| The Tax Publishers2020 TaxPub(DT) 1623 (Pune-Trib) : (2020) 204 TTJ 0513 INCOME TAX ACT, 1961
Section 92CA
Since none of the two conditions enshrined in Instruction of 2016 were satisfied in as much as neither transfer pricing adjustment of more than Rs. 10 crore was made for an earlier year nor, as a sequitur there was any question of such transfer pricing adjustment having been either upheld by a judicial authority or pending in appeal. That being the position, AO made a reference to TPO in contravention of Instruction No. 3/2016. Since the Instruction was binding on AO, such reference was invalid and consequential transfer pricing adjustment of Rs. 10.14 crore was directed to be deleted.
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Transfer pricing - Reference to TPO - Neither transfer pricing adjustment of more than Rs. 10 crore was made for an earlier year nor, as a sequitur there was any question of such transfer pricing adjustment having been either upheld by a judicial authori -
Assessee reported certain international transactions in Form No. 3CEB, including `Sale of Pharmaceutical products'. AO made a reference to TPO for determining the ALP of international transactions. TPO proposed a transfer pricing adjustment of Rs. 10,49,46,477. Pursuant to directions given by the DRP, AO made transfer pricing adjustment of Rs. 10,14,06,297 in the impugned final assessment order. The case of assessee was that AO could not have made a reference to TPO. Held: A careful circumspection of para 3.3(b) of CBDT Instruction No. 03/2016, dt. 10-3-2016 reveals that it contains two conditions. The first condition is that there: `has been a transfer pricing adjustment of Rs. 10.00 crore or more in an earlier assessment year' and after the use of conjunction `and', the second condition is that: `such adjustment has been upheld by the judicial authorities or is pending in appeal.' These two distinct conditions need to be cumulatively satisfied so as to bring a case within the purview of this para.In assessee's case though amount of `proposed transfer pricing adjustment' was more than Rs. 10.00 crore in an earlier assessment year but same fell short of `transfer pricing adjustment' as it was still pending with DRP at the time of AO making a reference to TPO for the year under consideration. Till then, AO had simply forward a draft of proposed order of assessment to eligible assessee proposing to make variation in the income returned. Thus none of the two conditions enshrined in Instruction of 2016 were satisfied in as much as neither transfer pricing adjustment of more than Rs. 10 crore was made for an earlier year nor, as a sequitur there was any question of such transfer pricing adjustment having been either upheld by a judicial authority or pending in appeal. That being the position, AO made a reference to TPO in contravention of Instruction No. 3/2016. Since the Instruction was binding on AO, such reference was invalid and consequential transfer pricing adjustment of Rs. 10.14 crore was directed to be deleted.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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