MOTT MACDONALD P.LTD, MUMBAI V. DCIT CIR 2(2), MUMBAI

ITA 1524/MUM/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1301 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 03-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS IN D ER SOLANKI DA
• Keywords: Transfer pricing; Opportunity of being heard; International transaction
• Section: 92C; 143(3); 13; 153; 92

Judgement Text

ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 1 OF 11 IN THE INCOME TAX APP ELLATE TRIBUNAL MUMBAI I BENCH, MUMBAI [CORAM : PRAMOD KUMAR ( V ICE PRESI DENT ) AND RAVISH SOO D ( J UDICIAL MEMBER ) ] ITA NO. 1524/MUM/14 ASSESSMENT YEAR : 2009 - 10 M OTT MACDONALD PVT LTD ... . .. ....... APPELLANT (SUCCESSOR TO M OTT MACDONALD CONS ULTANTS INDIA P RIVATE LIMITED) 44, KHANNA CONSTRUCTION HOUSE DR R G THANDANI MARG, WORLI MUMBAI 400 018 [AABCM0834 G] V S DEPUTY COMMISSIONER OF I N COME TAX CIRCLE 2 (2) , MUMBAI . ......RESPONDENT APPEA RANCES BY AART I V I S S A N J I FOR THE A PPELLANT RIGNESH DAS, IN D ER SOLANKI FOR THE RE SPONDENT DATES OF HEARING OF THE APP EAL : FEBRUARY 2 4 TH , 2020 DATE OF PRONO UNCING TH IS ORDER : MAY 27 TH , 2020 O R D E R PER PRAMOD KUMAR ( V ICE PRESIDENT ) : 1. BY WAY OF THIS APP EAL , THE ASSESSEE APPELLANT HAS C HALLE NGED CORRECTNESS OF THE ORDER DATED 31 ST JANUARY 2 014, PASSED BY THE ASSESSING OFFI CER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME TAX ACT, 1961, FOR THE ASS ESSMENT Y EAR 2009 - 10. 2. GRI EVANCES RAISED BY THE AS SESSEE ARE AS FOLLOWS: 1) THE LEARNED ASSESSING OFFICER ERRED IN PASSING A CONFORMITY ORDER ACCEPTING ADJUSTMENT MADE BY TH E LEARNED TRANSFER PRICING OFFICER 1(9), MUMBAI AND ALSO THE DIRECTIONS OF THE LEARNED HONBLE DRP - I, MUMBAI . ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 2 OF 11 2) THE HONBLE DRP - I MUMBAI ERRED IN CONFIRMING THE ACTION OF THE LEARNED TRANSFER PRICING OFFICER 1(9) OF ARRIVING ARMS LENGTH PRICE BY USING TN MM METHOD AND REJECTING THE CPM METHOD USED BY THE APPELLANT COMPANY FOR THE PURPOSE OF DETERMINING ALP. 3 ) THE HONBLE DRP - I MUMB AI ERRED IN CONFIRMING THE ORDER OF THE LEARNED TRANSFER PRICING OFFICER AND REJECTING NON AE COMPARABLES SELECTED BY THE APPE LLANT. 4) THE HONBLE DRP - I MUMBAI ERRED IN CONFIRMING THE ORDER OF THE LEARNED TRANSFER PRICING OFFICER WHICH FOLLOWED PICK AND CHOOSE OUT OF THE COMPANIES SELECTED FOR TNMM. 5) THE HONBLE DRP - I MUMBAI ERRED IN CONFIRMING THE ADJUSTMENTS MADE OF RS. 1, 80,00,639/ - BY LEARNED TRANSFER PRICING OFFICER I (9), MUMBAI HOWEVER SUBJECT TO CERTAIN RELIEF. 6) THE HONBLE DRP - I MUMBAI ER RED IN NOT OBJECTING TO THE BENCHMARKING THE INTERNATIONAL TRANSACTION BY THE LEARNED TRANSFER PRICING OFFICER OF PURCHASE OF RA W MATERIALS & COMPONENTS EVEN THOUGH THE ASSESSEE IS NOT ENGAGED IN ANY SUCH BUSINESS BUT IS IN THE BU SINESS OF PROVIDING ENGI NEERING SERVICES. 7) THE LEARNED ASSESSING OFFICER/TRANSFER PRICING OFFICER ERRED IN NOT PASSING AN ORDER GIVING EFFECT TO THE DI RECTIONS OF HONBLE DRP - I TO RE - DETERMINE THE MEAN PLI. 3. TO ADJUDICATE ON THESE GRIEVANCES, WHICH W E WILL TAKE UP TOGETHER, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF . THE ASSESSEE BEFORE US IS A CO MPANY, ENGAGED IN THE BUSINESS OF , INTER ALIA , PROVIDING ENGINEERING CONSULT ANC Y SERVICES RELATING TO OI L AND GAS SECTOR. ON 30 TH SEPTEMBER 2009, TH E ASSESSEE FILED ITS INC OME TAX RETURN DISCLOSING A TAXABLE INCOME OF RS 1,88,86,910 WHICH WAS P ICKED U P FOR SCRUTINY ASSES SMENT UNDER SECTION 143(3). IN THE ENSUING SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS ALSO SH OWN INTERNATIONAL TRANSA C TIONS , WITH I TS UK BASED ASSOCIATED ENTER PRISE - NAMELY MATT M CDONALD UK , FOR PROVIDING ENGINEERING CONSULTANCY SERVICES FOR RS 23,06,24,94 2. A REFERENCE UN DER SECTION 92CA(1) WAS , IN THIS BACKDROP, MADE TO THE TRANSFER PR ICING OFF ICER FOR ASCER TAINMENT O F ARM S LENGTH PRICE . THE TPO NOTED THAT T HE BENCHMARKING OF THESE TRANSACT IONS, AS ARM S LENGTH TRANSACTIONS, WAS DONE BY THE ASSESSEE ON THE BA SIS OF COST PLUS METH OD . IT WAS ALSO NOTED THAT , ACCORDING TO THE