TOWERS WATSON INDIA P.LTD, MUMBAI V. DCIT CIR 8(3), MUMBAI

ITA 3591/MUM/2015

AI Insights

The case involves Willis Towers Watson India Pvt. Ltd., which appealed against the orders of the Deputy Commissioner of Income-tax and the TPO concerning transfer pricing adjustments and the subsequent assessment of income. The primary contention was the validity of the TPO's order and the assessment order, both of which were challenged on the grounds of being time-barred. The Tribunal examined the procedural adherence to statutory timelines for passing orders under the Income Tax Act, particularly focusing on the interpretation of Section 92CA(3A) and its application in the context of the case. The Tribunal's decision emphasized the mandatory nature of the time limits set by the statute, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130184 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 01-05-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2015
• Other Referred Cases: National Thermal Power Company Vs. CIT, Pfizer Healthcare India Pvt. Ltd. Vs. JCIT, DCIT Vs. Saint Gobain India P. Ltd., Strides Shasum Limited Vs. DCIT, M/s Mondelez India Foods Private Limited Vs. Ad. CIT, M/s Tubacex Prakash India Pvt. Ltd. Vs. The ACIT/JCIT/DCIT/ACIT-national E-assessment Centre, Delhi, Tata AIA Life Insurance Company Limited Vs. The ACIT -2(3)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Principle of natural justice; International transaction; Period of limitation; Additional evidence; Validity of assessment
• Section: 144; 234B; 115JB; 144C; 40a(ia); 13; 153; 22; 92CA

Judgement Text

P a g e | 1 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) IN THE INCOME TAX APPELLATE TRIBUNAL “J” BENCH, MUMBAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 3591/Mum/2015 (A.Y.2009-10) Willis Towers Watson India Private Limited ( f o r m e r l y k n o w n a s T o w e r s W a t s o n I n d i a P v t . L t d . ) 2 Floor, Tower B, Unitech Business Park, South City-1, Sector 4, Gurgaon -122001 Vs. The DCIT Central Circle – 8(3), Room No. 204, Aaykar Bhavan Mumbai – 400 093 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACG2955K Appellant .. Respondent Appellant by : Nikhil Tiwari Respondent by : Manoj Kumar Date of Hearing 02.05.2023 Date of Pronouncement 12.05.2023 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by the Ld. CIT(A)-58, Mumbai dated 25.03.2015 for A.Y. 2009-10. The assesse has raised the following grounds before us: “General Ground 1. erred in upholding the action of the Deputy Commissioner of Income-tax 8(3), Mumbai ('learned AO) in determining the total taxable income of the Appellant for the subject AY at Rs.7,04,44,370 instead of the amount of Rs.1,14,98,477 as reported under Section 115JB of the Act, in the return of income filed by the Appellant. 2. erred in accepting the contentions of the learned AO of making a reference of the Appellant's case to the Deputy Commissioner of Income-tax II(8), Mumbai (learned TPO) under Section 92CA(1) of the Act, without satisfying the conditions specified therein, P a g e | 2 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) A. Transfer Pricing Grounds 3. erred in upholding the learned TPO's contentions for making a transfer pricing adjustment of Rs.11,91,65,955 under Section 92C(4) of the Act to the total income of the Appellant on the premise that the international transactions entered by the Appellant with its associated enterprises (AEs) were not at arm's length: Rejection of benchmarking analysis undertaken by the Appellant 4. erred in upholding the learned TPO's action of rejecting the benchmarking analysis undertaken by the Appellant for the provision of consultancy services, Rejection of the Comparable Uncontrolled Price (CUP) method as the most appropriate method 5. erred in accepting the learned TPO's contention of rejecting the CUP method applied by the Appellant as the most appropriate method, without giving cogent reasons, for benchmarking the international transactions with AEs of provision of consultancy services, Application of the Transactional Net Margin Method (TNMM') as the most appropriate method 6. erred in upholding the learned TPO's action of applying TNMM as the most appropriate method for benchmarking the international transactions pertaining to provision of consultancy service to AE, Recharacterization of subsidy income 7. erred in upholding the learned AO's TPO's action of not appreciating the nature of the service charge income received by the Appellant from its AE and thereby aggregating the same with the income towards provision of consultancy services while computing the proportion of services rendered to AEs in comparison to the total revenue of the Assessee from the provision of consultancy services, Selecting functionally different companies as comparable for benchmarking without providing the search process 8. erred in accepting the action of the learned TPO of selecting a set of comparable companies without providing the Appellant with the detailed search process, thereby violating the principles of natural justice, Use of single year data for computing operating margins of learned TPO's comparables 9. erred in accepting the learned TPO's action of using single year data (i e. for AY 2009-10) in computing the operating margin on operating cost of the comparables