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2023 (6) TMI 260 - ITAT MUMBAIRevision u/s 263 - determination of ALP of transactions to TPO - non reference of matter of determination of ALP to the TPO by AO - HELD THAT:- In the instant case, we notice that the Instruction no.3/16 issued by CBDT mandates that the AO should refer the matter of determination of ALP of international transactions to TPO. As per paragraph 3.2 of the Instruction, the AO is required to refer the matter of determination of ALP of international transactions to the TPO after obtaining approval from PCIT/CIT, if the return of income of the assessee has been selected under “T.P risk” parameter. AO, in the instant case, did not refer the matter of determination of ALP to the TPO as per the mandatory requirement of Instruction No.3/2016. As per clause (c) of Explanation 2 to sec. 263, the order passed without complying with the instruction etc., issued by CBDT u/s 119 of the Act would render the order erroneous and prejudicial to the interests of revenue. Since Explanation 2 is a deeming provision, the same has to be read strictly and in the instant case, in our view, clause (c) of Explanation 2 shall squarely apply to the facts of the present case. Decided against assessee.
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