ASSESSEE, WHILE THE COST PLUS MARGIN EARNED BY THE ASSESSEE, FROM THESE TRANSACTIONS, WORKED OUT TO 17.91% ON COST, THE COST PLUS MA RGI N, ON SIMILAR T RANSAC TION, WAS 7.3 6% ON COST . IT WAS ON THE BASIS OF THIS COM PAR ISON THAT THE INTRA AE TRANSACTIONS BY THE ASSESSEE WERE CLAI MED TO BE AT AN ARM S LE NGTH PRICE. THE TPO, HOWEVER , DID NOT ACCEPT TH IS CLAIM OF THE ASSESSEE. HE WA S OF THE VIEW THAT WH ILE THE VOLUM E OF TRANS ACTIONS WITH AE WAS RS 23.06 CRORES, THE TRANSACTIONS WITH NON A ES (I.E. INDEPENDENT ENTERPRISES WAS ONLY RS 12.08 CRORES. ACCORDING T O THE TP O, T HUS, THERE IS SI GNIFICANT ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 3 OF 11 VO LUME DIFFERENCE BETWEEN AE AND NON - AE SEGMENTS . T HE TPO FURTHER OBSER VED THAT THERE IS SIGNIFICANT DIFFERENCE IN FU NCTIONS PERFORMED, ASSETS DEP LO YED AND RISKS TAKEN IN RESPECT OF PR OJECTS TAKEN FROM THE RELATED PARTIES AND THE SE RVICES PE RFORMED FOR THE AE EVEN THOUGH HE DID NOT ELABORATE THIS S TAND ANY F U RTHER. THE NEXT OBJECTION TAKEN BY THE TPO, AGAINST ADOPT ION OF COST PLUS MET HOD , WAS THAT THE PRO JECTS WITH UNRELATED PARTY HAVE SUFF ERED BECAUSE OF THE PROB L EM FACED BY CLIENT IN RES PECT OF FUNDING AND ENVIRONMENT CLEARAN CE . FINALLY, THE TPO S O BJECTION WAS THAT SOME PROJECTS IN THE NON - AE SEGMENT CATER TO T HE DOMEST IC MARKET WHEREAS THE AE AGREEMENT PURELY CATERS TO PROJECTS OUTSIDE INDIA AND THAT THE PR E VAILING MA RKET CONDITIONS IN WHICH THE BUYER AND SELLER OF THE SERVICES IS LOCATED IS AN IMPORTANT CONSIDERATION AND HAS A BEARING ON THE PRO FIT MARGIN . THE TPO THEN P ROCEEDED TO REJECT THE COST PLUS METH OD (CPM) AND PROCEEDED TO ADOPT TRANSACTIONAL NET M ARGIN METHOD (TNMM) BY OBSERVING AS FOLLOWS: 6.3 IN VIEW OF THE A BOVE MATERIAL DIFFERENCE IN THE PROJECTS UNDERT AKEN FOR THE UNRELATED PARTIES BY THE TAXPAYER AND THE SER VICES RENDERED TO THE AE, IT IS HELD THAT THE BENCHMARKING U SING THE COST PLUS MET HO D ( CPM) BY TAKING THE COST PLUS MARGIN IN THE CAS E OF AE SEGMENT AND NON - AE SEGMENT OF THE TAXPAYER IS NOT APPROPRIATE AND IS, THEREF ORE, REJECTED. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT TRANSACTIONAL NET MA RGIN MET HOD (TNMM) IS USED A S MOST APPROPRIATE MET HOD TO BENCHMARK THE INTERNATION AL T RANSACTIONS ENTERED INTO BY THE ASSESSEE . 4. THE TPO THEN PROCEEDED TO COMPUTE THE ARM S LENGTH PRICE BY COMPUTING OP/OC OF THE ASSESSEE, WHICH WAS , AS C LAIMED BY THE ASSESS EE, WAS 1 9. 17%. HE THEN F INALLY AD OPTED THE COMPAR ABLES AS ALPHAGE O INDIA PV T LTD, AR TEFACT PROJECTS LTD, B E NGAL S REI I N FRASTRUCTURE DEVELOPMENT LTD , CETHAR CONSULTING ENGI NEERS LTD , I DESIGN ENGINEERING SOLUTIONS LTD, KIROLASKAR CONSULTANTS LTD, L&T SARGE NT & LUNDY LT D , L&T VALD E L ENG INEERING LTD, MAHINDRA CONSULTING E N GINEERS LTD, AND TCE CONSULTING E NGINEERS LTD. THE A RITHMETIC MEAN OF OP /TC OF THESE COMP AR ABL E COMPANIES WAS CALCULATED AT 2 8.47%. ACCORDINGLY, AN ALP ADJUSTMENT OF RS 2,85,62,102 WAS PROPO SED BY THE TPO. SUBSEQUE N TLY , HOWEVER, TH IS QUANTIFI CATION OF ALP ADJUSTMENT WAS CORRECTED, BY WAY OF AN ORDER UNDER SECTION 154, AND THE CORRECT AMOUNT OF ALP ADJUSTMENT WAS TAKEN AT RS 1,80,00,639. WHEN THE ASSESSI NG OFFICER ISSUED A DRAFT ASSESSMENT ORD ER, INCORPORATING THE AB O VE ALP ADJUSTMENT, THE ASSESSEE RAISED OBJECTIONS BEFO RE THE DISPUTE R E S OLUTION PA NEL. L EAR NED DISPUTE RESOLUT ION PAN EL REJECTED GRIEVANCE OF THE ASSESSEE , SO AS FAR AS REJECTION OF COST PLUS MET HOD IS CONCERNED . T HE ADOPTED OF T NMM WAS THUS CONFIRMED. T HE DRP DID GIVE SOME RELIEF ON OTHER ISSUES, SUCH AS SELECTION OF COMPARABLE COMPANI ES, SO FAR AS COMPUTATION OF ALP UNDER TNMM IS CONCERNED , BUT, F OR OUR PURPOSES, AND FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE, WE ARE NOT, AT TH IS STAGE, CONCERNED ABO UT THESE ASPECTS OF THE MATTER. SUFFICE TO NOTE THAT RE JECTION OF CPM , FOR BENCHM AR KING PURPOSES, WAS UPHELD BY THE DRP, AND, ACCORDINGLY, THE FINAL ASSESSMENT ORDER CONTAINED THE ALP ADJU STMENT OF RS 1,80,00,63 9 THOUGH WITH A R IDER THAT IN VIEW OF THE DR P D IRECTIONS , THE MATTER REGARDI NG ASCERTAINMENT OF ALP IS REF E RRED TO THE TPO ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 4 OF 11 AND THE ISSUE, AS ON NOW, IS PENDING AT THE END OF THE TP AUTHORITY AND THAT ADDITION MADE ON ACCOUNT OF ARM S LENGTH PRICE OF RS 1,80,00,639 IS RE TAINED, SUBJECT TO MODIF ICATION BY THE TPO . THE ASSESSEE IS AGGRIEVED OF THE ORDER SO PASSED B Y THE ASSES SIN G OFFIC ER AND IS IN APPEAL BEFORE US. 5 . WE HAVE HEARD RIVAL CONTENTI ONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICA BLE LEGAL POSITION. 