selected. Operating Profit Margin of the Appellant P a g e | 3 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) 10. erred in not adjudicating on the Appellant's ground raised before the Hon'ble CII(A), where the additional income of Rs.5,95,86,858 being an additional service charge income received from AE, which was offered to tax and has been taxed in the revised return of income has not been considered while computing the transfer pricing adjustment Payment made for availing consultancy services 11. erred in upholding the learned TPO's action of determining the arm's length price of the international transaction of availing consulting services from its AE amounting to Rs.99,27,601 to be Nil by rejecting the benchmarking analysis undertaken by the Appellant using the CUP method; Payment made towards cost allocations on account of intra-group services received 12. erred and upholding the learned TPO's action of determining the arm's length price of the international transaction pertaining to cost allocation payment of Rs. 5,66,39,404 (corrected amount aggregating to Rs 4,00,99,212) to its AEs, to be Nil, 13. erred in not adjudicating on the error highlighted by the Appellant as regards the amount disclosed in the Form 3CEB in respect of international transaction pertaining to payment of regional allocated cost, value of the said transaction was inadvertently reported as an expense of Rs.1,29,00,270 (Rs.82.70,094 plus Rs.46,30,174) instead of income of Rs.36,39,920 Payment made towards reimbursement of expenses (paid) 14. erred in upholding the learned TPO's action of determining the arm's length price of the international transaction of reimbursements amounting to Rs 41,98,151 to AEs to be Nil, disregarding the documentation submitted by the Appellant; Cost incurred to AFs towards various services is recovered with mark- up 15. erred in not appreciating the fact that the payment made by the Appellant towards services with respect to provision of consultancy services availed, reimbursatient expenses and cost allocation is eventually recovered with a mark-up of 10%, in the form of a subsidy received from AEs as per the existing inter-co agreement; Effect of miscellaneous income of the subsequent sear in AY 2009-10 The Appellant craves leave to add this ground for the said assessment year which is arising out of the Hon'ble DRP directions for the subsequent year, Le AY 2010-11, which was served after the Hon'ble DRP passed the said order in dispute for AY 2009-10; 16. Without prejudice to any of the grounds raised by Appellant in the assessment proceedings in respect of AY 2010-11 (subsequent year), the Appellant prays that the "miscellaneous income" amounting to Rs P a g e | 4 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) 2,78,11,245 as recorded in the audited financial statements of AY 10-11 (subsequent year), be regarded as operating income of assessment year under consideration (AY 09-10), for the reasons recorded by Hon'ble DRP in the Appellant's case in respect of AY 10-11; Corporate Tax Grounds Disallowance of expenses as prior period in nature 17. erred in confirming the disallowance by the learned AO of expenses amounting to Rs74,52,s345 while computing the business income of the Appellant on the basis that the same were in the nature of prior period expenses Addition on account of mismatch in Annual Information Report (AIR) 18. erred in confirming the addition of Rs.20,77,447 made by the learned AO to the Appellant's total income in respect of unreconciled entries in the AIR information, though the income recorded by the Appellant in its books of accounts and subsequently offered to tax in its return of income far exceeds the amount sought to be reconciled by the learned AO, 19. erred in failing to take cognizance of the change in name of one of the parties in the AIR information as pointed out to him by the Appellant, on the basis that additional evidence was filed by the Appellant. Levy of interest under Sections 234A and 2348 of the Act 20. erred in confirming the levy of interest under Sections 234A and 234B of the Act which is not in conformity with law Each of the above grounds is independent and without prejudice to one another. The Appellant craves leave to add, to alter, to amend or to delete any or all of the above grounds of appeal, at or prior to hearing of the appeal. The Appellant prays that appropriate relief be granted based on the above grounds of appeal and the facts and circumstances of the case.” 2. Fact in brief is that return of income declaring total income of Rs.2,17,30,848/- was filed on 30.09.2009. The case was subject to scrutiny assessment. The assesse company is engaged in the business of Consultancy Services in the areas of Human Resources Development, compensation benefit, employee benefits, actuarial services, remuneration data collection and other HR Consultancy services. During the year under consideration the assesse has reported the international transaction with its associate enterprise in form no. 3CEB, P a g e | 5 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) therefore, the A.O u/s 92CA(1) referred the international transaction entered by the assesse to the Transfer Pricing Officer after obtaining prior approval of the Commissioner of Income Tax -8, Mumbai vide order dated 24.01.2011. Thereafter the Transfer Pricing Officer has made an upward adjustment to the Arm’s length Price by Rs. 11,91,65,955/- vide order passed u/s 92CA(3) dated 30.01.2013. Accordingly, the AO has added the arm’s length adjustment of Rs.11,91,65,955/- to the total income of the assessee vide order u/s 143(3) dated 26.04.2013 and also disallowed prior period expenses Rs.74,52,345/- disallowance u/s 40A(ia) Rs.1,50,000/-, mismatch of AIR Rs.20,77,447/- and assessed total income at Rs.7,14,73,190/- after allowing claim of brought forward business loss and unabsorbed depreciation. 