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TMI Blog2022 (12) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer Pricing Officer (TPO). The TPO determined short fall in ALP to the extent of Rs.29,60,30,584/-. The addition suggested by the TPO was incorporated in the draft order of assessment by the AO. Against the draft assessment order, assessee filed objections before the Dispute Resolution Panel (DRP). The DRP issued directions dated 4/7/2018 based on which, the impugned final order of assessment order was passed by the AO. The assessee is aggrieved by the addition made in the final order of assessment in the form of shortfall in determination of ALP and is therefore preferred the present appeal before the Tribunal. 3. The assessee has raised the grounds with regard to validity of the reference made by the AO to the TPO u/s 92CA of the Act and in this regard has raised ground No.2 which reads as follows:- 2. "Jurisdiction 2.1, That the learned lower authorities erred in law and on facts in upholding the reference u/s 92CA of the Act as valid even though the reference is not in accordance with the relevant instructions of the Central Board of Taxes. 2.2. That the learned lower authorities erred in law and on facts in rejecting the contentions on jurisdiction just because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the TPO by the AO, after obtaining the approval of the jurisdictional PCIT or CIT. 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 TPOs only in the following circumstances: (a) where the AO comes to know that the taxpayer has entered into international 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 in the Accountant's report filed; (b) where there has been a transfer pricing adjustment of Rs. 10 Crore or more in an earlier assessment year and such adjustment has been upheld by the judicial authorities or is 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. 3.4 For cases to be referred by the AO to the TPO in accordance with pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gory comprises of cases that are selected for scrutiny on the basis of "non transfer pricing risk parameters". For the first category, which has been dealt with at para no.3.2 of the 2016 Instruction, it has been stated that all the cases selected for scrutiny on the basis of transfer pricing risk parameters have to be mandatorily referred by the AO to the TPO for determination of ALP. In this case the reasons for selection of assessee's case for scrutiny is not on the basis of transfer pricing risk parameters. Thus para 3.2 of the 2016 Instructions does not apply to the facts of the instant case requiring any mandatory reference to be made by the AO to the TPO. The second main category of the cases selected for scrutiny on the basis of non-transfer pricing risk parameters has been dealt with at para 3.3 of the 2016 Instruction. This mandates making a reference by the AO to the TPO for the ALP determination in one or more of the three circumstances enumerated in paras (a) to (c). Para 3.3(b) of the 2016 Instruction has been invoked by the AO for seeking approval from the Pr. CIT as well as making a reference to the TPO for the determination of the ALP. The AO sought approval of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Nayana P Dedhia 270 ITR 572 (AP) assessee therefore prayed that the order passed u/s 92CA of the Act may be quashed. 7. The DRP however in its directions held as follows:- "Panel: It is the contention of the assessee (hat the AO has not followed the procedure and instructions of Board while referring the case to the TPO. During the DRP proceedings the matter was referred to the AO for examination and report. The AO vide letter dated 22/06/2018 informed DRP that the case was referred to TP'O as per (CBDT instruction No. 3 of' 2016 after obtaining approval of CIT - LTU as required under the Act. Sec 92CA gives power to the AO to refer the case TPO for determination of Arm's Length Price in appropriate cases. CBDT instructions provide suitable guidelines to AO for proper administration of the discretion provided to the AOs. In this case the CIT LTU gave approval vide Ref. 95/Tech1/PCIT(LTU)/2016-17 after noting that the International transaction for the current year is 107.12 crore and that there was an adjustment in the earlier years. After receiving the reference from AO the TPO proceeded with determination of the Arm's length price and issued show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pricing Issue. However, as per CBDT Instruction 3 of 2016 dated 10.032016 para 3.3 (b), the Assessing Officer has reiZ'rred the Cuse to pricing Officer with a remark "TP adjustment for AY 2011-12 is above 10 Crore" after prior approval of CIT, LTV, Bangalore on The copy of reasons for scrutiny selection under CASS, reference to TPO and approval Of CIT(LTU), Bangalore for referring the case to TPO are also enclosed for kind reference Submitted for kind consideration Yours faithfully, [Pradeep S, IRSI Joint Commissioner of Income Tax(OSD), Circle-3(1)(1), Bangalore. 10. The ld.counsel for the assessee has filed a memo dated 28/5/2022 in response to the aforesaid letter of the JCIT (OSD) dated 18/3/2022 enclosing Final Assessment order and ITAT order for AY 2011-12, to substantiate the Assessee's claim that no TP adjustment of Rs. 10 crore or more was made in that year. The order u/s.92CA for AY 2011-12 and ITAT Order for AY 2011- 12 in Assessee's case was also filed. A perusal of the above documents shows that TP adjustment of more than Rs. 10 crore has not been AY 2011-12. Since the conditions mentioned in p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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