6 . THE FIRST ISSUE THAT WE NEED TO AD JUDICATE ON IS WHETHER, ON THE FACTS AND IN TH E CIRCUMSTANCES OF THIS CASE , IT WAS APPROP R IATE FOR THE TRANSFER PRICING OFFICER TO REJECT THE COST PLUS METHOD (CPM ) TO DETER MINE THE ARM'S LENGTH PR ICE OF THE TRANSACTIONS WITH AES, ON THE GROUND THAT THE T RANSACTIONAL NET MARGIN MET H OD (TNMM ) TO DETERMINE THE ALP WILL BE MORE APPROPRIATE ON THE FACTS OF THIS CASE . 7 . SECTION 92C(1) R.W.R 10C(2) PROV IDES THE ARM'S LENGTH PRI CE IN RELATION TO AN INT ERNATIONAL TRANSACTION IS TO BE DETERMINED BY ONE OF THE PRESCRIBED METHODS, WHICH IS MOST APPROPRIATE METHOD, HAVING REGARD TO (A) THE NATURE AND CLASS OF THE INTERNATIONAL TRANSACTION ; (B) THE CLASS OR CLASSES OF ASSOCIATED E NTERPRISES ENTERING INTO THE TRANSACTION AND THE FUNCTIONS PERFORMED BY THEM TAKING INTO A CCOUNT ASSETS EMPLO YED OR TO BE EMPLOYED AND RISKS ASSUMED BY SUCH ENTERPRISES; (C ) THE AVAILABILITY, COVERAGE AND RELIABILITY OF DATA NECESSARY FOR APPLICATION OF TH E METHOD; (D) THE DEGRE E OF COMPARABILITY EXISTING BETWEEN THE INTERNATIONAL TRANSACTI ON AND THE UNCONTROLLE D TRANSACTION AND BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS; (E) THE EXTENT TO WHICH RELIABLE AND ACCURATE ADJUSTMENTS CAN BE MADE TO ACCOUNT FOR DIFFERENCES , IF ANY, BETWEEN THE INTERNATIONAL TRANSACTION AND THE COMPARABLE UNCONTROLLED TRANS ACTION OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS; AND (F) THE NATURE, EXTENT AND RELIABILITY OF ASSUMPTIONS REQUIRED TO BE MADE IN APPLICATION OF A METHOD . SECTION 92C(2) PROVIDES THAT IT IS ONLY THE MOST APPROPRIATE METHOD, AS REFERRED TO IN SECTION 92C(1), WHICH CAN BE APPLIED FOR DETERMINATION OF ARM'S LENGTH PRICE, IN THE PRESCRIBED MANNER. RULE 1 0B(2) , WHICH IS ALSO VERY RELEVAN T IN THE PR ESENT CONTEXT , PROVIDES THAT THE COMPARABILITY OF AN INTERNATIONAL TRANSACTION WITH AN UNCONTROLLED TRAN SACTION SHALL BE JUDGED WITH REFERENCE TO THE FOLLOWING, NAMELY: (A) THE SPECIFIC CHARACTERISTICS OF THE PROPERTY TRANSFERRED OR SERVICES PR OVIDED IN EITHER TRANSAC TION; (B ) THE FUNCTIONS PERFORMED, TAKING INTO ACCOUNT ASSETS EMPLOYED OR TO BE EMPLOY ED AND THE RISKS ASSUMED, BY THE RESPECTIVE PARTIES TO THE TRANSACTIONS; (C ) THE CONTRACTUAL TERMS (WHETHER OR NOT SUCH TERMS ARE FORMAL OR IN WRI TING) OF THE TRANSACTION S WHICH LAY DOWN EXPLICITLY OR IMPLICITLY HOW THE RESPONSIBILITIES, RISKS AND BENEFI TS ARE TO BE DIVIDED BETWEEN THE RESPECTIVE PARTIES TO THE TRANSACTIONS; (D ) CONDITIONS PREVAILING IN THE MARKETS IN WHICH THE RESPECTIVE PARTIES TO THE TRANSACTIONS OPERAT E, INCLUDING THE GEOGRAPHICAL LOCATION AND SIZE OF THE MARKETS, THE LAWS AND GOVER NMENT ORDERS IN FORCE, COSTS OF LABOUR AND CAPITAL IN THE MARKETS, OVERALL ECONOMIC DEVELOPMENT AND LEVEL OF COMPETITION AND WHETHER THE MARKETS ARE W HOLESALE OR RETAIL. QUI T E C LEARLY, THEREFORE, T HE CHOICE OF METHOD ON THE BASIS OF WHIC H ARM'S LENGTH PRICE IS DETERMINED IS, THEREFORE, NOT AN UNFETTERED CHOICE O N THE PART OF TAXPAYER, AND, ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 5 OF 11 IN OUR CONSIDERED VIEW, THIS CHOICE HAS TO BE EXERCISED ON THE T OUCHSTONE OF PRINCIPLES, GOVERNING SELECTION OF MOST APPROPRIATE METHOD, SET OUT IN SEC TION 92C(1). THE FIRST STEP IN DETERMINATION OF ARM'S LENGTH PRICE IS THE SELECTION OF THE RIGHT METHOD OF COMPUTING THE ARM'S LENGTH PRICE. ONCE THE RIGHT METHOD IS SEL ECTED U N D E R S E C T I O N 9 2 C ( 1 ) , THE NEXT STEP IS APPLICATION OF THE METHOD SO SELECTED IN C OMPUTATION OF ARM'S LENGTH PRICE - AS