TaxTMI 
TaxTMI 
2026 (9) TMI 1172
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....umstances of the case and in law, 1. Not following the specific directions of the Income-tax Appellate Tribunal ("ITAT"), Mumbai 1.1. The Learned Transfer pricing Officer ("TPO")/ Learned Assessing Officer ("AO") and the Hon'ble Dispute Resolution Panel ("DRP") has erred in not following the specific directions of the ITAT, Mumbai given vide order dated 7th February, 2013, in entirety and spirit. 2. Holding that the Appellant has a Permanent Establishment ("PE") in India: 2.1. The Learned TPO/ Learned AO/ Hon'ble DRP has erred in holding that the Appellant has a Permanent Establishment ("PE") in India through which it carries out its sales in India. 2.2. The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, it has no PE in India and the stand taken by the Learned TPO/ Learned AO/ Hon'ble DRP in this regard is erroneous, misconceived and not in accordance with law. 2.3. The Appellant submits that the Learned TPO/ Learned AO/ Hon'ble DRP has erred in arriving at various unwarranted and erroneous conclusions unsupported by any relevant material to hold that the Appella....
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....ppellate Tribunal. 5.4. The Appellant submits that the Assessing Officer be directed to delete the interest levied on it. 6. General: 6.1. The Appellant craves leave to add, alter, amend, substitute and / or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal." CO No. 70/MUM/2017; revenue's cross-objection 1.Whether on the facts and in the circumstances of the case, the Ld. DRP has erred in providing relief to the assessee in respect of adjustment of income attributable to PE, made by the TPO to the tune of Rs.61,32,34,759/- based on Singapore database (or adjustment of Rs.29,78,91,272 made by TPO on alternative basis based on Indian comparables) based on arms length principles and the adjustment made by the TPO should be restored ?." 2. Whether on the facts and in the circumstances of the case and in law, the Ld. DRP has erred in holding that combined profits of AEs cannot exceed Rs. Rs.11,07,20,280 as the combined profits of AEs have been estimated by the TPO as Rs. 61,32,34, 759/- (or adjustment of Rs. 29,78,91,272 made by TPO on alternative basis) on the basis of arm....
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....nish its return of income on or before 18/11/2009. In response thereto, the assessee filed its return of income on 20/11/2009, declaring total income at Nil. In the notes forming part of the return, the assessee stated that the return was being filed under protest and in response to the notice issued under section 142(1) of the Act. 2.3.1. It was further submitted that the assessee did not have a PE in India within the meaning of Article 5 of the India-Singapore DTAA and, consequently, the profits arising from its Indian operations were not liable to tax in India under Article 7 of the said DTAA. 2.4. After considering the submissions of the assessee the Ld.AO passed draft assessment order dated 31/12/2009 making 100% addition of the rebate incentives received by IMIPL for the services provided by IMIPL that were paid directly by the vendors to IMIPL, by treating IMIPL to be PE of assessee in India. Aggrieved by the draft assessment order, the assessee filed objections before the Dispute Resolution Panel (DRP). 2.5. The DRP, disposed of the same vide its order dated 29/09/2010 by rejected the assessee's contention and confirmed the proposed assessment order. Based on th....
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...., it accepted assessee's contention that the transfer pricing adjustment could not exceed the entire profits of the assessee from its Indian operations, quantified at Rs.11,07,20,280. 3.4.1. On receipt of the DRP direction, the Ld.AO passed the impugned final assessment order dated 28/01/2016, by determining the income of assessee at Rs.10,51,84,266, being 95% of Rs.11,07,20,280. Aggrieved by the order of the Ld.AO the assessee is in appeal before this Tribunal. 3.5. At the outset, the Ld.Sr.Counsel submitted before this Tribunal, that the assessee filed applications seeking admission of additional grounds dated 31/03/2023, 11/10/2022 and 28/03/2023. The Ld.Sr.Counsel submitted that, additional grounds raised vide applications dated 11/10/2021 and 28/03/2023 are challenging validity of the order passed by the Ld.TPO and Ld.AO to be passed beyond the period of limitation. He submitted that these application may be treated infructuous pursuant to the amendments brought in by the Finance Act 2025. Accordingly, additional grounds raised vide applications dated 11/10/2022 and 28/03/2023 stands dismissed infructuous at this stage. However, the Ld.Sr.Counsel submitted t....
