A division bench of the Madras High Court, while asking the Transfer Pricing Officer to pass an order determining Arm’s Length Pricing within 60 days and held that the department cannot claim that the time limitis prescribed in the statute are not mandatory.
The Petitioner is a private limited company, engaged in the business of manufacturing generic drugs, exporting the same to group entities and contract research and development services for pharmaceutical products. On 10.12.2018, a notice under Section 92CA(2) of the Act was issued by the first appellant calling upon the writ petitioner to furnish certain particulars. The first appellant, thereafter, passed the order under Section 92CA (3) of the Act on 01.11.2019, which according to the writ petitioner, was passed, after the time limit prescribed for passing such order until 31.10.2019. Therefore, the order dated 01.11.2019 passed by the first appellant is beyond he period of limitation as stipulated under Section 92CA(3A) of the Act.
A bench of Mr. Justice R. Mahadevan and Mr. Justice J.Sathya Narayana Prasad held that “If the language employed in any statute is clear and unambiguous from its plain and natural meaning, external aid for interpretation are unnecessary. In the present case, we are called upon to adjudicate the period of limitation applicable to TPO under Section 92CA(3A) and incidentally under Section 153.”
“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. 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,” the bench said.
Concluding the judgment, the Court observed that “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.”
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