2020 (10) TMI 458

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....ions of law: i) Whether on the facts and circumstances of the case and in law, the Tribunal is right in holding that, CBDT Instruction No.3 dated 20.05.2003 is not binding on the Assessing Officer and as such the Assessing Officer himself determining the Transfer Pricing adjustment is justified and hence the order of assessment cannot be said to be erroneous in order to invoke the provisions of section 263 by the Commissioner of Income Tax? ii) Whether on the facts and circumstances of the case and in law, the Tribunal is right in holding that, the Assessing Officer himself determining the Transfer Pricing adjustment without referring the matter to the Transfer Pricing Officer is one of the possible views taken and as such....

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....he Act on 30.03.2012. The said order was challenged before the ITAT and by the impugned order, the ITAT has allowed assessee's appeal. Hence, these Income Tax Appeals. 7. Shri Raghavan urged following contentions; • the judgment in S.G.ASIA is not applicable because; i) the judgment did not go into the question 'whether Instruction No.3 is mandatory?'; ii) the judgment is not 'law declared' under Article 141 of the Constitution of India in view of the STATE OF U.P. AND ANOTHER VS. SYNTHETICS AND CHEMICALS LTD., AND ANOTHER (1991) 4 SCC 139; iii) even if it is construed that in S.G.ASIA, the Hon'ble Apex Court has considered the question 'whether Instruction No.3 is mandatory', in the facts and circ....

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.... mandates that wherever the aggregate value of international transaction exceeds Rs. 5 crores (amended to Rs. 15 crores), the case must be picked up for scrutiny under Section 92CA and sent to Transfer Pricing Officer (for short 'the TPO') for determination of ALP. 10. The Tribunal has recorded in paragraph No.8 of its order that Instruction No.3 is not binding on the Assessing Officer. Tribunal has further recorded that the Assessing Officer himself has made his own assessment without referring the matter to the TPO and it is one of the possible views and therefore, it cannot be held as erroneous. 11. Shri Raghavan urged that sub Section (4) of Section 92CA has been substituted by Finance Act, 2007, with effect from 01.06.2007. Prior....

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....rom 01.06.2007. No authority of the Supreme Court of India is cited to show that the position of law stated in S.G.ASIA has been altered. Therefore, in view of the unambiguous language employed in paragraph No.7 of S.G.ASIA extracted hereinabove, we are of the considered view that Instruction No.3/2003 issued by the CBDT is mandatory. 15. Shri Raghavan has relied upon COMMISSIONER OF INCOME TAX VS. MAX INDIA to contend that where two views are possible and if the Assessing Officer has taken a particular view, it cannot be treated as erroneous. 16. Placing reliance on MALABAR INDUSTRIAL CO., LTD., VS. COMMISSIONER OF INCOME TAX, Shri Raghavan urged that power under Section 263 cannot be invoked to correct each and every type of error. ....