3. Aggrieved, the assesse filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 4. During the course of appellate proceedings before us the ld. Counsel filed additional ground before us: “Validity of TP order 21. Without prejudice to Ground Nos 1 to 20, the TP order passed under Section 92CA(3) is invalid and unsustainable in law since the same is passed on 30 January 2013 which is beyond the time limit available for completion of proceedings under Section 92CA(3A) of the Act. Validity of Assessment order 22. On the facts and circumstances of the case and in law, the learned AO erred in passing a draft assessment order in the case of the Appellant in lieu of the final assessment order given that the Appellant does not fall within the definition of "eligible assessee" as per Section 144C of the Act as the transfer pricing order is invalid and thus entire assessment is bad in law as provisions of sections 144C(1) of the Act are not applicable to the Appellant” 5. After referring the aforesaid decision of the ITAT, Mumbai ld. Counsel submitted that order passed by the Transfer Pricing Officer dated 30.01.2013 and assessment order dated 26.04.2013 are time P a g e | 6 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) barred. The ld. Counsel further submitted that additional ground is the legal ground challenging the validity of the assessment order and order of TPO on the ground of limitation and no further documentary evidences is required to adjudicate these ground. After considering the decision of Hon’ble Supreme Court of India in the case of National Thermal Power Company Vs. CIT (229 ITR 383) these ground of appeal are adjudicated and are taken for adjudication. 6. As per additional ground the order of the ITAT is barred by limitation, therefore, the assessee does not become eligible assesse u/s 144C of the Act, therefore, the draft assessment order dated 20.03.2013 and the final assessment order passed by the AO on 26.04.2013 were barred by limitation. 7. The ld. Counsel vide detailed submission dated 01.12.2022 submitted that order passed by the Transfer Pricing Officer on 30.01.2013 is time barred by 1 day since impugned order would have been passed on or before 29.01.2013. The ld. Counsel further submitted that as per provision of Sec. 92CA(3A) of the Act in a case where the reference is made to the TPO, the TPO is required to pass order u/s 92CA(3A) of the Act on any time before 60 days prior to the date on which the period of limitation referred u/s 153 of the Act expires. The ld. Counsel further submitted that since proviso employer words ‘prior to date’ the day on which limitation expires is required to be included while computing the period of 60 days and the period of 60 days is required to be seen including the last date on which the limitation expires. The ld. Counsel also submitted that the period of limitation for making of order for assessment as per Sec. 53 of the Act is two year and where a case is referred u/s 92CA of the Act to the TPO the period of limitation shall be 3 years from the end of the assessment year in which the income was first assessable. As per the computation shown by the ld. Counsel the order u/s 92CA(3) of the Act ought to be passed on or P a g e | 7 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) before 29.01.2013, however, the TPO has passed the same order on 30.01.2013. Therefore, the impugned order passed u/s 92CA(3) is time barred by 1 day. The ld. Counsel has also paced reliance on the following judicial pronouncements i.e Pfizer Healthcare India Pvt. Ltd. Vs. JCOIT, 433 ITR 028 (Mad); DCIT Vs. Saint Gobain India P. Ltd. 137 taxmann.com 215 (Mad) and also placed reliance the decision of ITAT Mumbai in the cases i.e (i) Strides Shasum Limited Vs. DCIT, Circle 15(3)(2) vide ITA No. 2877/Mum/2014 dated 28.02.2023 (ii) M/s Mondelez India Foods Private Limited Vs. Ad. CIT, Range 5(1) vide ITA Nos. 1492, 1576 & 2340/Mum/2015 dated 14.11.2022 and (iii) M/s Tubacex Prakash India Pvt. Ltd. Vs. The ACIT/JCIT/DCIT/ACIT- national E-assessment Centre, Delhi and DCIT, circle 14(1)(2), dated 24.03.2023. On the other hand, the ld. D.R supported the order of lower authorities. The ld. D.R also submitted that Sec. 92CA(3A) uses word ‘may’ only and same cannot be construed as shall and equated to limitation especially when further proceedings are contemplated under the Act such as passing the draft assessment order and for the remedy before the dispute resolution panel and final assessment order. 