TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 696
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....investment in redeemable preference share in F.Y. 2012-13 and to incorporate the Arm's Length Price determined by the learned Transfer Pricing Officer to be incorporated in the assessment order. 02. The assessee has raised following grounds of appeal: - "The following grounds of appeal are without prejudice to one another: 1.(a) On the facts and in the circumstances of the case and in law, the ld. Pr. Commissioner of Income Tax erred in passing an order u/s. 263 of the Income Tax Act, 1961 whereby he directed the AO to refer the international transaction of interest on loan on conversion of preference shares to the Associated Enterprise (AE) to the Transfer Pricing Officer (TPO) for determination of Arm's Length Price and the reasons assigned for doing so are wrong and contrary to the facts and circumstances of the case, provisions of the Income Tax Act, 1961, and the Rules made there under. (b) The Id. Pr. Commissioner of Income Tax erred in invoking the revisionary powers under section 263(1) of the Income Tax Act, 1961 without appreciating the fact: (i). That the appellant had reported said transaction in Form 3CEB filed before the Income Tax Department. (ii).....
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....e Director of Income Tax (Transfer Pricing) and therefore, the revision order passed by the ld. Principal Commissioner of Income Tax is without jurisdiction, bad in law and against the provisions of the Income Tax Act, 1961 and deserves to be quashed. That the above grounds of appeal are without prejudice to each other." 03. The brief facts of the case shows that assessee is a company engaged in software development and consultancy services along with providing ITES services filed its return of income on 30th November, 2013, declaring a total loss of Rs.1,152,05,81,718/-. The return of income was selected for scrutiny. Assessee has entered into international transactions and therefore, after obtaining the approval of the Pr. Commissioner of Income Tax-15, Mumbai, the reference was made to The Jt. Commissioner of income Tax (Transfer Pricing)-4(1), Mumbai (the learned Transfer Pricing Officer), as per letter dated 22nd February, 2016 to determine the Arm's Length Price of International Transactions. The respective order of the learned Transfer Pricing Officer passed under Section 92CA (3) of the Act on 26th October, 2015, wherein transfer pricing adjustment of Rs.27,84,86,725....
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....earned Transfer Pricing Officer did not make any adjustment in respective loan transactions and the learned Assessing Officer has made the addition in violation of the Provision of Section 92CA(4) of the Act. Therefore, there is no error in the assessment order, which is prejudicial to the interest of the Revenue. 06. The learned PCIT called for report of ld AO, which was received on 25th March, 2019, wherein, it has been submitted that the learned Transfer Pricing Officer has not discussed the transaction of investment in redeemable preference shares of its related party which has been converted into loan with effect from 1st July, 2012 at the coupon rate of 5% and in his order under Section 92CA (3) has not discussed any arm's length adjustment on that count. The learned Assessing Officer categorically held that the learned Assessing Officer has not decided the Arm's Length Price of international transaction. 07. The learned PCIT examined the form no. 3CEB and noted that in that form at Para no.14, the assessee in reply to particulars of lending and borrowing money has stated 'yes', however, the amount is not reported. Therefore, the learned Transfer Pricing Officer has not....
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....e learned TPO did not take any adverse view. He further submitted that the learned PCIT does not have any power to direct the learned TPO to recompute the arm's-length price of international transaction. He submitted that such powers under section 263 of the income tax act are available only with effect from 1/4/2022. The issue in the present case is related to assessment year 2013 - 14. The learned principal Commissioner of income tax also passed the order under section 263 of the act on 29/3/2019. Therefore, the revisionary order passed by the learned PCIT is not sustainable. Assessee referred to his factual paper book containing 97 pages and also referred to several judicial precedents. He specifically relied upon the decision of the coordinate bench in case of Essar steel Ltd versus additional Commissioner of income tax in ITA number 4007/M/2010 stating that in assessee's case assessing officer has passed the order under section 143 (3) read with section 144C (3) in conformity of the arm's-length price determined by the learned transfer pricing officer and therefore the learned PCIT does not have any power to hold that such an order is erroneous and prejudicial to t....
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....onal transaction, which could have only been made by the learned transfer pricing officer and therefore there is a mistake apparent from the record and the addition requires to be deleted. Thus, the assessee challenged the above addition of Rs. 29.46 crores for assessment year 2014 - 15. 012. Thus from the above facts it was clear that there was an adjustment to the international transaction for assessment year 2014 - 15 which the assessing officer has made and not the learned transfer pricing officer. 013. However, for the assessment year 2013 - 14, the learned PCIT has directed the learned assessing officer to refer this international transaction to the learned TPO for determination of arm's-length price. We find that the original reference is already made by the learned assessing officer by obtaining the prior approval of the principal Commissioner of income tax - 15, Mumbai. Such reference was made on 22/2/2016. It is also to be noted that reference was made for all the transactions reported in form number 3CEB filed by the assessee. We have also stated that in the transfer pricing study report of the assessee above transactions were clearly disclosed. Transfer pricing st....