SUB-SECTION (3) TO SECTION 201 W.E.F. A.Y. 2010-11 PROVIDING TH E TIME LIMIT FOR PASSING OF THE ORDER DEEMING A PERSON TO BE AN ASSE SSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESIDENT IN INDIA, AT ANY TIME WITHIN (I) TWO YEARS FROM TH E END OF THE FINANCIAL YEAR IN WHICH THE STATEMENT IS FILED IN A CASE WHER E THE STATEMENT REFERRED TO IN SECTION 200 HAS BEEN FILED; (II) SI X YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH PAYMENT IS MADE OR CRED IT IS GIVEN, IN ANY OTHER CASE. THE RATIONALE OF THIS DISCUSSION IS THA T THE ABSENCE OF A STATUTORY TIME LIMIT FOR PASSING AN ORDER IS NOT AN ABSOLUTELY IMPOSSIBLE SITUATION. IN A CASE, WHERE NO TIME LIMIT HAS BEEN PRESCRIBED, THEN REQUISITE ORDER SHOULD BE PASSED WITHIN A REASONABL E TIME. AS THERE IS NO TIME LIMIT PRESCRIBED FOR THE PASSING OF THE DRAFT ORDER, SUCH ORDER IS ALSO REQUIRED TO BE PASSED WITHIN A REASONABLE TIME. COM ING BACK TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE INFORMATION F ROM THE JAPANESE COMPETENT AUTHORITY WAS RECEIVED BY THE DIT ON 24.1 .2014. BY NO ITA NO.1132/DEL/2015 34 STANDARD, THE PASSING OF THE DRAFT ORDER ON 11.7.20 14, THAT IS, WITHIN A PERIOD OF LESS THAN SIX MONTHS FROM THE DATE OF SUC H RECEIPT OF INFORMATION, CAN BE CONSTRUED AS HAVING BEEN PASSED IN AN UNREASONABLE TIME. AS SUCH, WE JETTISON THE VIEW CANVASSED BY TH E LD. AR THAT THE TIME LIMIT GIVEN U/S 153 SHOULD BE READ AS RELEVANT FOR THE PASSING OF DRAFT ORDER. 5.27. IT IS, THEREFORE, SUMMED UP THAT THE TIME LIMIT FOR COMPLETION OF ASSESSMENT, OR IN OTHER WORDS, PASSING OF THE FINA L ASSESSMENT ORDER PURSUANT TO THE ORDER OF THE TPO, IS CONTAINED IN SECTION 144C(4) AND (13); THE TIME LIMIT GIVEN U/S 153 HAS NO RELATION WHATSOEVER WITH THE PASSING OF THE DRAFT ORDER, WHICH SHOULD BE PASSED WITHIN A REASONABLE TIME; AND THE TIME LIMIT GIVEN IN SECTION 153 IS RE LEVANT FOR DETERMINING THE TIME AVAILABLE WITH THE TPO FOR PASSING ORDER U /S 92CA(3). 5.28. TURNING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE AO PASSED THE FINAL ASSESSMENT ORDER ON 29.1.2015, WHI CH IS WELL WITHIN A PERIOD OF ONE MONTH FROM THE END OF THE MONTH IN WH ICH DIRECTION WAS RECEIVED FROM THE DRP ON 24.12.2014. AS SUCH, WE HO LD THAT THE FINAL ITA NO.1132/DEL/2015 35 ASSESSMENT ORDER PASSED BY THE AO IS WITHIN THE TIM E PRESCRIBED U/S 144C(13). FURTHER SINCE THE DRAFT ORDER HAS ALSO BE EN PASSED WITHIN A REASONABLE TIME, THE SAME IS ALSO NOT BARRED BY LIM ITATION. THE CONTENTION OF THE LD. AR THAT THE DRAFT ORDER PASSE D IN THIS CASE WAS BARRED BY LIMITATION, IS THEREFORE, FOUND TO BE WIT HOUT ANY SUBSTANCE AND HENCE REPELLED. B. TIME LIMIT FOR PASSING OF ORDER BY THE TPO 6.1. THE LD. AR ALSO CHALLENGED THE PASSING OF T HE ORDER BY THE TPO. IT WAS SUBMITTED THAT THE TPO PASSED ORDER ON 31.5. 