The Tax Publishers2020 TaxPub(DT) 4651 (Mad-HC)

INCOME TAX ACT, 1961

Section 144C

Since the issue on which reference was thought to be necessary to TPO was explicitly mentioned in AO's letter to Pr. CIT seeking a reference to TPO, there was no merit in assessee's plea that there was no necessity to make reference to TPO on the ground of limited scrutiny notice not involving examination of TP parameters. Accordingly writ petition file by assessee challenging reference made by AO to TPO was dismissed.

Assessment - Transfer pricing - Assessee pleading no necessity to make reference to TPO on the ground of limited scrutiny notice not involving examination of TP parameters - The issue on which reference was thought to be necessary to TPO was explicitly mentioned in AO's letter to Pr.CIT seeking a reference to TPO

Assessee by way of writ petition challenged order passed by AO on the ground of reference made to TPO. Assessee's case was that limited scrutiny notice, only necessitated a reconciliation between Form-3CEB and return of income filed, and this exercise did not involve examination of Transfer pricing risk parameters and hence there was no necessity to make reference to the TPO to determine ALP. Held: Assessee's submission to the effect that the reason for selection of scrutiny by CASS only involved a numerical reconciliation was, an over simplification of reason stated for selection. Perhaps, AO might have been more detailed in the choice of words employed so as to specifically refer to the issue of aggregate value of total employees cost in comparison to aggregate value of international transactions as per books of accounts. However, non-reference to this was not fatal as reason for selection by CASS had beden produced and placed on reord AO while seeking approval of Pr.CIT for reference of matter to TPO and the issue on which reference was thought to be necessary to TPO was explicitly mentioned in letter to Pr.CIT seeking a reference to TPO. Accordingly, proper procedure had been followed by AO in approaching Pr.CIT seeking approval for reference and there was no merit in writ petition and same was, therefore, dismissed.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2016-17



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