8. Heard both the sides and perused the material on record. With regard to the limited issue of validity of order passed by the TPO u/s 92CA(3) of the Act and assessment proceeding arised therefrom the ld. Counsel has filed computation of period of limitation as under: P a g e | 8 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) The relevant provisions of Sec. 92CA(3A) is reproduced as under: Section 92CA (3A) “(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 said 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 time 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 recomputation or fresh assessment, as the case may be, expires:” Section 153(1) “Time limit for completion of assessment and reassessments- (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) (b) One year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on 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: Provided xxxxxxxxxxx Provided further xxxxxxxxxx Provided also that in case the assessment year in which the income 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-section(1) of section 92CA is made, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words “two years” the words “three years” had been substituted.” As per provision of Sec. 92CA(3A) the TPO is required to pass an order u/s 92CA(3) of the Act at any time before 60 days prior to the date on which the period of limitation referred to in Sec. 153 for making the assessment order on assessment or reassessment or re-computation or fresh assessment as the case may be expires. The decision of single bench of Hon’ble High Court of Madras in the case of Pfizer Healthcare Ltd Vs. JCIT as supra is reproduced as under: “30. Now, coming to the question of how the 60 day period is to be computed, the critical question would be whether the period of 60 days would be computed including the 31st of December or excluding it. Section 153 states that no order of assessment shall be P a g e | 9 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) made at any time after the expiry of 21 months from the end of the assessment year in which the income was first assessable. The submission of the revenue is to the effect that limitation expires only on 12 am of 1-1-2020. However, this would mean that an order of assessment can be passed at 12 am on 1-1-2020, whereas, in my view, such an order would be held to be barred by limitation as proceedings for assessment should be completed before 11.59.59 of 31-12-2019. The period of 21 months therefore, expires on 31-12-2019 that must stand excluded since section 92CA(3A) states 'before 60 days prior to the date on which the period of limitation referred to section 153 expires'. Excluding 31-12-2019, the period of 60 days would expire on 1-11-2019 and the transfer pricing orders thus ought to have been passed on 31-10-2019 or any date prior thereto. Incidentally, the Board, in the Central Action Plan also indicates the date by which the Transfer Pricing orders are to be passed as 31-10-2019. The impugned orders are thus, held to be barred by limitation”. 8. Further the decision of division bench of the Hon’ble Madras High Court in the case of DCIT Vs. Saint Gobain India P. Ltd. as referred supra by the ld. Counsel is reproduced as under: “28. The word "date" in section 92CA(3A) would indicate 31-12-2019. But the preceding words "prior to" would indicate that for the purpose of calculating the 60 days, 31-12-2019 must be excluded. The usage of the word "prior" is not without significance. It is not open to this court to just consider the word "to" by ignoring "prior". The word "prior" in the present context, not only denotes the flow of direction, but also actual date from which the period of 60 days is to be calculated. It is settled law that while interpreting a statute, it is not for the courts to treat any word(s) as redundant or superfluous and ignore the same. In this connection, it is pertinent to note the judgment of the Apex Court in Grasim Industries Ltd. v. Collector of Customs 2002 taxmann.com 1803, wherein, it was held as follows : "10. No words or expressions used in any statute can be said to be redundant or superfluous. In matters of interpretation one should not concentrate too much on one word and pay too little attention to other words. No provision in the statute and no word in any section can be construed in isolation. Every provision and every word must be looked at generally and in the context in which it is used. It is said that every statute is an edict of the legislature. The elementary principle of interpreting any word while considering a statute is to gather the mens or sententia legis of the legislature. Where the words are clear and there is no obscurity, and there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for the court to take upon itself the task of amending or alternating (sic altering) the statutory provisions. Wherever the language is clear the intention of the legislature is to be gathered from the language used. While doing so, what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results in rejection of words has to be avoided. As stated by the Privy Council in Crawford v. Spooner [(1846) 6 Moore PC 1 : 4 MIA 179] "we cannot aid the legislature's defective phrasing of an Act, we cannot add or mend and, by construction make up deficiencies which are left there". In case of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary for deciding the particular case. This P a g e | 10 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) principle is too well settled and reference to a few decisions of this Court would suffice. (See : Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests [1990 Supp SCC 785 : AIR 1990 SC 1747] , Union of India v. Deoki Nandan Aggarwal [1992 Supp (1) SCC 323 : 1992 SCC (L&S) 248 : (1992) 19 ATC 219 : AIR 1992 SC 96] , Institute of Chartered Accountants of India v. Price Waterhouse [(1997) 6 SCC 312] and Harbhajan Singh v. Press Council of India [(2002) 3 SCC 722 : JT (2002) 3 SC 21] .)” 