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2023 (9) TMI 1080 - AT - Income TaxRevision u/s 263 - TP Adjustment - international transaction with its Associates Enterprises (AEs) - CIT concluded AO’s failure to examine the issue by not referring the SDT[specified domestic transactions] to TPO - HELD THAT:- There is no dispute that the AE while filing return of income, in its report in Form 3CEB reported various international as well as specified domestic transfer. The assessing office made reference to TPO for determination of Arm’s length price of certain international transactions only. Admittedly the assessee reported specified domestic transactions with its associated enterprises for more than Rs. 47.00 Crore, which is more than the threshold limit of Rs. 10.0 Crore for making reference to the TPO. The specified domestic transaction which consist of transfer of steam from boiler unit is of Rs. 23.65 Crore. Thus, admittedly remaining specified domestic transaction of more than threshold limit of Rs. 10.00 Crore, nowhere discussed examined or disallowed by assessing officer. Deduction of section 80IA disallowed on the basis of finding of TPO in earlier years - Such action of assessing office in not in accordance with mandate of CBDT Circular no.3 of 2016. There is no dispute that the Circulars of CBDT is binding on the assessing officer. So far as other / remaining specified domestic transaction of more than Rs. 23 Crore, the assessment order is totally silent, hence, the assessment order is certainly not only erroneous on such issue but so far as prejudicial to the interest of revenue. In absence of reference to TPO with regard to such domestic transaction, the transaction remained unexamined. The specified domestic transaction has direct bearing on the computation of income, therefore, to that extent it is certainly prejudicial to the interest of revenue. Further clause (c) of Explanation-2 of section 263 is also attracts in the present case. In our considered view the twin conditions for invoking the jurisdiction under section 263 is fully met out. PCIT while granting approval of reference to TPO with regards to international transaction reported by AE, considered the issue of specified domestic transaction and now cannot review of decision of his predecessor and that impugned order will enlarge the period of limitation for passing order by TPO - We are not convinced with such submission of ld AR for the assessee, once the order passed by assessing officer is found to be erroneous and so far as prejudicial to the interest of revenue and stand revised, all necessary legal consequences are to be followed as per the statutory provisions. The AO or TPO will be bound to pass order giving effect as per the statutory proceeding. And there is no such enlargement of period of limitation as argued by ld AR for the assessee. We are also not convinced with the submissions that the ld PCIT has revived order of his predecessor by passing order under section 263. As recorded earlier that once it is proved that assessment order is erroneous and prejudicial to the interest of revenue, the PCIT has no option except to exercise his jurisdiction under section 263. There is no bar in section 263 that the ld PCIT cannot revise the issue where it contained the determination of Arm’s Length Price. All the grounds of appeal raised by the assessee dismissed.
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