TaxTMI 
TaxTMI 
2016 (7) TMI 1053
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.... issue, viz., first, that the assessee could not take up the jurisdiction issue before the tribunal for the first time without raising it before the authorities below, and second, that the assessee has not taken any such ground in its Memorandum of appeal. In response, the ld. AR submitted that the assessee did assail the jurisdiction of the TPO during the course of proceedings before him, but, the TPO went ahead with the determination of the ALP of AMP expenses without deciding that issue. On a specific query as to by which document the assessee challenged the jurisdiction of the TPO, the ld. AR referred to page 490 of the paper book, being the assessee's reply dated 15th December, 2014 to the show cause notice issued by the TPO. In particular, the ld. AR drew our attention towards para C.1 of the assessee's reply to the show cause notice, which reads as under:- "C.1 Your goodself has concluded that the marketing intangible is an international transaction by disregarding the fact that the AMP expenses incurred by the Assessee represent purely domestic transaction(s) undertaken towards third parties, not covered under the purview of Section 92 of the Act and that the analysis of "....
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....otwithstanding the same having not been raised either before the authorities below or not taken up in the Memorandum of Appeal. The Hon'ble Supreme Court in NTPC Ltd. vs. CIT (1998) 229 ITR 383 (SC), has held that an additional ground on question of law can be raised before the Tribunal for the first time which has a bearing on the tax liability of the assessee notwithstanding the fact that the same was not raised before the lower authorities. The only condition for raising such a ground is that the factual position governing such a legal ground should be available on record and the ground should be capable of rendering decision without carrying out any fresh investigation of facts. Since the issue of jurisdiction of the AO/TPO in determining the ALP of the AMP expenses is a question of law and the relevant material for delivering decision on it is available on record, we admit this issue for consideration on merits. 6. On merits, the ld. AR submitted that the assessee did not indicate AMP expenses as an international transaction in its audit report in Form No.3CEB and the same was not referred by the AO to the TPO, hence, the TPO/AO did not have any jurisdiction to determine the ....
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....r of ALP of AMP expenses to the TPO without recording his satisfaction and such satisfaction could have recorded only after giving opportunity of hearing to the assessee. Let us see the contents of para 3.4 of the Instruction, which reads as under :- "3.4 For cases to be referred by the AO to the TPO in accordance with paragraphs 3.2 and 3.3 above, in respect of transactions having the following situations, the AO must, as a jurisdictional requirement, record his satisfaction that there is an income or a potential of an income arising and/or being affected on determination of the ALP of an international transaction or specified domestic transaction before seeking approval of the PCIT or CIT to refer the matter to the TPO for determination of the ALP: * where the taxpayer has not filed the Accountant's report under Section 92E of the Act but the international transactions or specified domestic transactions undertaken by it come to the notice of the AO; * where the taxpayer has not declared one or more international transaction or specified domestic transaction in the Accountant's report filed under Section 92E of the Act and the said transaction or transactions come to the notice....
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....ng to the assessee. We do not find the assessee's case falling under the second bullet point, because it is not the AO who formulated his view on AMP expenses as an international transaction and then required determination of its ALP by the TPO. As in the instant case, the AO did not make any reference to the TPO for determining the ALP of the unreported international transaction of AMP expenses, this para of the Instruction, can have no application. 11. Now, we take up the challenge to the jurisdiction of the TPO, made by the ld. AR by relying on para 4 of the Instruction, which reads as under :- "4.1 The role of the TPO begins after a reference is received from the AO. In terms of Section 92CA, this role is limited to the determination of the ALP in relation to international transactions or specified domestic transactions referred to him by the AO. However, if any other international transaction comes to the notice of the TPO during the course of the proceedings before him, then he is empowered to determine the ALP of such other international transactions also by virtue of Section 92CA (2A) and (2B). The transfer price has to be determined by the TPO in terms of Section 92C. Th....
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....o the notice of the Transfer Pricing Officer during the course of the proceeding before him, the provisions of this Chapter shall apply as if such transaction is an international transaction referred to him under sub-section (1).' 13. The Hon'ble jurisdictional High Court in Sony Ericson Mobile Communications India Pvt. Ltd. vs. CIT (2015) 374 ITR 118 (Del) has decided this very issue in favour of the Revenue by holding in para 47 that: `The majority decision of the Tribunal in L.G. Electronics India Pvt Ltd. (supra) has rightly drawn a distinction between sub-section (2B) and sub-section (2A) to Section 92CA of the Act. Sub-section (2A) was inserted in 2011, i.e. nearly one year before insertion of Section (2B) by the Finance Act, 2012. Sub- section (2A) has not been given retrospective effect and it applies only w.e.f. 1st June, 2011. Subsection (2A) applies to any international transaction or specified domestic transaction of which reference has not been made to the TPO under sub-section (1). With effect from 1st June, 2011, the TPO can go into arm's length pricing of an international transaction or a specified domestic transaction not referred to him. The distinction between ....
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....y mentioned in para 7 of the later Instruction dated 10th March, 2016 that: "This issues u/s 119 of the Income-tax Act, 1961 and replaces Instruction No.15 of 2015 with immediate effect." It is plentifully clear that this later Instruction has been implemented 'with immediate effect' from the date of its issuance, which is 10th March, 2016. Instructions to the Officers given by the Board setting up a procedure for implementation of certain provisions cannot assume the character of a legislative provision so as to toy with the possibility of applying the same retrospectively. We are reminded of the decision of the Hon'ble jurisdictional High Court in DIT VS. Ericsson A.B. (2012) 246 CTR 0422 (Del), in which the assessee, inter alia, relied on Instruction no. 1829 dt. 21.9.1989 to claim that no taxable event took place in India. The Revenue argued before the Hon'ble High Court that such Instruction stood withdrawn `with immediate effect' by a later Circular No. 7 of 2009 dt. 22nd Oct., 2009, and hence the later Circular be treated as retrospective. The argument of the ld. AR in case before us is similar to that advanced by the Revenue in that case before the Hon'ble High Court that t....
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....ional transaction in terms of the judgment in Whirlpool (supra). He also relied on another judgment of the Hon'ble Delhi High Court in Maruti Suzuki India Ltd. & Another vs. CIT (2015) 129 DTR 25 (Del) for the same proposition. In the light of these judgments and some other Tribunal orders, it was submitted that there was no international transaction of AMP expenses on the basis of principles laid down in these judgments and, hence, the entire exercise of determining its ALP and, consequently, making transfer pricing adjustment, be set aside. 18. In the oppugnation, the ld. DR submitted that there is no blanket rule of the AMP expenses as non-international transaction. He submitted that the Hon'ble High Court in Whirlpool (supra) has made certain observations, which should be properly weighed for ascertaining if an international transaction of AMP expenses exists. He further contended that the Tribunal in assessee's own case for the immediately preceding assessment year has restored the issue to the file of TPO to be decided afresh in the light of the judgment of the Hon'ble Delhi High Court in Sony Ericson Mobile Communications (India) Pvt. Ltd. vs. CIT (2015) 374 ITR 118 (Del). ....