2017 (12) TMI 670

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....etitioners submits that, the first petitioner has branch units located at two countries apart from India. They are at Saudi Arabia and United Arab Emirate. He submits that, there was no business transaction far less an international business transaction between the unit in India and the two branch units at the two different countries. Therefore, the provisions for arm's length pricing in respect of the so-called international transaction does not get attracted to the facts of the present case. The assessing officer did not decide such jurisdictional fact before transferring the matter to the Transfer Pricing Officer. In fact, he submits that, the assessing officer had issued a show cause notice dated March 11, 2015 requiring the first petit....

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....show cause notice dated March 11, 2015 from the assessing officer, calling upon the first petitioner to respond in writing with supporting evidence, as to the claim of the department that, there has been international transaction within the meaning of Section 92B between the branch units and the permanent establishment located in India. The first petitioner did reply thereto by its writing dated March 24, 2015. The assessing officer did not afford any opportunity of hearing to the petitioners thereafter. It did not decide the jurisdictional fact as whether there are transactions requiring the attention of the TPO. The TPO had issued a notice dated April 16, 2015 calling upon the first petitioner to participate in the proceedings for the ass....

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....ng officer is required to record his satisfaction that, there is an income or a potential of an income arising and/or being affected on determination of the arm's length pricing of an international transaction or specified domestic transaction. The circular in clause 3.4 goes on to say that the assessing officer must provide an opportunity of hearing to the assessee before recording his satisfaction or otherwise. He should also pass an speaking order so as to comply with the principles of natural justice. In the facts of the present case, although the circular was not in vogue at the material point of time, the applicability of the principles of natural justice and the requirement of the assessing officer deciding on a jurisdictional fac....