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2011 (12) TMI 227 - HC - Income TaxTransfer Pricing A.O. seeked approval of Commissioner for reference u/s 92CA(1) to the Transfer Pricing Officer(TPO) reliance placed upon an Instruction no. 3/2003 of the CBDT which stipulates that all cases where international transactions exceeding Rs. 15 crores are involved shall within the meaning of Section 92 be selected for compulsory scrutiny assessee contended breach of the principles of natural justice by the TPO invalidity of approval granted by the CIT to the A.O. for reference u/s 92CA(1) and order of TPO Held that - In the present case Commissioner granted his approval on 30 September 2009 and TPO issued a notice to the Assessee on 3 March 2010. The Petitioner participated in the proceedings before the TPO and submitted its representations. The TPO has now rendered a determination on 31 October 2011. At this stage it would be inappropriate for this Court to exercise its writ jurisdiction under Article 226 of the Constitution to entertain a Petition challenging the validity of the reference made by the A.O. to the TPO on 9 October 2009 and the underlying approval of the Commissioner dated 30 September 2009 both of which have been issued over two years ago. Petitioner has a remedy of moving appeal against the draft order before the Dispute Resolution Panel. - Decided against the assessee.
Issues Involved:
1. Validity of the order dated 31 October 2011 by the Transfer Pricing Officer. 2. Validity of the reference made on 9 October 2009 by the Assistant Commissioner of Income-tax to the Transfer Pricing Officer. 3. Validity of the approval granted by the Commissioner of Income-tax - VI. Issue-wise Detailed Analysis: 1. Validity of the order dated 31 October 2011 by the Transfer Pricing Officer: The Petitioner challenged the order dated 31 October 2011 passed by the Transfer Pricing Officer (TPO), which determined the Arm's Length Price (ALP) for the international transactions disclosed by the Petitioner, including a corporate guarantee provided to its Associated Enterprises (AEs). The Petitioner argued that there was a breach of the principles of natural justice by the TPO, asserting that the requirements of the Proviso to Section 92C(3) were not fulfilled. However, the court found that the Petitioner was on notice of the nature of the enquiry pursued by the TPO and had participated in the proceedings. The TPO had issued a notice detailing the required information and the basis for the disclosure, and the Petitioner had submitted detailed responses. Therefore, the court concluded that there was no breach of natural justice principles. 2. Validity of the reference made on 9 October 2009 by the Assistant Commissioner of Income-tax to the Transfer Pricing Officer: The Petitioner questioned the validity of the reference made by the Assistant Commissioner of Income-tax to the TPO on 9 October 2009, arguing that the Assessing Officer (AO) had not fulfilled the jurisdictional condition necessitated for making a reference. The AO had relied on an instruction of the Central Board of Direct Taxes (CBDT) stipulating that all cases involving international transactions exceeding Rs. 15 crores be selected for compulsory scrutiny. The court noted that the AO had stated in her order that she considered it necessary or expedient to make the reference and had sought and obtained the approval of the Commissioner. The court found that the Petitioner had participated in the proceedings before the TPO and had ample opportunity to present its case. Consequently, the court held that it would be inappropriate to exercise its writ jurisdiction under Article 226 of the Constitution to entertain the Petition challenging the reference made by the AO to the TPO. 3. Validity of the approval granted by the Commissioner of Income-tax - VI: The Petitioner also challenged the approval granted by the Commissioner of Income-tax - VI, arguing that the Commissioner had not acted in accordance with the statute when granting approval for the reference. The court observed that the Commissioner had granted approval on 30 September 2009, and the Petitioner had participated in the subsequent proceedings before the TPO. The court emphasized that a comprehensive remedy was available to the Petitioner before the AO framed an order of assessment, including the opportunity to submit objections to a draft order and to move the Dispute Resolution Panel. The court concluded that there was no merit in the Petitioner's submission and found no case for interference under Article 226 of the Constitution. Conclusion: The court dismissed the Petition, stating that no case for interference under Article 226 of the Constitution was made out. The court clarified that the Petitioner could urge all appropriate grounds and contentions in the available appellate remedies. The court also noted that the validity of the CBDT instructions had been upheld by the Delhi High Court in a previous case.
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