2014, WHICH WAS TIME BARRED AND, HENCE, THE SAME SHOULD BE ANNULLED LEADING TO THE QUASHING OF THE FINAL ASSESSMENT ORDER. IN THE OPP OSITION, THE LD. DR SUPPORTED THE REVENUES STAND. 6.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. IT HAS BEEN NOTICED ABOVE THAT THE PROVISIONS OF SECTION 92CA REQUIRING THE PASSING OF THE ORDER BY THE TPO DETERMINING THE ALP OF THE INTERNATIONAL TRANSACTIONS, CAME INT O BEING BY THE FINANCE ACT, 2002. AS PER SUB-SECTION (3) OF SECTIO N 92C, THE TPO IS ITA NO.1132/DEL/2015 36 REQUIRED TO PASS THE ORDER DETERMINING THE ALP OF T HE INTERNATIONAL TRANSACTIONS. NO TIME LIMIT WAS INITIALLY GIVEN FOR THE PASSING OF ORDER BY THE TPO. IT IS ONLY BY THE FINANCE ACT, 2007, THAT SUB-SECTION (3A) WAS INSERTED PROVIDING TIME LIMIT FOR THE PASSING AN OR DER BY THE TPO. NO AMENDMENT HAS BEEN CARRIED OUT IN THIS PROVISION TH EREAFTER. SUB-SECTION (3A) OF SECTION 92CA CONTAINING THE RELEVANT TIME L IMIT FOR THE PASSING OF THE ORDER BY THE TPO, READS AS UNDER : - `(3A) WHERE A REFERENCE WAS MADE UNDER SUB-SECTION (1) BEFORE THE 1ST DAY OF JUNE, 2007 BUT THE ORDER UNDER SUB-SECTION ( 3) HAS NOT BEEN MADE BY THE TRANSFER PRICING OFFICER BEFORE THE SAI D DATE, OR A REFERENCE UNDER SUB-SECTION (1) IS MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, AN ORDER UNDER SUB-SECTION (3) MAY BE MADE AT ANY T IME BEFORE SIXTY DAYS PRIOR TO THE DATE ON WHICH THE PERIOD OF LIMITATION REFERRED TO IN SECTION 153, OR AS THE CASE MAY BE, IN SECTION 153B FOR MAKING THE ORDER OF ASSESSMENT OR REASSESSMENT OR RECOMPUTATIO N OR FRESH ASSESSMENT, AS THE CASE MAY BE, EXPIRES. . 6.3. IT TRANSPIRES FROM A READING OF THE ABOVE PROV ISION THAT WHERE A REFERENCE IS MADE TO THE TPO AFTER 1.6.2007, AN ORD ER UNDER SUB-SECTION ITA NO.1132/DEL/2015 37 (3) MAY BE MADE AT ANY TIME BEFORE 60 DAYS PRIOR TO THE DAT E ON WHICH THE PERIOD OF LIMITATION REFERRED TO IN SECTION 153 , OR, AS THE CASE MAY BE, IN SECTION 153B, FOR MAKING THE ORDER OF ASSESSMENT OR RE-ASSESSMENT, ETC., EXPIRES. 6.4. THE LD. DR VEHEMENTLY CONTENDED THAT THE USE OF THE WORD `MAY IN THIS PROVISION FOR THE PASSING OF THE ORDER BY T HE TPO WITHIN A PERIOD OF 60 DAYS OF THE LIMITATION SET OUT IN SECTION 153 INDICATES THAT THE ADHERENCE TO THIS TIME LIMIT IS NOT MANDATORY. HE C ONTENDED THAT EVEN IF THE ORDER IS PASSED AFTER THE PERIOD OF 60 DAYS FRO M THE PERIOD OF LIMITATION AS GIVEN U/S 153, STILL IT WOULD BE TREA TED AS HAVING BEEN PASSED