TaxTMI 
TaxTMI 
2024 (4) TMI 256
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....r under consideration the assessee had entered into international transaction with its associated enterprise. Hence, after necessary approval of Pr. C.I.T., Delhi-IX, New Delhi, in accordance with the provisions of section 92CA of the I.T. Act, 1961, the matter was referred to the TPO for determining the Arm's Length Price (ALP) of the international transaction. The DCIT, TPO- 3(1)(1), New Delhi, passed order u/s 92CA(3) of the Act dated 22.01.2015 wherein an adjustment of Rs. 6,55,34,938/- was made u/s 92CA(3) of the Act. Accordingly, the draft assessment order u/s 144C of the Act was passed on 25.03.2015 at assessed income of Rs. 7,61,59,160/- by making addition of Rs. 6,55,34,938/-. The assessee filed objections against the draft assessment order before the DRP on 23.04.2015. The DRP vide its order dated 28.10.2015 passed u/s 144C(5) of the Act directed the TPO/AO to exclude/ include certain companies as comparable for calculating the ALP. After taking into consideration the direction of the DRP, the TPO vide its letter dated 12.11.2015 revised the transfer pricing adjustment to Rs. 3,87,54,545/- from Rs. 6,55,34,938/- (as determined earlier vide order u/s 92CA(3) dated 22.01.20....
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....led a detailed reply primarily submitting that the assessment order was null and void and non est which cannot be subject matter of the revision and for which judgement of the Hon'ble Supreme Court in the case Zuari Cement Limited vs. ACIT in WP No.5557 of 2012 was relied. The assessee had also taken a plea that appeal is pending before the ld.CIT(A) on the same ground. 7. However, the ld.PCIT was not satisfied and taking recourse to sub-clause (c) of Explanation 2 to Section 263(1) of the Act, the ld.PCIT held the order to be erroneous and prejudicial to the interests of the Revenue. The ld.PCIT observed that the AO has not taken into consideration the CBDT Circular No.05/2010 dated 03.06.2010 and Circular No.09/2013 dated 19.11.2013 which has made it mandatory for the AO to pass a draft assessment order under Section 144C of the Act, prior to passing the final assessment order. 8. The assessee is in appeal before us raising the following grounds:- "The following grounds are independent of and without any prejudice to one another: 1. On the facts and circumstances of the case and in law, the order dated March 31, 2021 passed by the Ld. Pr. CIT under section 263 of the Act is....
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....other hand, the ld. DR has relied on the judgement of the Hon'ble Madras High Court in the case Enfinity Solar Solutions (P) Ltd. vs. DCIT (2021) 129 taxmann.com 172 (Madras) to submit that in cases when the Tribunal reinstates the matter to TPO, the AO is not supposed to pass a draft assessment order and there is no illegality in the assessment order. The ld. DR has submitted that the judgements relied on by the ld. AR are not applicable as the same were not in regard to remand proceedings, but, were related to the original proceedings. 11. We have given thoughtful consideration to the matter on record and the case laws cited. It is the admitted state of affairs that the TPO had passed an order dated 29.10.2018 in furtherance of the Tribunal's order of remand dated 15.09.2016 and the TPO had reproduced the relevant part of the order of the Tribunal and we consider it appropriate to reproduce the same as follows:- "2. The relevant Para of the order of Hon'ble ITAT is reproduced hereunder:- "As is evident from ld. DRP's direction, it has accepted the assessee's contention regarding limiting the expenses to the percentage of revenue from the AE i.e. 47%. Thus, though ld. DRP did....
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....her the AE derived any benefit or mark up on the price charged by the vendor for supply of raw materials to assessee's AE, which it has sold to assessee. With these observations, the Income Tax Appellate Tribunal remitted the issue for selection of appropriate method to Assessing Officer for fresh consideration. 19. Thus, it is not the case, where the entire order is set aside and a direction is issued, remanding the matter to conduct a fresh adjudication of the entire issues by following the procedures contemplated under Section 144C of the Income Tax Act. The Income Tax Appellate Tribunal, in clear terms, directed the Assessing Officer to decide regarding the application of method i.e., whether CUP method or TNMM as a most appropriate method. Thus, a specific issue was directed to be decided by the Assessing Officer and a direction was issued to the Assessing Officer to make it clear that the assessee is at liberty to raise any other grounds in support of the claim of the assessee in this case. The ITAT further held that the matter was remitted. The issue regarding selection of most appropriate method by the Assessing Officer / Transfer Pricing Officer and has not decided o....
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....annot be accepted from ld. DR that he would still press that there was no requirement of passing a draft assessment order. Thus the order passes was not in accordance with law. 16. Furthermore, coming to the exercise of jurisdiction by invoking clause (c) of Explanation 2 of Section 263(1) of the Act, it comes up that the same has been inserted w.e.f. 01.06.2015 and the clause (c) provides that in case the assessment order has not been made in accordance with any order, directions or instructions issued by the Board u/s 119 of the Act, the assessment order shall be deemed to be erroneous in so far as it is prejudicial to the interests of the Revenue. 16.1 Now Circular No.05/2010 of CBDT dated 03.06.2010 is in the form of explanatory notes to the provisions of Finance (No.2) Act, 2009 and Circular No.09/2013 dated 19.11.2013 is only making consequential amendments in the explanatory Circular No.05/2010 dated 03.06.2010. We are of the considered view that every circular or communication of the Board cannot be considered to be issued by the Board u/s 119 of the Act, which are meant for issuing orders, instructions and directions and same when issued u/s 119 of the Act specifically m....