Transfer pricing reference stayed where taxable income in India was not yet established under the DTAA challenge.

Ad-interim protection was granted against a transfer pricing reference and connected assessment proceedings where the writ petition challenged the Chapter X reference on the basis that income chargeable to tax in India had not first been established under the DTAA context. The Court directed filing of a reply affidavit and, pending further hearing, stayed the impugned notice, the impugned order, the reference to the Transfer Pricing Officer, and the assessment proceedings until further orders.

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Issues: Whether ad-interim stay should be granted against the show cause notice, the impugned reference to the Transfer Pricing Officer, and the assessment proceedings pending the writ petition.

Analysis: The petition raised a challenge to the reference made under Chapter X on the ground that income chargeable to tax in India had not first been established, particularly in the context of the DTAA and the alleged absence of a taxable income arising from the transaction. The respondents sought time to file a reply. Pending further hearing, the Court directed filing of an affidavit in reply and listed the matter for ad-interim consideration. In the meantime, the Court granted ad-interim protection in terms of the prayer seeking stay of the impugned notice, the impugned order, and the reference to the Transfer Pricing Officer, and also stayed the assessment proceedings.

Conclusion: Interim relief was granted in favour of the petitioner by staying the impugned notice, the reference under section 92CA(1), and the assessment proceedings until further orders.

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