IS SET OUT UNDER SECTION 92C(2). ON BOTH OF THESE ASPECTS OF EXERCISE OF DETERMINING THE ARM'S LENGTH PRICE, HOWEVER, THE ASSESSIN G OFFICER HAS THE OVERRI DING POWERS FOR COURSE CORRECTION. THESE POWERS ARE SET OUT IN S ECTION 92C(3)(A) WHICH PROVIDES THAT WHERE, DURING THE COURSE OF ANY PROCEEDING FOR THE ASSESSMENT OF INCOME, THE ASSESSING OFFICER IS, INTER ALIA, OF THE OPINION THAT THE PRICE CHARGED OR PAI D IN AN INTERNATIONAL TRANSACTION HAS NOT BEEN DETERMINED IN ACC ORDANCE WITH SECTIONS 92C(1) AND SECTION 92C(2), THE ASSESSING O FFICER MAY PROCEED TO DETERMINE THE ARM'S LENGTH PRICE IN RELATION TO THE SAID INTERNATIONAL TRANSACTION IN ACCORDANCE WITH SECT IONS 92C(1) AND SECTION 92C(2), ON THE BASIS OF SUCH MATERIAL OR INFORMATION OR DOCUMENT AVAILABLE WITH HIM. THE ASSESSING OFFIC ER HAS THE POWERS TO DETERMINE ARM'S LENGTH PRICE WHEN THE ARM'S LENGTH PRICE COMPUTED BY THE TAXPAYER I S NOT ON THE BASIS OF CO RRECTLY APPLYING THE METHOD OF COMPUTING THE ARM'S LENGTH, IN TE RMS OF THE PROVISIONS OF SECTION 92C(2), AS ALSO WHEN THE METHOD OF SELECTING MOST APPROPRIATE METHOD OF COMPUTING THE ARM'S LENGTH PRICE IS NOT DETERMINED IN ACCORDANC E WITH THE SCHEME OF THI NGS ENVISAGED UNDER SECTION 92C(1). ONCE THE PRE - CONDI TIONS FOR INV OKING THE POWERS UNDER SECTION 92C(3) ARE SAT ISFIED, WHICH I NCLUDES THE SITUATION IN WHICH THE ASSESSING OFFICER , ON THE BASIS OF MATERIAL, INFORMATION OR DOCUMENT IN HIS POSSESSION, IS OF THE O PINION THAT THE PRICE CHARGED OR PAID IN AN INTERNATIONAL TRANSACTION HAS NOT BEEN DETERMINED IN ACCORDANCE WITH SUB - SECTI ONS (1) AND (2 ) O F SECTION 92C, THE ASSESSING OFFICER MAY PRO CEED TO DETERMINE THE ARM S LENGTH PRICE IN RELATION TO THE SAID INTERN ATI ONAL TRANSACTION IN ACCORDANCE WITH SUB SECTIONS (1) AND (2) [OF SECTION 92 C] .. . THIS PROVISION IS, HOWEVER, SUBJECT TO THE CONDITION , SET OUT IN PROVISO TO SECTION 92C(3) TO THE EFFECT THAT AN OPPORT UNITY SHALL BE GIVE N BY THE ASSESSING OFFIC ER , BY SER VING NO T ICE CA LLING UPON THE ASSESSEE TO S H OW CAUSE, ON A DATE AND TIME TO BE SPECIFIED IN THE NOTICE, WHY THE ARM S L ENGTH PRICE SHOULD NOT BE SO DE TERMINED ON THE BASIS OF MATERIAL, OR INFORMATION, OR DOCUMENT IN POSSESS ION OF THE ASSESSING OF FICER . OF COURSE, THERE ARE OTHER SITUATIONS, AS SET OUT IN CLAUSES (B), (C ) AND (D) OF SECTION 92C(3), IN WHICH THE ASSESSI NG OFFICER CAN PROCEED TO DETERMINE THE ARM'S LENGTH PRICE UNDER SECTION 92C(1) AND (2), BUT, IN THE CON TEXT OF THE SITUATION TH AT WE ARE IN SEISIN OF, IT IS NOT REALLY NECESSARY TO DEAL WITH THE SAME. WE MAY A LSO ADD THAT WHILE THESE POWERS ARE VESTED IN THE AS SESSING OFFICER UNDER SECTION 92C, IN VIEW OF THE EXPLANA TION BELOW SECTION 92CA(7), THE TRANS FER PRICING OFFICER , AUTHO RI SED BY THE BOARD, CA N EXERCISE ALL OR ANY THE POWERS OF THE ASSESS ING OFFIC ER SPECIFIED IN SECTION 92C AND 92D. 8 . IN THE LIG HT OF THE ABOVE ANALYSIS, IT EMERGES THAT THE TRANSFER PRICING OFFICER HAS THE POWERS TO MODI FY THE METHO D OF C OMPUTING THE ARM S LENGTH PRICE, THE REASONS FOR WHICH ARE SUBJECT TO JUDICIAL SCRUTINY , TH E MANNER IN WHICH THE METH O D OF ASCERTAINING T HE ALP C AN BE MODIFIED BY THE T PO IS AS FOLLOWS: ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 6 OF 11 - THE STARTING POINT OF THIS EXERCISE IS THE FORMAT ION OF P RIMA FAC IE VIEW BY THE TRANS FER PRICING OFFICER THAT THE R E IS A VIOLATION OF SECTION 92C (2) INASMUCH METHOD OF C OMPUTATION OF ARM S LENGTH PRICE IS NOT THE MOST APPROPRIA TE METHO D , IN THE LIGHT OF THE MANDATE OF SECTION 92C(1) READ WITH RULE 10 B (2) AND RULE 10 C (2) . IT IS O NL Y A PRI MA FACIE VIEW FOR THE REASON THAT IF TH IS IS TO BE TREATED AS A FINAL VIEW T HAN THE ISSUANCE OF SHOW CAUSE NO TICE TO THE ASSESSEE WILL BE RENDERED A RITUA LIS TIC F ORMALITY. - THE VIEW SO FORMED BY THE TRANSF ER PRICING OFFICER HAS TO T AKE INTO ACCOUN T THE FAC T THAT NOT ONLY THE METHOD ADOPTED BY THE ASSESSEE HAS THE SHORTCOMINGS BUT ALSO THAT THE VIEW THAT THE TRANS FER PRICING OFFICER PROPOSES IS COMPARATIVELY BETTER VIEW VIS - - VIS E NTIRETY OF THE