TMI Blog2023 (10) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... ority at the instance of assessee. In case, the ld. 1st Appellate Authority forms an opinion that ld. AO has committed an error by not making complete disallowance on all the limbs of Rule 8D, then, he could have issued a notice for enhancement of income by exercising his appellate power. Therefore, this issue ought to have not been taken up in 263 proceeding. The order of ld. Pr. CIT is not sustainable on the first-fold of reasoning given by him. As there is a domestic transaction between inter-related parties AO was required to make a reference to the ld. TPO mandatorily which he failed - We are of the view that Coordinate Benches have taken a view that since clause (i) of section 92BA stands omitted from the provision and omission of such is to be construed as if it never existed in the Statute Book and if it never existed in the Statute Book, then, no Arm s Length Price is required to be determined for a transaction with specified persons in section 40A(2)(b) of a domestic transaction. If no Arm s Length Price is required to be determined, then, no reference was required to be made. Therefore, on this fold of contention also, the order of the ld. Pr. Commissioner is not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic transaction between inter-related parties and ld. Assessing Officer was required to make a reference to the ld. TPO mandatorily. He failed to make such reference and, therefore, his order is erroneous. 5. In response to the notice of hearing, the assessee filed detailed reply and submitted that ld. Assessing Officer has accepted the claim of assessee after due examination of both the facts, but ld. Pr. CIT was not satisfied and passed the impugned order, whereby he set aside the issue to the file of ld. Assessing Officer for re-adjudication. 6. The ld. Counsel for the assessee while impugning the order of ld. Pr. CIT submitted that as far as the first fold of reasoning given by the ld. Pr. CIT is concerned, he submitted that the assessee has dividend income of Rs. 1,42,84,882/-, which was claimed as exempt. The ld. Assessing Officer has consciously considered this aspect. He has discussed this issue from paragraph no. 4 to paragraph no. 4.3 of the assessment order. The ld. Assessing Officer after taking cognizance of the investment disallowed the expenditure towards administrative cost under Rule 8D(2) at Rs. 44,02,222/-. The assessee is aggrieved with the computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is being selected on the basis of transfer pricing risk parameters, then, it was incumbent for the ld. Assessing Officer to make a reference to the ld. TPO regarding domestic transaction. But in case it is not selected for scrutiny on the basis of transfer pricing risk parameters, then, the conditions enumerated in paragraph no. 3.3 of the Circular would be applicable. He took us through these conditions and submitted that none of the conditions is available in the case of the assessee. 9. On the other hand, ld. CIT(DR) relied upon the order of the ld. Pr. CIT and submitted that a reference to the TPO ought to have been made. He drew our attention towards paragraph no. 4 4.1 of the order of the ld. Commissioner passed under section 263. 10. We have duly considered the rival contentions and gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not, it is pertinent to take note of this section. It reads as under:- 263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 11. A bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 12. In the light of above, let us examine the facts in the present case. As observed earlier, a perusal of the financial statement would indicate that the assessee was having more interest-free funds than the investment. The interest-free funds are to the tune of Rs. 381 crores, whereas the investment which yielded tax-f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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. 14. The ld. Counsel for the assessee took us through the notice issued under section 143(2) of the Income Tax Act, which is available on the paper book. As per this notice, the assessee was called upon to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson, then, Arm s Length Price of such transaction was required to be determined. This clause (i) of section 92BA has been omitted by way of an amendment carried out by Finance Act, 2017 w.e.f. 01.04.2017. The ld. Counsel has contended that since this clause has been omitted from the provision, therefore, as per Section 24 of General Clauses Act, it would be construed as if this clause never existed in the Statute Book. He pointed out that it is not repealed of section rather it is omission of a section. He submitted that this aspect has been considered by the Tribunal in the case of Eveready Industries India Limited vs.- PCIT in ITA No. 805/KOL/2019. He took us through the paragraph no. 30 of this order on page 23 and submitted that Tribunal has placed reliance upon its earlier decision of Coordinate Bench rendered in the case of DVC Emta Coal Mines Limited Ors vs.- ACIT in ITA Nos. 2430-2432/KOL/2017. Thus on the strength of this fold of contention, he submitted that if it is construed that this provision was never existed in the Statute Book, then, no reference ought to have been made to the ld. TPO. Finance Act, 2017 was passed before the ld. Commissioner took cognizance un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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