TMI Blog2020 (10) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... r has replied on 23.10.2019 enclosing various details on the computation of the ALP as sought for by the Officer. The affidavit filed in support of the writ petition however, is silent in regard to these facts. The petitioner has thus not only cooperated and participated in the conduct of assessment but has also filed objections before the DRP that are pending disposal. WP disamissed. - W.P. Nos.5760 & 35246 of 2019 and WMP. Nos.6581, 6583, 36045 and 36047 of 2019 - - - Dated:- 15-10-2020 - THE HONOURABLE DR. JUSTICE ANITA SUMANTH For Petitioner : Mr. R. Sivaraman For Respondents : Mrs. Hema Muralikrishnan Senior Standing Counsel COMMON ORDER The petitioner is a private limited company engaged in the business of providing Software Business and Technology Solutions to its clients. The challenge in WP.No.5760 of 2020 is to an order passed by the 2nd respondent/Assistant Commissioner of Income Tax dated 19.12.2018 under the provisions of Sections 92CA(2) and 92D(3) of the Income Tax Act, 1961 (in short Act ) for assessment year (AY) 2016-17. Initially the petitioner had enjoyed an interim order to the effect that while assessment proceedings may continue, no or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere arithmetical comparison but should be seen to connote a determination of the pricing methodology of the international transactions. (iv) On 24.07.2017 PCIT recorded satisfaction for the reference sought and granted approval to the AO to make a reference to the TPO. Once again, according to the petitioner, the approval granted by the PCIT is for a different reason from that stated in the notice under Section 143(2). (v) On 06.08.2018 R1 makes a reference to R2 to compute the ALP of Specified Domestic Transactions (SDT). (vi) Since the petitioner had not engaged in SDT, R1 issued an amended reference to R2 to compute the ALP of international transactions. (vii) Impugned notice dated 19.12.2018 was issued by R1 to R2. (viii) On 03.01.2019, the petitioner objected to the reference video communication dated 19.12.2018, raising the very dispute as raised in this writ petition, that the limited scrutiny notice dated 27.07.2017 only necessitated a reconciliation between Form-3CEB and the return of income filed, and this exercise did not involve the examination of Transfer pricing risk parameters. There was thus no necessity to make a reference to the TPO to det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the writ petitioner filed WP.No.5760 of 2020 challenging the reference made by R1 to R2 dated 19.12.2018 and obtained interim protection against finalization of assessment on 28.02.2019, 08.03.2019 and 14.03.2019 effective till 29.03.2019, The interim protection was not extended thereafter. (xi) On 11.10.2019, a show cause notice was issued by R2 for the purpose of determining ALP to which a reply was filed on 29.03.2019 by the petitioner. (xii) On 31.10.2019 R2 passes the Transfer pricing order under Section 92CA of the Act. (xiii) A draft order of assessment came to be passed by R3 under Section 144C of the Act on 27.11.2019 and the aforesaid order came to be challenged in WP.No.35246 of 2019. (xiv) The narration in the impugned order is to the effect that the assessment has been selected through CASS with the reason large aggregate value of total employee cost in comparison to aggregate value of international taxation as per books of accounts . According to the petitioner, the reasons adduced for selection of the assessment for scrutiny as per the draft order of assessment varies with the reasoning reflected in the scrutiny notice dated 27.07.2017. (x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TP01 .04 Large Aggregate value of total employee cost is comparison to Aggregate value of international transactions as per books of accounts (T.P. Risk Parameter) (S. No. 8 of Form 3CEB and Part AP L of ITR) Whether value of international transactions are correctly shown in Form 3CEB and return of income 9. Though initially a reference was made to the determination of value of SDT, upon ascertaining that the petitioner had not engaged in SDT, the AO seeks approval from the PCIT to make a reference to the TPO. The reason for reference at column-4 cites the T.P. risk parameters as per CASS description extracted above. The approval sought is specifically in regard to the aggregate value of total employee cost in comparison to aggregate value of international transactions as per books of accounts. 10. The condition at para-3.4 of the Instruction is to the effect that the issue on which a reference was thought to be necessary has to be explicitly mentioned in the AOs letter seeking a reference to TPO. Such letter of the AO dated 17.07.2018 is found to have complied with the aforesaid c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CEB and CASS reasons screen shot in the above mentioned case are enclosed herewith for your kind reference. 11. A perusal of the above documents leads me in no doubt that the proper procedure has been followed by the Assessing Officer in approaching the PCIT seeking approval for reference. The PCIT, on 24.07.2018 grants approval in the following terms: Letter dated 19.7.18 received from Addl CIT Corp.3 requesting approval of Pr.CIT to refer the following cases to TPO for computation of Arms Length Price from International and specified domestic transactions 1. M/s. Trivent Systems Pvt Ltd 2. M/s. Trimble Information Technologies India Pvt Ltd 3. M/s. Takato India Pvt Ltd 4. M/s. Transsys Solutions Pvt Ltd. 5. M/s. Toshiba JSW Power Systems Pvt Ltd 6. M/s.Taeyang Metal India Pvt Ltd 7. M/s. Thinkbig Edu-Venture (India) Pvt Ltd 8. M/s. The Deal India Pvt Ltd. Addl CIT has submitted that as per Para 3.2 of Inst. No.3/2016 all the cases selected for scrutiny on TP risk parameter have to be referred to TPO after obtaining approval of Pr.CIT. File put up for Pr.CIT approval I have gone through the proposals and for the reasons g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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