MATTER. IT CANNOT T HE REFORE B E A SIMPLE FAULT FIN DING MISSION O F THE TPO FOR I DENTIFYING LIMITATIONS OF THE METH O D OF ASCERTAINING A RM S LENGTH PRICE ADOPTED BY THE ASSESSEE, BUT IT ALSO HAS TO POINT O UT A BETTER ALTERNATIVE MORE APPROP R IATE TO THE CASE IN QUESTION . IN OTHER WORDS, THE TPO IS NOT ONLY TO DE MONSTRATE TH AT THE METHOD SELECTED BY THE ASSESSEE IS NOT CORRECT MET HOD OF ASCERTAINING THE ALP, HE IS ALSO TO DEM ONST RATE THAT THE MET HOD PROPOSED BY HIM IS A BETTER METHOD OF ASCERTAINING THE ALP. - T HE TRANSFER PRICING OFFICER HAS TO THE N PUT THE ASSES SEE TO NO TICE ABOUT HIS PRIMA FACIE VIEW, TA KE INTO ACCOUNT SUBM ISSIONS OF THE ASSESSEE ON HIS SUCH VIEWS AND THEN GIVE HIS REASONS IN SUPPORT OF THE PROP OSITIO N AS TO WHY THE MET HOD OF ASCERTAINING ARM S LENGTH PRICE, AS SELECTED BY HIM, IS MO RE APPROPRIA TE MET HOD VIS - - VIS THE MET HOD ADOPTED BY HIM. UNLESS THE MET HOD SELECT ED BY THE TPO IS MORE APPROPRIATE A METHOD OF ASCERTAINING THE ARM S LENGTH PRICE ADOPTED BY THE ASSESSEE, OBVIOUSLY IT CANNOT BE MOST APPROPRIATE METHOD OF ASCERTAININ G THE ARM S LEN GTH PRICE - AS IS THE R EQUIREMENT OF SECTION 92C(1 ). 9 . LET US NOW REVERT TO THE FACTS OF THIS CA SE. THE FIRST REASON FOR REJECTING THE C PM, ON THE FACTS OF THIS CASE, WAS SAID TO BE SIGNIFICANT VOLUME DIFFERENCE . AS AG AINST TRANSACTION VALUE OF RS 2 3 . 0 6 CRORE S WITH THE AE, THE T RANSACTION VALUE IS 12.08 CRO RES. UNDOUBTEDLY , T HE RE IS A DIFFERENCE IN V OLUME BUT WHEN WE LOOK AT THE SCHEME OF SECTION 92C(1 ) READ WITH RU LE 10C, IT IS CLEAR THAT WHAT REALLY MATTERS IS THE DEGREE OF COMPARABI LITY EXISTING BETWEEN TH E INTERNATIONAL TRANSACTION AND THE UNCONTROLLED TRANSACTION AND BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS AND ONE OF THE FACTORS AFFECTING SUCH A COMPARA BILITY IS VO LU ME, AND IT IS IN THIS CONTE XT THAT V OLUME DIFFERE NCE IS RELEVANT. NOTHIN G , T HEREF ORE, TUR NS O N THE DIFFERENCE PER SE IN V OLUME OF TRANSACTION , BUT THEN THATS THE ONLY CASE OF THE TPO. IN ANY CASE, WE DO NOT THINK THAT THE VOLUME OF DIFFERENCE IS SO MATERIAL THA T IT WILL AFFECT THE DEGREE OF C OMPARABILI TY. THE SECOND OBJECTION TAKEN BY THE TPO IS THAT THERE IS SIGNIFICANT DIFFERENCE IN FU NCTIONS PERFORMED, ASSETS DEP LO YED AND RISKS TAKEN IN RESPECT OF PR OJECTS TAKEN FROM THE RELATED PARTIES AND THE SE RVICES PE RFORMED FOR THE AE BUT THEN HE ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 7 OF 11 DOES NOT EL ABORATE THAT POI NT AS TO WHAT ARE TH E DIFFERENCES IN ASS ETS EMPLOYED, FU NCTIONS PERFORMED AND RISKS ASSUMED. T HATS A VALID REASON FOR REJE CTION OF AN ALP DETERMINATION MET HOD AS MAM, BUT ONE NEEDS LITTLE MORE THAN SUCH MACRO OBSERVATIONS WITHOUT ANY SPEC IFICS , TO SUPPORT THAT A PPROACH . THIS IS A SWEEPING GENE RALISATION MADE BY THE TPO AND AT NO STAGE, INCLUDING BEFORE US, THERE WAS EVEN AN EFFORT TO DEMONSTRATE AS TO WHAT WERE THESE DIFF ERENCES. THE NEXT OBJECTION TAKEN BY THE TPO, AGAINST ADOPT ION O F COS T PLUS METHOD, WAS THAT THE PROJECTS WITH UNRELATED PARTY HAVE SUF FERED BECAUSE OF THE PROBLEM FACED BY CLIENT IN RESPECT OF FUNDING AND ENVIRONMENT CLEARANCE . IT IS FIRST OF ALL AN UNC ONTROVERTED FACTUAL CLAIM OF THE ASSESSEE THAT THERE WERE N O S UCH ISS UES IN THE RELE VANT FINA NCIAL YEA R. THE BIGGER QUESTION, AS RIGHTLY RAISED BY THE ASSESSEE, IS THAT IN ANY CASE SUCH PROBLEMS HAVE NO BEARING ON PROFIT ELEMENT EM BEDDED IN T HE REVENUE WHICH IS NEGOTIATED IN ADVANCE . THE FUNDING AND ENVIRONMENTAL ISSUES MAY HAVE IMPACT ON COMPLETI ON OF A PRO JECT OR PROJECT MILESTONES AND THUS HAVE AN IMPACT ON EARNINGS OF REVENUE BUT THESE THINGS CANNOT BE ASSUMED TO HAVE IMPACT ON THE PROFIT ELEMENT IN THE REVENUES WHICH IS WHAT REALLY MATTERS FOR THE PRESENT PUR POSES. THE LAST AN D FINAL OBJECTIO N OF THE TPO WA S THAT SOME PROJECTS IN THE NON - AE SEGMENT CATER TO T HE DOMEST IC MARKET WHEREAS THE AE AGREEMENT PURELY CATERS TO PROJECTS OUTSIDE INDIA AND THAT THE PRE VAILING MA RKET CONDITIONS IN WHICH THE BUYER AND SELLER OF TH E SERVICES IS LOCATED IS AN IMPORTANT CONSIDERATION