29. The language employed is simple. 31-12-2019 is the last date for the assessing officer to pass his order under section 153. The TPO has to pass order before 60 days prior to the last date. The 60 days is to be calculated excluding the last date because of the use of the words "prior to" and the TPO has to pass order before the 60th day. In the present case, the word "before" used before "60 days" would indicate that an order has to be passed before 1-11-2019 i.e on or before 31-10-2019 as rightly held by the Learned Judge. 30. Even considering for the purpose of alternate interpretation, the scope of section 9 of the General Clauses Act, it is to be noted that an inverted calculation of the period of limitation takes place here. If the last date is taken to be the first date from which the period of 60 days is to be calculated, reading down the provision with the use of the word "from", which denotes the starting point or period of direction in general parlance, would mean that 60 days "from the last date". Even going by section 9 of the General Clauses Act, when the word "from" is used, then, that date is to be excluded, implying here that 31-12-2019 must be excluded. After excluding 31- 12-2019, if the period of 60 days is calculated, the 60th day would fall on 1-11-2019 and the TPO must have passed the order on or before 31-10-2019 as orders are to be passed before the 60th day. Therefore, either way the contention of the Revenue is a fallacy and has no legs to stand. Mandatory or Directory 31. The next contention that has been raised by the learned senior standing counsel for the appellants is that the usage of the word "may" in section 92CA (3A) indicates that the time fixed is only directory, a guideline, not mandatory and is for the sake of internal proceedings. 32. Let us now examine the relevant procedures relating to Transfer Pricing. After an international transaction is noticed subject to satisfaction of section 92B, a reference is made to the TPO under sub-section (1) of section 92CA of the Act. The TPO after considering the documents submitted by the assessee is to pass an order under section 92CA (3) of the Act. As per section 92CA(3A), the order has to be passed before the expiry of 60 days prior to the date on which the period of limitation under section 153 expires. As per 92CA(4), the assessing officer has to pass an order in conformity with the order of the TPO. After receipt of the order from the TPO determining ALP, the assessing officer is to forward a draft assessment order to the assessee, who has an option either to file his acceptance of the variation of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer. Sub- section (5) of section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. Sub- section (13) of section 144C of the Act provides that upon receipt of directions P a g e | 11 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) issued under sub-section (5) of section 144C of the Act, the Assessing Officer shall in conformity with the directions complete the assessment proceedings. It goes without saying that if no objections are filed by the Assessee either before the DRP or the assessing officer to the determination by the TPO, section 92CA(4) would come into operation. Therefore, it is very clear that once a reference is made, it would have an impact on the assessment unless a decision on merits is taken by DRP rejecting or varying the determination by the TPO. 33. It would only be apropos to note that as per proviso to section 92CA (3A), if the time limit for the TPO to pass an order is less than 60 days, then the remaining period shall be extended to 60 days. This implies that not only is the time frame mandatory, but also that the TPO has to pass an order within 60 days. 34. Further, the extension in the proviso referred above, also automatically extends the period of assessment to 60 days as per the second proviso to section 153. 35. Also, but for the reference to the TPO, the time limit for completing the assessment would only be 21 months from the end of the assessment year. It is only if a reference is pending, the department gets another 12 months. Once reference is made and after availing the benefit of the extended period to pass orders, the department cannot claim that the time limits are not mandatory. Hence, the contention raised in this regard is rejected. 36. As rightly pointed out by Mr. Ajay Vohra, learned senior counsel for the respondents in WA. Nos.1148 and 1149/2021, the word "may" has to be sometimes read as "shall" and vice versa depending upon the context in which it is used, the consequences of the performance or failure on the overall scheme and object of the provisions would have to be considered while determining whether it is mandatory or directory. 