Pr. CIT v. Obulapuram Mining Company (P) Ltd.

SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2020 TaxPub(DT) 4177 (Karn-HC) : (2020) 428 ITR 0322

INCOME TAX ACT, 1961

Section 263

Where reference to the TPO is required to be made under sub-section (1) of section 92CA and in view of unambiguous language employed in Pr. CIT v. S.G. Asia Holdings (India) Pvt. Ltd. [Civil Appeal No. 6144 of 2019, dt. 13-8-2019], Instruction No.3/2003 issued by the CBDT was mandatory, where two views are possible and if AO has taken a particular view, it cannot be treated as erroneous, therefore, CIT was not justified in invoking provision under section 263.

Revision under section 263 - Validity - AO himself determined TP adjustment without referring the matter to TPO -

Assessee was engaged in the business of mining and export of iron ore and it has sold iron ore to M/s. G at a much lower price when compared with export of iron, in other overseas transactions. AO recorded that assessee sold iron ore to various overseas buyers at price between USD 144.25 and USD 165.22. However, assessee has sold iron ore having the same content to M/s. G between USD 76.14 and USD 98.24. AO did not make any reference for determination of ALP in respect of international transactions, though the transactions had exceeded Rs. 15 crores. The Instruction No. 3/2003 issued by CBDT mandates that wherever the aggregate value of international transaction exceeds Rs. 5 crores, the case must be picked up for scrutiny under section 92CA and sent to TPO for determination of ALP. CIT, however, held the order of AO as erroneous and prejudicial to interest of revenue. Held: A reference to TPO is required to be made under sub section (1) of section 92CA. There was no amendment to the said section. Assessee was right in his submission to the extent that sub section (4) of section 92CA was substituted with effect from 1-6-2007. In view of the unambiguous language employed in Pr. CIT v. S.G. Asia Holdings (India) Pvt. Ltd. [Civil Appeal No. 6144 of 2019, dt. 13-8-2019], Instruction No. 3/2003 issued by the CBDT was mandatory. Where two views are possible and if AO has taken a particular view, it cannot be treated as erroneous. Assessee urged that power under section 263 cannot be invoked to correct each and every type of error. Therefore, order passed by CIT under section 263 was clearly unsustainable in law.

Followed:Pr. CIT v. S.G. Asia Holdings (India) Pvt. Ltd. [Civil Appeal No. 6144 of 2019, dt. 13-8-2019] and State of UP. & Anr. v. Synthetics & Chemicals Ltd. & Anr. (1991) 4 SCC 139. Relied:CIT v. Max India Ltd. 2007 (15) SCC 401 : 2007 TaxPub(DT) 1548 (SC), Malabar Industrial Co. Ltd. v. CIT (2000) 2 SCC 718 : 2000 TaxPub(DT) 1227 (SC), Vodafone India Service Pvt. Ltd. (formerly known as 3 Global Services Pvt. Ltd.) v. UOI 2013 SCC Online Bom 1534 : 2013 TaxPub(DT) 2842 (Bom-HC) Dy. CIT v. Tata Consultancy Services Ltd. & Vica-Versa 2016 TaxPub(DT) 0639 (Mum-Trib)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

IN THE KARNATAKA HIGH COURT