AND HAS A BEARING ON THE PRO FIT MARGIN . WH ILE ON THIS ASPECT OF MATTER, IT IS IMPORTANT TO BEAR IN MIND THAT AS RULE 10B( 2)(D) PRO VIDES THAT COM PARABILITY OF A CONTROLLED TRANSACT ION WITH UN CONT ROLLED T RANSACTION IS TO BE JUDG ED, INTER ALIA , IN THE LIGHT OF CONDITIONS PREVAILING IN THE MARKETS IN WHICH THE RESPECTIVE PARTIES TO THE TRANSACTIONS OPERATE, INCLUDING THE GEOGRAPHICAL LOCATION AND SIZE OF THE MARKETS, THE LAWS AND GOVER NMENT ORDERS IN FORCE, COSTS OF LABOUR AND CAPI TAL IN THE MARKETS, OVERALL ECONOMIC DEVELOPMENT AND LEVEL OF COMPETITION AND WHETHER THE MARKETS ARE WHOLESALE OR RETAIL. QUITE CLEARLY, THEREFORE, GEOGRAPHICAL DIFFERENCE , BY ITSELF, DOES NOT RENDER A N IND EPENDENT TRANSACTION UNCO M PARABLE WITH CONTROLLED TRANSACTION. GEOGRAPHICAL LOCATION, BY ITSELF, IS NOT AN IMPORTANT FACTOR FOR DECIDING COMPARABILITY OF AN UNCONTROLLED TRANSACTION, ITS IMPORTANCE LIES IN BEING ONE OF THE FACTORS WHICH COULD AFFECT THE MARKET CONDITIONS IN WHICH RESPECTIVE PARTIES OPERA TE. UNLESS MARKET CONDITIONS, IN WHICH UNCONTRO LLED TRANSACTIONS HAVE TAKEN PLACE, ARE MATERIALLY DIFFERENT VIS - - VIS CONDITIONS IN WHICH INTERNATIONAL TRANSACTION HAS TAKEN PLACE, AND SUCH A DIFFERENCE IS ON ACCOUNT OF GEOGRAPHICAL LOCATION OF THE MARKET, GEOGRAPHICAL LOCATION OF THE MARKET IS OF NO C ONSEQUENCE IN JUDGING COMPARABILITY OF AN UNCONTROLLED TRANSACTION FOR THE PURPOSE OF ASCERTAINING THE ALP . IN RESPECT OF CONS ULTANCY SERVICES IN SUCH HIGHLY SOPHISTICATED AREA AS OIL AND GAS SECTOR, THE FACT THAT THE CL IENT IS IN JURISDICTION A AND B , BY ITSELF, D OES NOT MAKE SUCH FACTOR ON STANDALONE BASIS. TH IS OBJECTION OF THE TPO THAT MERELY BE CAUSE CLIENTS ARE LOCATED AT DIFFERENT GEOGRAPHICAL LOCATION, THE PREVAILING MARKET CONDI TIONS WIL L BE DIFFERE NT PROCEEDS ON THE UNPR OVEN ASSUMPTION THAT THAT THE SCOPE OF SUCH MAR KET AS CONSULTANCY SERVICES WITH RESPECT TO OIL AND GAS SE CTOR IN INDIA IS BASED ON LOCATION OF THE C LIENT AND THAT , THEREFORE , IT HAS A BEARING ON THE PROFIT MAR GIN . UNLIKE THE MARKET FOR A PHYSICAL PROD U CT , THE MARKET FO R CONSULTANCY SERVICES OF SUCH A NATURE IS UNLIKELY TO BE RESTRICTED TO NATIONAL BOUNDA RIES , AND, THERE FORE, LOCATION OF SOME OF THE CLIENTS A T ONE LOCATION O R THE OTHER WOULD NOT REALLY MATTER. IN A NY CASE, THE STAND OF TH E TPO ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 8 OF 11 WAS THAT SOME OF T HE NON - AE S ARE SITUA TED IN INDIA, AND FOR THIS REASON, THESE TRANSACTIONS S HOULD NOT HA VE BEEN TRE ATED AS VALID INTERNAL COMPA R A B L E S IS UNSUSTAINABLE IN LAW , INASMU CH AS , ALL IT CAN JUSTIFY AT BEST IS EXCLUSI ON OF SUCH TRANSACTIONS WITHIN INDIAN MARKET, RATHE R THAN REJECTING THE MET HOD , OF ASCERTAINING THE ALP , ITSELF. IN OUR CONSIDERED VIEW, THEREFORE, N ONE OF THE REASONS ASSIGNED BY THE TPO , FOR REJECTI ON OF THE CPM, WAS THUS SUSTAINABLE IN LAW. UNDOUBTEDLY , THE TPO DOES INDEED HA VE POWERS, UNDER SECTION 92C(3), WHERE HE IS, INTER ALIA , OF THE OPIN ION THAT T HE MOST APPROPRI ATE MET HOD FOR ASCERT AINING THE ARM S LENGTH PRICE HAS NOT BEEN USED FOR DETERMINATION OF ARM S LENGTH P RICE, TO PROCEED WITH HIS DETE RMI NATION OF ARM S LE N G TH P RICE IN ACCORD ANCE WI TH SECTIO N 92 C (1) AND 92C(2) , AND, BY IMPLI CAT ION, ADOPT WHAT HE PERCEIVES TO BE THE MOST APPROPRIATE METH OD . HOWEVER, THIS CAN ONLY BE DONE BY FOLLOWING THE COURSE LAID DOWN IN PROVISO TO SECTIO N 9 2 C(3), I.E. B Y ISSUING SPECIFIC SHOW CA USE NOTICE TO THAT EF FECT BY THE T PO, AND THE REASON S SO ASSIGNED FOR REJECTI ON OF THE MOST APPROPRIATE MET HOD, ADOPTED BY THE ASSESSEE, ARE SUBJECT TO JUDICIAL SCRUTIN Y. FOR THE DETAILED REA SONS SET OUT A BOVE, WE FIND THAT THE R EASONING ADOPTED BY THE TPO WAS INCO RREC T AND THUS UNSUSTAINABLE IN LAW. ACCORDINGLY , THE IMPUGNED ALP ADJUSTMENT OF R S 1,80,00,639 BY REJECTING THE CPM MET HOD ADOPTED BY THE ASSESSEE AND BY ADOPTED THE TNMM MET HOD , FOR ASCERTAINING THE AR M S LENGTH PRICE , MUST BE DELETED F OR TH IS SHORT REASON ALONE. 