37. At this juncture, it is noteworthy to mention the commentary of Justice G.P.Singh on the interpretation of statutes, Principles of Statutory Interpretation (1st Edn., Lexis Nexis 2015), which is quoted below for ready reference: ' The intention of the legislature thus assimilates two aspects: In one aspect it carries the concept of "meaning" i.e. what the words mean and in another aspect, it conveys the concept of "purpose and object" or the "reason and spirit" pervading through the statute. The process of construction, therefore, combines both literal and purposive approaches. In other words the legislative intention i.e. the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. This formulation later received the approval of the Supreme Court and was called the "cardinal principle of construction".' 38. In case of assessments involving transfer pricing, fixing of time limits at various stages sets forth that the object of the provisions is to facilitate faster assessment involving such determination. In the present case, as rightly held by the learned Judge in paragraphs 22 to 29 of the order dated 7-9-2020, the order of the TPO or the failure to pass an order before 60 days will have an impact in the order to be passed by the Assessing Officer, for which an outer time limit has been prescribed under sections 144C and 153 and is hence P a g e | 12 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) mandatory. What is also not to be forgotten, considering the scheme of the Act, the inter-relatability and inter-dependency of the provisions to conclude the assessment, is the consequence or the effect that follows, if an order is not passed in time. When an order is passed in time, the procedures under 144C and 92CA(4) are to be followed. When the determination is not in time, it cannot be relied upon by the assessing officer while concluding the assessment proceedings. 39. Upon consideration of the judgments and the scheme of the Act, we are of the opinion that the word "may" used therein has to be construed as "shall" and the time period fixed therein has to be scrupulously followed. The word "may" is used there to imply that an order can be passed any day before 60 days and it is not that the order must be made on the day before the 60th day. The impact of the proviso to the subsection clarifies the mandatory nature of the time schedule. The word "may" cannot be interpreted to say that the legislature never wanted the authority to pass an order within 60 days and it gave a discretion. Therefore, the learned Judge rightly held the orders impugned in the writ petitions as barred by limitation, as the Board, in the Central Action Plan, has specified 31-10-2019 as the date on which orders are to be passed by the TPO, reiterating the time limit to be mandatory.” After taking into consideration the material placed on record it is undisputed fact that transfer pricing officer has passed order u/s 92CA(3) on 30.01.2013 whereas the limitation for passing the said order u/s 92CA(3) expires on 29.01.2013. Therefore, taking into consideration the provision of the Act and decision of Hon’ble Madras High Court in the cases referred supra the order u/s 92CA(3) of the Act is time barred by 1 day. Further the ld. Counsel has mentioned the provisions of Sec. 144C(15) of the Act pertaining to the eligible assesse the same is reproduced as under: “(b) “eligible assessee” means – (i) Any person in whose case the variation referred to in sub- section(1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) (ii) any non-resident not being a company, or any foreign company.” After referring the aforesaid provisions the ld. Counsel contended that since the order of the TPO was barred by limitation, therefore, there was no eligible assessee in the case of the assessee in terms of provisions of subsection (15) to Sec. 144C of the Act. P a g e | 13 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) 9. In this regard, we find that coordinate bench of the ITAT on the similar issue on identical facts in the cases i.e (i) Strides Shasum Limited Vs. DCIT, Circle 15(3)(2) vide ITA No. 2877/Mum/2014 dated 28.02.2023 (ii) M/s Mondelez India Foods Private Limited Vs. Ad. CIT, Range 5(1) vide ITA Nos. 1492, 1576 & 2340/Mum/2015 dated 14.11.2022 and (iii) M/s Tubacex Prakash India Pvt. Ltd. Vs. The ACIT/JCIT/DCIT/ACIT-national E-assessment Centre, Delhi and DCIT, circle 14(1)(2), dated 24.03.2023 and (iv) Tata AIA Life Insurance Company Limited Vs. The ACIT -2(3) dated 27.04.2023 held that the order of the TPO and draft assessment order are barred by limitation, therefore, resulting in assessee not being a eligible assessee u/s 144C(15)(b)(i) of the Act. Consequently, the final assessment was also bad in law. Therefore, since the issue on hand being squarely covered on similar fact and circumstances, therefore, we find merit in the submission of the assessee and allow the additional ground raised by the assesee. No argument were made by the ld. Counsel for the assessee in respect of the original ground of appeal, other additional ground of appeal therefore they are left open for adjudication if the need arises, therefore, the appeal of the assessee is allowed. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 12.05.2023 Sd/- Sd/- (Aby T. Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 12.05.2023 Rohit: PS P a g e | 14 ITA No.3591/Mum/2015 Willis Towers Watson India Pvt. Ltd. Vs. The DCIT, CC-8(3) आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.