WITHIN TIME. THIS ARGUMENT WAS COUNTERED BY THE LD. AR. 6.5. THERE IS NO DOUBT THAT THE LEGISLATURE HAS U SED THE WORD `MAY IN SUB-SECTION (3A) OF SECTION 92CA. THERE IS FURTHER NO DOUBT THAT THE AMBIT OF THE WORD `MAY IS DIFFERENT FROM THE WORD `SHALL. WHEREAS, ORDINARILY THE USE OF THE WORD `SHALL SIGNIFIES MA NDATORY COMPLIANCE, THE WORD MAY SIGNIFIES DIRECTORY COMPLIANCE. BUT AT TIMES, THE WORD `MAY CAN ALSO BE READ AS `SHALL AND VICE VERSA . IN FACT, ALL DEPENDS ITA NO.1132/DEL/2015 38 UPON THE CONTEXT AND THE BACKGROUND OF THE PROVISIO N IN WHICH SUCH A WORD IS USED. 6.6. SECTION 127 DEALS WITH THE POWER TO TRANSFE R CASES. SUB-SECTION (1) OF THIS PROVISION PROVIDES THAT : `THE DIRECTOR GEN ERAL OR CHIEF COMMISSIONER OR COMMISSIONER MAY , AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER , WHEREVER IT IS POSSIBLE TO DO SO, AND AFTER RECORDING HIS REASONS FOR DOING SO, TRANSFER ANY CASE FROM ONE OR MORE ASSESSING OFFICERS SUBORD INATE TO HIM (WHETHER WITH OR WITHOUT CONCURRENT JURISDICTION) T O ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITH OUT CONCURRENT JURISDICTION) ALSO SUBORDINATE TO HIM. DISPUTE AR OSE IN SAHARA HOSPITALITY LTD. VS. CIT (2013) 352 ITR 38 (BOM) AS TO WHETHER OR NOT GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEI NG HEARD BEFORE THE TRANSFER OF CASE BY THE CHIEF COMMISSIONER, IN THE BACKDROP OF THE USE OF THE WORD `MAY IN THE PROVISION, BE CONSIDERED A S MANDATORY. THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THE WORD ` MAY IN SECTION ITA NO.1132/DEL/2015 39 127 SHOULD BE READ AS `SHALL AND HENCE THE GRANTIN G OPPORTUNITY TO THE ASSESSEE IS MANDATORY. 6.7. SECTION 16 OF THE WEALTH-TAX ACT, 1957 DEA LS WITH THE ASSESSMENT OF WEALTH. SECTION 16A HAVING MARGINAL NOTE OF `RE FERENCE TO VALUATION OFFICER PROVIDES THROUGH SUB-SECTION (1) THAT : ` FOR THE PURPOSE OF MAKING AN ASSESSMENT (INCLUDING AN ASSESSMENT IN RE SPECT OF ANY ASSESSMENT YEAR COMMENCING BEFORE THE DATE OF COMIN G INTO FORCE OF THIS SECTION) UNDER THIS ACT, WHERE UNDER THE PROVISIONS OF SECTION 7 READ WITH THE RULES MADE UNDER THIS ACT OR, AS THE CASE MAY BE, THE RULES IN SCHEDULE III, THE MARKET VALUE OF ANY ASSET IS TO B E TAKEN INTO ACCOUNT IN SUCH ASSESSMENT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF ANY ASSET TO A VALUATION OFFICER- (A) IN A CASE WHERE T HE VALUE OF THE ASSET AS RETURNED IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER IF THE ASSESSING OFFICER IS OF OPINION THAT THE VAL UE SO RETURNED IS LESS THAN ITS FAIR MARKET VALUE; (B) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF OPINION- (I) THAT THE FAIR MARKET