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2020 (1) TMI 972 - SCH - Income TaxReview petition - whether referring to guidelines issued by the CBDT in Instruction No.3/2003 the Tribunal was right in observing that by not making reference to the TPO, the AO had breached the mandatory instructions issued by the CBDT? - in this Review Petition it is urged that in view of Circular dated 08.08.2019, benefit ought to be extended in favour of the Review Petitioner as the tax effect in the matter is stated to be less than the limit prescribed in the Circular dated 08.08.2019 - HELD THAT - Since the matter has been restored to the file of the Assessing Officer so that appropriate reference could be made to the Transfer Pricing Officer (TPO), at this stage the benefit of the aforesaid circular dated 08.08.2019 cannot be extended. Review Petition is dismissed.
Issues:
1. Compliance with CBDT guidelines regarding reference to Transfer Pricing Officer (TPO). 2. Consideration of Circular dated 08.08.2019 for extending benefits based on tax effect limit. Comprehensive Analysis: Issue 1: Compliance with CBDT guidelines regarding reference to Transfer Pricing Officer (TPO) The Supreme Court, in this judgment, addressed the issue of compliance with CBDT guidelines regarding the reference to the Transfer Pricing Officer (TPO). The Court acknowledged that the Tribunal was correct in observing that the Assessing Officer had breached mandatory instructions by not making reference to the TPO. The Court found the Tribunal's conclusion on this matter to be correct. However, the Court also noted that the Tribunal should have accepted the submission made by the Departmental Representative and restored the matter to the file of the Assessing Officer for appropriate reference to the TPO. The Court directed that the Assessing Officer should now take necessary steps in accordance with Instruction No.3/2003 issued by the CBDT. Issue 2: Consideration of Circular dated 08.08.2019 for extending benefits based on tax effect limit The Review Petition argued for the extension of benefits in favor of the Petitioner based on a Circular dated 08.08.2019, citing that the tax effect in the matter was below the prescribed limit in the Circular. However, the Court noted that since the matter had been remanded to the Assessing Officer for appropriate reference to the TPO, the benefit of the Circular dated 08.08.2019 could not be extended at that stage. Consequently, the Court dismissed the Review Petition based on this argument. In conclusion, the Supreme Court's judgment emphasized the importance of compliance with CBDT guidelines regarding the reference to the Transfer Pricing Officer and highlighted the need for proper adherence to such instructions. Additionally, the Court clarified that the benefits based on Circulars would be applicable based on the specific circumstances and stages of the proceedings, as evidenced by the dismissal of the Review Petition in this case due to the matter being remanded for TPO reference.
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