10. G IVEN THESE FIN DINGS, IT IS NOT REALLY NECESSARY TO EXAMINE AS TO WH E THER OR NOT SPE CIF IC SHO W CAUSE NOTICE , REQUIRING THE ASSESSEE TO S HOW CAUSE AS TO WHY THE MET HOD O F ASC ERTAINING THE A LP AS A DOPTED BY THE ASSESSEE, WAS IS SUED BY THE TPO OR NOT , NOR IS IT NECESSARY TO EXAMINE THE S UITABILITY OF TNMM METH OD VIS - - VIS CPM METHOD ON THE F ACTS OF THIS CASE. W E HAVE ALSO NOTED THAT, IN TERMS OF THE PROVISIONS OF SEC TION 144C(13), U PON RECEIPT OF THE DIR ECTIONS ISSUED UND ER SUB - SECTION (5) [I.E. THE DRP DIRECTIONS] , THE ASSESSING OFFICER SHALL, IN CONFORMITY WITH THE DIRECTIONS, COMPLETE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 153 OR SECTION 153B , THE ASSESSMENT WITHOUT PROVIDING AN Y FURTHER OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE, WITHIN ONE MONTH FROM THE END OF THE MONTH IN WHICH SUCH DIRECTION IS RECEIVED . THE ASSESSING OFFICER T HUS HAS ONLY ONE MONTH FROM THE END OF THE MONT H IN WHICH THE DR P DIRECT IONS ARE REC EIVED TO COM P LETE THE ASSESSMENT IN CO NFORMITY WITH THE DIRECT IO N S OF THE DRP. HOWEVER , IT WOULD APPEAR THAT B Y NOT GIVING E FFECT TO THE DIRE CTION S OF THE DRP ON THE GROUND THAT RELEVANT I NPUTS ARE NOT RECEIVED FROM THE TPO AND PROCEEDING TO PASS THE ASSESSMENT ORDE R AS ORIGI NALLY PROP OSED , THE ASS ESSING OFFICE R ENDS UP EXTE NDING THIS S TATUTOR Y TIME LIMIT. THAT DOES NOT SEEM TO BE A COU RSE P ERMISSIBLE IN LAW. AN OR DER PASSED UNDER SECTION 14 3(3) R.W.S 144C(13), WH ICH IS NOT IN CO NFORMITY WITH THE DIRECTIONS OF THE D RP - AS IN THIS CASE, MAY NOT PERHAPS MEET ANY JUDICIAL APPROVAL. HOWEVER, GIVEN THE FACT THAT WE HAVE DELETED THE IMP UGNED ALP ADJUSTMENT ITSELF, AND THAT WAS THE ONLY ADDITION IN THE IMPUGNED ASSESSMENT, IT IS NOT REALLY NECESSARY TO GO INTO THIS ASPECT O F THE MATTER, AS INDEED ALL OTHER ISSUES R AISED IN THIS APPEAL, AT THIS STAGE. THESE ISSUES ARE RENDERED WHOLLY INFRUCTUOUS. ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 9 OF 11 11 . HOWEVER, BEFO RE WE PART WITH THE MATTER, WE MUST DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF TH IS APPEAL WAS CONCLUDED ON 24 TH FEBRUARY 2020 , THIS ORDER IS BEING PRONOUNCED TODAY ON TH DAY OF MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM TH E DATE OF CONCLUSION OF HEARING. WE ARE ALSO ALIVE TO THE FACT THAT RULE 34(5) OF THE INCOME TAX APPELLATE TRIB UNAL RULES 1963, WHICH DEALS WITH PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) THE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWING MANNERS : (A) THE BENCH MAY PRONOUNCE THE ORDER IMMEDIATELY UPON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONOUNCED IMMEDIATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A DATE FOR PRONOUNCEMENT. (C) IN A CASE WHERE NO DATE OF PRONOUNCEMENT IS GIVEN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY T HE BENCH TO PRONOUNCE THE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRACTICABLE SO T O DO ON THE GROUND OF EXCEPTIONAL AND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR PRONOUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED BY US NOW) BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICE BOARD. 12 . QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPEAL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVE R, IMPORTANT TO NOTE THAT THE EXPRESSION ORDINARILY HAS BEEN USED IN THE SAID RULE ITSELF. THIS RULE WAS INSERTED AS A RESULT OF DIRECTIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 433 (BOM)] WHEREIN THEIR LORDSHIPS HAD, INTER ALIA, DIRECTED THAT WE, THEREFORE, DIRECT THE PRESIDENT OF THE APPELLATE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDELINES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTRATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF . WE HOPE AND TRUST THAT SUITA BLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESIDENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY ALL THE BENCHES OF THE TRIBUNAL. IN THE MEANWHILE ( EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW ), ALL THE REVISION AL AND APPELLATE AUTHORITIES UNDER THE INCOME - TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A PERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT . IN THE RULED SO FRAMED, AS A RESULT OF THESE DIRECTIONS, THE EXPRESSION ORDINA RILY HAS BEEN INSERTED IN THE REQUIREMENT TO PRONOUNCE THE ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSING OF THIS ORDER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAORDINARY CIRCUMSTANCES. ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 10 OF 11 13 . LET US IN T HIS LIGHT REVERT TO THE PREVAILING SITUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINISTER OF INDIA TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PREVENT THE SPREAD OF COVID 19 EPIDEMIC, AND THIS LOCKDOWN WAS EXTENDED FROM TIME TO TIME. AS A MATTER OF FACT, EVEN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON A CCOUNT OF STRICT ENFOR CEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBAI BEING GRAVE, THERE WAS NOT MUCH OF A RELAXATION IN SUBSEQUENT LOCKDOWNS ALSO. IN ANY CASE, THERE WAS UNPRECEDENTED DISRUPTION OF JUDICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HISTORY OF INDIA AND VI DE ORDER DATED 6.5.202 0 READ WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.03.2020 THEN THE PERIOD FROM 15.03 .2020 TILL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN THE JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR WHERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERIOD OF 15 DAYS AFTER THE LIFTING OF LOCKDOWN . HONBLE BOMBAY HIGH CO URT, IN AN ORDER DATED 15TH APRIL 2020, HAS, BESIDES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FOR DISPOSAL OF MATTERS MADE TIME - BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORD ER DATED 26TH MARCH 20 20 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY , AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TILL 15TH JUNE 2020 . IT H AS BEEN AN UNPRECEDENT ED SITUATION NOT ONLY IN INDIA BUT ALL OVER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19 TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONAVIRUS SHOULD BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJ EURE CLAUSE) MAYBE INV OKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLLED WHEN SUCH IS THE POSITION, AND IT IS OFFICIALL Y SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID - 19 EPIDEMIC HAS BEEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOVE, THE PERIOD D URING WHICH LOCKDOWN WAS IN FORCE CAN BE ANYTHI NG BUT AN ORDINARY PERIOD . 1 4. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDING THE IMPORTANT FACT THAT THE ENTIRE CO UNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING AT LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND REALITIES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NO T BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. 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 IN ITA NO. 1524/MUM/14 ASSESSMENT YEAR: 2009 - 10 P AGE 11 OF 11 CONSONANCE WI TH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DI T [(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, VIDE JUDGMENT DATED 1 5 TH 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 TAKE N SUO MOTU BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDE RED VIEW, EVEN WITHOUT TH E WORDS ORDINARILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PERIOD DURING WHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTI ON, 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 ANY, BAR ON THE DISCRE TION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BECAUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHEN THE HEARING IS CONCLUDED 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. 1 5 . IN THE RESULT, THE APPEAL IS ALL OWED IN THE TERMS INDICATED AB OVE. ORDER PRONOUNC ED UNDER RULE 34(4) OF THE INCOME TAX (APPELL ATE TRIBUNAL) RULES, 196 2, BY PL ACING THE DETAILS ON THE NOTICE BOARD. SD/ - SD/ - RAVISH SO OD PRAMOD KUMAR (J UDICIAL MEMBER) ( VICE PRESIDENT ) MU MBAI , DATED THE 27 TH DAY O F MAY 2020 COPIES TO : (1) T HE APPELLANT (2) TH E RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTA NT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHE S, MUMBAI