VALUE OR TH E ASSET EXCEEDS THE VALUE OF THE ASSET AS RETURNED BY MORE THAN SUCH PERCENTA GE OF THE VALUE OF THE ITA NO.1132/DEL/2015 40 ASSET AS RETURNED OR BY MORE THAN SUCH AMOUNT AS MA Y BE PRESCRIBED IN THIS BEHALF; OR (II) THAT HAVING REGARD TO THE NATU RE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO. IN RAJ PAUL OSWAL VS. CWT (1988) 171 ITR 489 (P&H), THERE AROSE A QUARREL AS TO THE MEANING OF THE WORD ` MAY USED IN SECTION 16A IN THE CONTEXT OF MAKING REFERENCE TO THE VALUATION OFFICER. SETTLING THE CONTROVERSY, THE HONBLE HIGH COURT HELD THAT THE WORD ` MAY ' USED IN SECTION 16A(1)(B), SHOULD BE READ AS ` SHALL '. IT HELD THAT IF THE LEGISLATIVE INTENT HAD BEEN TO ACCORD TOTAL DISCRETION TO THE WTO TO MAKE A REFERE NCE TO THE VALUATION OFFICER OR NOT IN CASES WHICH WERE COVERED BY CLS. (A) & (B) OF SUB-S. (1) OF S. 16A OF THE WT ACT, THEN THERE WAS NO NECESSIT Y OF PROVIDING THE GUIDELINES IN CL. (A) OR IN SUB-CLS. (I) AND (II) O F CL. (B) OF SUB-S. (1) OF S. 16A. IT WAS, THEREFORE, HELD THAT THE LEGISLATURE B Y PRESCRIBING THE CONTINGENCIES, IN WHICH, BY IMPLICATION, IT WOULD N OT BE NECESSARY TO MAKE A REFERENCE, ALSO AGAIN BY NECESSARY IMPLICATI ON BE TAKEN TO HAVE INTENDED THAT THE REFERENCE TO VALUATION OFFICER WA S MUST IF THE GIVEN CONTINGENCIES DID NOT EXIST. IN THIS REGARD, THE HO NBLE HIGH COURT OBSERVED THAT : ` THERE IS NO DOUBT ABOUT THE FACT THAT THE USE OF ITA NO.1132/DEL/2015 41 EXPRESSION 'MAY' AND 'SHALL' TO SOME EXTENT SERVES AN INDICIA TO THE INTENTION OF THE LEGISLATURE AND HELPS IN DECIDING AS TO WHETHER THE GIVEN REQUIREMENT IS DIRECTORY OR MANDATORY IN CHARACTER, BUT THE USE OF EXPRESSION 'MAY' OR 'SHALL' IS NEVER CONSIDERED DEC ISIVE IN THAT REGARD. IT WAS THUS HELD THAT THE MOMENT THE ESTIMATED VALU E EXCEEDED THE RETURNED VALUE OF THE ASSET BY MORE THAN WHAT IS EN VISAGED BY R. 3B, THEN THE WTO HAD NO OPTION, BUT TO MAKE A REFERENCE AND HE IS NOT TO WAIT FOR A REQUEST FROM THE ASSESSEE TO MAKE A REFERENCE. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE DELHI HIGH COURT IN SHARBATI DEVI JHALANI VS. CWT & ORS. (1986) 159 ITR 549 (DEL) . IT IS VIVID FROM THE ABOVE DISCUSSION THAT THE USE OF WORD `MAY OR `SHALL I N A PROVISION IS NOT CONCLUSIVE OF ITS MANDATORY OR DIRECTORY NATURE. ON E NEEDS TO GO THROUGH THE TEXT OF THE PROVISION AND THE CONTEXT IN WHICH SUCH A WORD HAS BEEN USED. 6.8. REVERTING TO SECTION 92CA, WE FIND THAT THE FINANCE ACT, 2007 INSERTED SUB-SECTION (3A) CARRYING THE TIME LIMIT O F SIXTY DAYS FOR PASSING OF THE ORDER BY THE TPO BEFORE THE EXPIRY O F TIME LIMIT FOR ITA NO.1132/DEL/2015 42 COMPLETION OF