A reference to the Transfer Pricing Officer that is made after the statutory limitation period under Section 153(2) of the Income Tax Act is invalid, leading to the quashing of any consequent assessments.

ORDER :

C.SARAVANAN, J.

In this Writ Petition, the Petitioner has challenged the impugned Order dated 27.01.2022 passed by the 1^st Respondent under Section 92CA (3) of the Income Tax Act, 1961.

2. By the impugned Order dated 27.01.2022, the 1^st Respondent Deputy Commissioner of Income Tax, Chennai has ordered as under:-

‘From the above, it can be seen that residual method under Rule 10AB was brought into the statute to evaluate transactions which were not being capable of being evaluated under other regular methods and is also in accordance with the OECD Guidelines referred earlier. Further, if one were to accept the assessee’s contentions, then certain transactions would be rendered incapable of being evaluated for ALP. This certainly is not the case and the Income Tax Rules and OECD Guidelines provide for benchmarking or transactions even with hypothetical prices as held by the ITAT in the case of Gulf Energy Maritime Services P Ltd (supra).

As discussed above, the other Method is adopted as the Most Appropriate Method and the ALP of the transactions relating to Corporate Support Service Fee in pursuance of the Agreement is treated as NIL by benchmarking it separately under Rule 10AB and a downward adjustment of Rs.20,12,29,781/- is proposed on the said transaction.

12. It is hereby clarified that the findings and discussions made in this order are applicable only in respect of reference received for Assessment Year 2017- 2018 and not for any other Assessment Year.’

3. The case of the petitioner is that the reference to the 1^st Respondent on 13.01.2022 was beyond the statutory period of limitation under Section 153 (2)r/w 153(4) and Section 92CA (1) of the Income Tax Act, 1961 .

4. The sum and substance of the challenge to the impugned Order dated 27.01.2022 passed under Section 92CA (3) of the Income Tax Act,1961 is that the date of approval under Section 92CA (1) from the Principal Commissioner or Commissioner of Income Tax has to be computed with the reference timelines contemplated under Sub-Section (2) to Section 92CA of the Income Tax Act, 1961 .

5. The challenge to the impugned Order is primarily on the ground of limitation and has inspired from the decision of a Division Bench of this Court in Virtusa Consulting Services (P.) Limited Vs. Dispute Resolution Panel (DRP), [2022] 446 ITR 454.

6. To substantiate the arguments, the learned counsel for the Petitioner drew attention to the following paragraphs from the decision of the Division Bench of this Court in Virtusa Consulting Services (P.) Limited (cited supra).

“19. Similarly, the contention of the learned counsel for the Revenue that both the proviso’s to section 153(1) are independent, have no connection in their operation and the reference to the Transfer Pricing Officer has to be made within twenty four (24)