TaxTMI 
TaxTMI 
2019 (2) TMI 1783
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....AT) has erred in law is rejecting the application for the stay of demand as well as the request for early hearing of the case made by the Appellant? B. Whether the Income Tax Appellate Tribunal (ITAT) erred in holding that the Appellant could not prove her case for grant of early hearing? 8. In the light of the aforesaid submissions, the question of law framed above are answered in favour of the appellant. We, therefore, dispose of this appeal by directing the Tribunal to hear the appeal of the appellant, pending before it." 2. This appeal has been preferred by the assessee against order dated 30/08/2019 passed by the CIT(Appeals)-44, New Delhi [in short the 'Ld. CIT(A)'] for assessment year 2014-15 raising following grounds: 1. The order of the CIT(A)-44, Delhi is assailed of being a perverse order, as the same passed without considering the submissions of the assessee, without taking a holistic view of the case, without giving any justifiable reason for confirming the order of the AO/TPO and is sub silentio order passed in any arbitrary manner. 2. The CIT(A)-44, Delhi has erred in law in facts in confirming the order of the AO/TPO wherein the AO/TPO has made an addition ....
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....opment Authority, ATS and the appellant. In lieu of the development rights of the 100 acres of project land transferred to OIPL, a sum of Rs. 68,80,48.216 was paid to OIPL directly by ATS on behalf of the appellant for relinquishing its rights over hundred acres of land which was then sold by the appellant to OIPL. The transaction between the appellant OIPL and ATS was recorded in writing in a Memorandum of Understanding (MoU) dated 13/05/2012 and a sub lease deed between ATS. Yamuna Expressway Development Authority and appellant was also registered and 100 acres of land was sold to ATS." 3.1 The assessee submitted a transfer pricing report prepared by the Chartered Accountant, wherein computations relating to the profitability of the assessee, NPV calculations are provided. The assessee claimed that in view of the 'other method' as most appropriate method, the payment made by the assessee to its Associated Enterprise (AEs) was not excessive. The learned TPO after analysing the agreement and other information found that the value of the transaction was recorded at different values at a different places. The values observed by the learned TPO is reproduced as under: S. No. Natu....
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....he Assessing Officer. The assessee was afforded reasonable opportunity of being heard." 3.3 The Assessing Officer in assessment order dated 30/12/2017 made addition for the transfer pricing adjustment proposed by the learned TPO. Aggrieved, the assessee filed appeal before the Ld. CIT(A) and filed detailed submissions. The objection of the assessee in respect of the colourable device have been rejected by the Ld. CIT(A) observing as under: "6.8 Ground No. 2 pertains to the contention of the appellant that the AO had erred in confirming the order of the TPO who had made an addition of Rs. 68,80,48,216 on account ot payment made by the appellant to its associate enterprise. The TPO has disallowed the payment of Rs. 68,80,48,216 as in a transaction between two unrelated parties, the appellant would not have made payment OIPL for sale of land to ATS. Hence, the AO/TPO has correctly held to be a colourable device. 6.9 The contention of the appellant is not accepted as the Issue relates to transaction between related parties which is a specified domestic transaction. The .Act gives the power to the 4 PG to examine the arm's-length price of such transactions. The contention of the ap....
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....Wakefield (India) P Ltd in ITA 475/2012 to support the contention that matter is referred to the learned TPO only for the limited purpose of determining the ALP and he did not have authority to decide whether the transaction should happen or not. Accordingly, requested that matter maybe restored back to Ld. AO/TPO for deciding the arm's-length price of the specified domestic transaction in accordance with law. 5. The learned Departmental Representative on the other hand relied on the order of the Ld. AO/TPO and submitted that entire transaction was only colourable device and therefore learned TPO is justified in benchmarking at nil. 6. We have heard the rival submission of the parties and perused the relevant metal on record. We find that the specified domestic transaction of collaboration expenses has been benchmarked by the assessee following the other method as most appropriate method. The assessee has valued the transaction at which the third-party has made payment for the transaction. We find that the learned TPO instead of benchmarking the transaction in accordance with the law, he simply taken the value of the specified transaction at nil observing that reliable data was n....
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....ed, then the Transfer Pricing Officer is justified in making an adjustment under the arm's length price. 38. In the case on hand, the Transfer Pricing Officer has determined the arm's length price at "nil" keeping in view the factual position as to whether in a comparable case, similar payments would have been made or not in terms of the agreements. This is a case where the assessee has not determined the arm's length price. The burden is initially on the assessee to determine the arm's length price. Thus, the argument of the assessee that the Transfer Pricing Officer has exceeded his jurisdiction by disallowing certain expenditure, is against the facts. The Transfer Pricing Officer has not disallowed any expenditure. Only the arm's length price was determined. It was the Assessing Officer who computed the income by adopting the arm's length price decided by the Transfer Pricing Officer at "nil"." This is a slender yet crucial distinction that restricts the authority of the TPO. Whilst the report of the TPO in this case ultimately noted that the ALP was 'nil', since a comparable entity would pay 'nil' amount for these services, this Court....
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....cer made a disallowance under section 37 of the Act. It is a case where an adjustment has been made under section 92C(4) of the Act, after the Transfer Pricing Officer determined the arm's length price at nil under section 92CA(3). Hence this argument is devoid of merit." Indeed, a Division Bench of this Court, in Sony India Pvt. Ltd. v. Central Board of Direct Taxes and Anr., [2007] 288 ITR 52 (Delhi) (albeit considering the law prior to the 2007 amendment to the Act), concurred with this view: "18 ... a reading of Section 92C and 92CA does not indicate that the AO is required to form a prior considered opinion after considering all the available materials even ITA 475/2012 Page 33 before making a reference to the TPO. A prima facie opinion would suffice at the stage of making the reference. 35 ... It correctly interprets the law as requiring only a formation of a prima facie opinion by the AO at the stage of the reference. Therefore, the question of the CBDT supplanting the judicial discretion of the AO does not arise. It is perfectly possible that, independent of the circular, the AO might still "consider it necessary or expedient" to refer an international transaction....