ASSESSMENT BY THE AO U/S 153. DESPITE THE USE OF THE WORD ` MAY , THE TIME LIMIT FOR PASSING THE ORDER BY THE TPO IS MANDATORY, AS IN THE OTHERWISE SITUATION OF THE TPO HAVING BEEN ALLOWED MORE TIME BY IMPLICATION, SAY OF THREE MONTHS OR MO RE, COULD AT THAT TIME HAVE FRUSTRATED THE PROVISIONS OF SECTION 153 FOR THE PASSING OF THE ASSESSMENT ORDER BY THE AO. THUS WE HAVE NO HESITAT ION IN HOLDING THAT THE USE OF THE WORD ` MAY IN SUB-SECTION (3A) OF SECTION 92CA IS TO BE CONSTRUED AS ` SHALL , THEREBY MAKING THIS TIME LIMIT AS MANDATORY AND NOT DIRECTORY. AS SUCH, IT IS HELD THAT THE TPO IS BOUND BY THE GIVEN TIME LIMIT FOR PASSING OF HIS ORDER. 6.9. HAVING HELD THAT THE WORD `MAY IN SECTION 9 2CA(3A) SHOULD BE READ AS `SHALL, WE ONCE AGAIN NOTE THAT PRIOR TO T HE INSERTION OF SECTION 144C BY THE FINANCE ACT, 2009, THE TIME LIMIT FOR C OMPLETION OF ASSESSMENT WAS CONTAINED IN SECTION 153 AND ACCORDI NGLY THE TIME LIMIT FOR THE PASSING OF THE ORDER BY THE TPO WAS ALSO SE T OUT ACCORDINGLY IN SECTION 92CA W.R.T. THE TIME LIMIT FOR THE COMPLETI ON OF ASSESSMENT AS PER SECTION 153. HOWEVER, WITH THE INSERTION OF SEC TION 144C, THE TIME ITA NO.1132/DEL/2015 43 LIMIT FOR THE COMPLETION OF ASSESSMENT, OR IN OTHE R WORDS, FOR PASSING OF THE FINAL ASSESSMENT ORDER, STOOD SHIFTED TO SUB-SE CTIONS (4) OR (13) OF SECTION 144C AND GOT DETACHED FROM SECTION 153. AL ONG WITH THIS, PASSING OF DRAFT ORDER ALSO BECAME MANDATORY, FOR W HICH WE HAVE HELD ABOVE THAT THE SAME IS REQUIRED TO BE PASSED WITHIN A REASONABLE TIME AND IT HAS GOT NO RELATION WITH THE TIME LIMIT GIVE N IN SECTION 153. WHEN THE POSITION IS SUCH THAT THE DRAFT ORDER HAS TO BE PASSED INDEPENDENT OF THE TIME LIMIT GIVEN IN SECTION 153, THERE APPEARS SOME LOGIC IN NOT CONTINUING WITH THE TIME LIMIT FOR THE PASSING OF T HE ORDER BY THE TPO TAGGED WITH THE TIME LIMIT GIVEN IN SECTION 153. IT HAS LED TO INCOHERENCE IN THE PROVISIONS. THIS POSITION CAN BE SET RIGHT O NLY WITH A SUITABLE LEGISLATIVE AMENDMENT. 6.10. HAVING HELD THAT THE TIME LIMIT GIVEN IN SU B-SECTION (3A) OF SECTION 92CA IS MANDATORY FOR THE PASSING OF THE OR DER BY THE TPO, LET US FIND OUT THE TIME AVAILABLE WITH THE TPO FOR THE PASSING OF HIS ORDER. IT HAS BEEN NOTICED ABOVE THAT THE TIME LIMIT AS PE R SECTION 153(1) READ WITH THE THIRD PROVISO AND CLAUSE (VIII) OF THE EXP LANATION TO THE SECTION, ITA NO.1132/DEL/2015 44 COMES AT 7 TH JUNE, 2014. PERIOD OF 60 DAYS PRIOR TO SUCH TIME L IMIT COMING AS PER SECTION 153, AVAILABLE WITH THE TPO F OR PASSING HIS ORDER, COMES TO AN END ON 8 TH APRIL, 2014. AS AGAINST THIS, THE ORDER WAS ACTUALLY PASSED BY THE TPO ON 31 