TaxTMI 
TaxTMI 
2026 (7) TMI 689
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....is justified allowing the ground number 3 of the assessee where the assessment order dated 31.12.2018 passed u/s 143(3) of the Act has been rendered invalid ab-initio despite the fact that assessment order has been passed within the normal security limitation i.e. 31.12.2018 as no reference was made to the Transfer Pricing Officer by Assessing Officer. 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,94,39,817/- u/s 35(2AB) towards R&D expenditure. No reconciliation was provided by the assessee on the capital expenses wherein deduction claimed u/s 35(2AB) of the Act is not considered for computing depreciation u/s 32 of the Act. 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 20,18,64,525/- u/s 41 on account of sundry creditors where the assessee failed to produce correct and complete list of creditors and other supporting documents. 4. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 10,31,638/- made u/s 14A read with Rule 8D. The provision of Section 14A are applicabl....
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.... specified domestic transactions, followed the TPO order for immediately preceding assessment year i.e. 2015-16, and made enhancement by way of TP adjustment to ALP wrt specified domestic transactions proportionately, wherein ALP adjustment to specified domestic transactions were added by the AO to the income of the assessee to the tune of Rs. 1,49,48,643/-, being 3.6% of domestic transactions of Rs. 41,52,40,079/- as shown by the assessee company in its books of accounts. Thus, there was no TP reference made by the AO u/s 92CA(1) of the 1961 Act to the TPO to determine ALP of the specified domestic transactions. 4.2.1 The assessee being aggrieved filed first appeal with ld. CIT(A), and main bone of contention of the assessee was that the AO could not have made TP additions by way of ALP adjustment to specified domestic transactions without referring the matter to TPO as is mandated u/s 92CA(1). The assessee contended before the ld. CIT(A) that the final assessment order dated 31.12.2018 passed by the AO u/s 143(3) is void ab-intio and invalid in law, as it is contrary to the provisions of Section 92C(3) if the 1961 Act, which necessitates passing of draft assessment order u/s 1....
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....d such adjustment has been upheld by the judicial authorities or pending in appeal ; and c) where search and seizure or survey operations have been carried out under the provisions of the Income-tax Act and findings regarding transfer pricing issues in respect of international transactions or specified domestic transactions or both have been recorded by the Investigation Wing or the AO. *** *** 3.7 For administering the transfer pricing regime in an efficient manner, it is clarified that though AO has the power under section 92C to determine the ALP of international transactions or specified domestic transactions, determination of ALP should not be carried out at all by the AO in a case where reference is not made to the TPO. However, in such cases, the AO must record in the body of the assessment order that due to the Board's instruction on this matter, the transfer pricing issue has not been examined at all. *** ***" 4.2.2.The ld. CIT(A) observed that the instant case is not covered by clause 3.3 of the aforesaid CBDT instructions as none of the stipulated conditions therein stood fulfilled, and as a result ld. AO did not r....
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....ustment to specified domestic transactions were added to the income of the assessee to the tune of Rs. 1,49,48,643/- by computing ALP of specified domestic transactions. In our considered view, the AO ought and should have made reference to TPO to compute ALP wrt specified domestic transactions, instead of computing ALP and consequently making TP adjustment himself, albeit it was made by the AO based on TPO order for immediately preceding assessment year i.e. assessment year 2015-16. Reference is drawn to provisions of Section 92CA(1). However, it could not be said that the AO acted without any basis as clause 3.3 of the CBDT instructions dated 10.03.2016 supports the stand of the AO, which reads as under: "3.3 Cases selected for scrutiny on non-transfer pricing risk parameters but also having international transactions or specified domestic transactions shall be referred to TPO's only in the following circumstances: a) Where the AO comes to know that the taxpayer has entered into transactions or specified domestic transactions or both but the taxpayer has either not filed the Accountant's report under Section 92E at all or has not disclosed the said transactions ....
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.... G Asia Holdings India Private Limited in CA no. 6144 of 2019 dated 13th August, 2018, which was infact rightly relied upon by ld. CIT-DR, wherein Hon'ble Supreme Court has restored the matter to the file of the AO so that appropriate reference could be made to the TPO, and therefore it would be upto the authorities and the Commissioner concerned to consider the matter in terms of Sub-section (1) of Section 92CA of the 1961 Act. The specified domestic transactions entered into by the assessee in the instant case before us were to the tune of Rs. 41,52,40,079/-, which are above threshold limit of Rs. 20 crores. We, therefore, following the judgment and order of the Hon'ble Supreme Court in the case of SG Asia Holdings (India) Private Limited(supra), set aside the issue of computing ALP of the specified domestic transactions as well international transactions(if any) as were entered into by the assessee, to the file of the AO so that appropriate reference could be made to the TPO, and therefore it would be upto the authorities and the ld. PCIT (or ld. Commissioner) concerned to consider the matter in terms of Sub-section (1) of Section 92CA of the 1961 Act. The ld. CIT-DR also rightl....