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....re consideration of any fresh facts or examination of any new material. Respectfully following the decisions of Hon'ble Supreme Court in case of National Thermal Power Co. Ltd. Vs. CIT reported in (1998) 229 ITR 383 and Jute Corporation of India Ltd. Vs. CIT reported in 187 ITR 688, we admit the additional ground raised by the assessee. Accordingly, the additional ground raised vide application dated 31/03/2023 filed by assessee stand admitted. The legal issue raised in the additional ground goes to the root cause of the assessment, it is necessary to consider this ground first. 5.1. The Ld. Sr.Counsel submitted that the reference made by the Ld.AO to the Ld.TPO during the set-aside proceedings was legally unsustainable. It was submitted that the scope of the remand was governed by paragraphs 9 and 10 of the Tribunal's order dated 7/02/2013. He further submitted that, section 92CA(1), read with sections 92(1) and 92B(1) of the Act, requires the Ld.AO to refer the relevant international transactions to the Ld.TPO for determination of its ALP. In the present case, according to the Ld.Sr.Counsel, the reference made by the Ld.AO was vague and did not specify international tra....
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....e Ld.TPO under section 92CA. Therefore, the assessee could not rely upon the said instruction to contend that the reference was invalid for want of a prior hearing. 5.6. The Ld.DR further submitted that CBDT Instruction No. 15/2015, which, according to the assessee, required an opportunity of being heard before making a reference to the Ld.TPO, was issued subsequently and was prospective in operation. The Ld.AO, while making the reference during the relevant proceedings, could not be expected to comply with a procedural requirement which had not been prescribed or introduced at the relevant point of time. The subsequent instruction, therefore, could not be invoked retrospectively to invalidate a reference which was otherwise validly made under section 92CA of the Act. 5.7. In response to the Revenue's submission, the Ld.Sr.Counsel submitted that CBDT Instruction No. 3/2003 did not contemplate an opportunity of hearing before making a reference to the Ld.TPO, the Ld.Sr.Counsel relied upon the decision in Indorama Synthetics (India) Ltd.(supra), particularly paragraphs 16, 17, 20 and 21, and contended that the instruction envisaged an opportunity of being heard before makin....
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.... of the Tribunal in Sava Healthcare Ltd. v. ACIT, reported in (2019) 107 taxmann.com 226, particularly paragraphs 103 to 107, wherein, according to the Ld.Sr.Counsel, it was held that the Ld.TPO could not perform functions entrusted to the Ld.AO. In response to the Revenue's submission that an appeal against the decision in Sava Healthcare Ltd.(supra) was pending before Hon'ble Bombay High Court, the Ld.Sr.Counsel submitted that the mere filing of an appeal did not dilute the relevance of the decision of the Tribunal unless a contrary view had been expressed by Hon'ble High Court. The Ld.Sr.Counsel, thus submitted that order dated 30/01/2015 passed by the Ld.TPO be quashed on the ground that the Ld.TPO acted beyond the scope of his jurisdiction. We have perused the submissions advanced by both sides in light of records placed before us. 6. The principal controversy arising for our consideration is whether, the reference made by the Ld.AO to the Ld.TPO during the set-aside proceedings was valid in law and, consequently, whether the Ld.TPO was competent to determine the existence of a PE of the assessee in India and the taxability of the profits attributable thereto....
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....ining the ALP of an international transaction, while section 92C(2) provides for the manner in which the most appropriate method is to be applied. The statutory function of the Ld.TPO under section 92CA(3) is to determine, after considering the evidence produced by the assessee and the relevant material gathered by him, the ALP in relation to the international transaction referred to him, in accordance with section 92C(3). The expression "in relation to" cannot be construed as conferring an unrestricted power to adjudicate matters falling outside the statutory function of determining the ALP. 6.5. The scheme of section 92CA further reinforces this position. Under section 92CA(2), the notice issued by the Ld.TPO requires the assessee to produce evidence in support of the computation of the ALP in relation to the international transaction referred to him. Even where an additional international transaction comes to the notice of the Ld.TPO during the proceedings, sections 92CA(2A) and 92CA(2B), as applicable to the relevant assessment year, specifically provide the statutory basis for bringing such transaction within the transfer-pricing framework. These provisions do not authorise....
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....e under section 92CA, confer upon the Ld.TPO jurisdiction over the very issue which had been restored to the Ld.AO for fresh adjudication. 6.10. There is, however, an additional and independent infirmity in the proceedings. Even assuming that a reference to the Ld.TPO could validly be made is a set-aside proceedings, section 92CA(1) authorises the Ld.AO to refer the computation of ALP in relation to an international transaction to the Ld.TPO. The jurisdiction of the Ld.TPO is strictly confined to determining the ALP of the international transaction referred to him by the Ld.AO in accordance with section 92C. 6.11. However, in the present case, we note that the reference made by the Ld.AO did not identify any international transaction between the assessee and IMIPL(Indian company) in respect of which the determination of the ALP was sought. The reference proceeded on the general observation that IMIPL was carrying on the actual business on behalf of the assessee and that, in view of the additional functions allegedly performed by IMIPL, the transactions required examination from the perspective of the arm's length principle. Such a general reference, without identifying th....