ST MAY, 2014. THUS, THE ORDER PASSED BY THE TPO IS PATENTLY TIME BARRED. C. CONSEQUENCES OF VALID DRAFT ORDER AND TPOS TIME BARRED ORDER 7. THE LD. AR ARGUED THAT SINCE THE DRAFT ORDER AS WELL AS THE ORDER OF THE TPO WERE TIME BARRED, THE FINAL ASSESSMENT ORDE R PASSED BY THE AO WAS LIABLE TO BE SET ASIDE. WE HAVE HELD ABOVE THAT THE DRAFT ORDER WAS PASSED WITHIN TIME AND ONLY THE ORDER OF THE TPO IS TIME-BARRED. WHEN AN ORDER IS PASSED WITHOUT JURISDICTION OR BEYOND T HE PERMISSIBLE TIME, IT IS CONSIDERED AS NULL AND VOID. THE EFFECT OF PASSI NG A NULL AND VOID ORDER IS THAT IT IS CONSIDERED AS NON EST, MEANING THEREBY, THAT IT ENTAILS ALL THE CONSEQUENCES OF NOT HAVING BEEN PASSED AT A LL AND IS IGNORED FOR ALL PRACTICAL PURPOSES. THE HONBLE MADRAS HIGH CO URT IN VIJAY TELEVISION (P.) LTD. VS. DRP (2014) 369 ITR 113 ( MAD) CONSIDERED A CASE IN WHICH THE ASSESSMENT ORDER WAS DIRECTLY PA SSED WITHOUT ROUTING ITA NO.1132/DEL/2015 45 THROUGH DRAFT ORDER OR DRP. THE HONBLE COURT HELD IT TO BE A NON- CURABLE DEFECT AND RESULTANTLY THE ASSESSMENT WAS Q UASHED. IT WAS HELD THAT WHEN THERE IS AN OMISSION ON THE PART OF THE A O TO FOLLOW THE MANDATORY PROCEDURE PRESCRIBED UNDER THE ACT, SUCH AN OMISSION CANNOT BE TERMED AS A MERE PROCEDURAL IRREGULARITY AND IT CANNOT BE CURED. EXTANTLY, WE ARE CONFRONTED WITH A SITUATION IN WHI CH THE DRAFT ORDER HAS BEEN PASSED IN TIME BUT THE LAPSE HAS COME IN THE P ASSING OF THE ORDER BY THE TPO. THE CONSEQUENCE OF THE ABOVE SCENARIO IS T HAT THE PASSING OF A VALID AND PROPERLY TIMED DRAFT ORDER CANNOT LEAD TO THE SETTING ASIDE OF THE FINAL ASSESSMENT ORDER. HOWEVER THE PASSING OF THE TIME BARRED ORDER BY THE TPO, WHICH IS AGAIN A MANDATORY PROCEDURE PR ESCRIBED UNDER THE ACT, WOULD BE A NON-CURABLE DEFECT, HAVING THE CONS EQUENCE AS IF IT WAS NOT PASSED. IN SUCH CIRCUMSTANCES, THOUGH THE FINAL ASSESSMENT ORDER WOULD BE SAVED BUT THE ADDITION ON ACCOUNT OF TRANS FER PRICING ADJUSTMENT ARISING FROM THE DETERMINATION OF THE AL P OF THE INTERNATIONAL TRANSACTIONS BY THE TPO AS EMANATING FROM HIS TIME BARRED ORDER, WOULD BE UNSUSTAINABLE. WE HOLD ACCORDINGLY AND DIRECT THE ITA NO.1132/DEL/2015 46 DELETION OF ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT MADE IN THE FINAL ASSESSMENT ORDER. 8. IN VIEW OF OUR DECISION ON THE ABOVE LEGAL GR OUND, THERE REMAINS NO NEED TO DEAL WITH THE CONTENTIONS RAISED BEFORE US ON THE MERITS OF THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 15.09.201 5. SD/- [A.T. VARKEY] SD/- [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 15 TH SEPTEMBER, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.