INCOME TAX ACT, 1961

--Transfer pricing--Reference to transfer pricing officerJurisdiction of transfer pricing officer, whether extend to transactions not referred to him--During the previous year under consideration, the assessee entered into international transactions with associated enterprises. The details of the said transactions were mentioned in Form 3CEB filed by the assessee. The Assessing officer had referred the case of the assessee to the Transfer Pricing Officer (TPO), under the provisions of section 92CA(1). The TPO adjusted an amount of Rs. 32,92,83,589 attributable to the difference in arm's length price of the international transactions entered into between the assessee and its associated enterprise. The said adjustment was made by the assessing officer. The TPO had observed that the assessee had incurred more than the normal advertisement, marketing and provisions (AMP) expenses to build the 'Amadeus' brand in India which was owned by Amadeus Spain. The main point of discussion before the Tribunal was whether the TPO could have determined the arm's length price in respect of an international transaction which had not been specifically referred to him by the assessing officer. In this context, it was argued on behalf the assessee that the issue of determining the arm's length price in respect of AMP expenses had not been referred by the assessing officer to the TPO as an international transaction. In fact, what had been referred was only those transactions which found mention in Form 3CEB which pertained to services provided and services received. It was contended on behalf of the assessee that the TPO had exceeded his jurisdiction when he sought to consider the question whether AMP expenditure was in the nature of an international transaction and that the TPO fell in error in doing so. Held: The role of the TPO, as indicated in section 92CA, is restricted to determining the arm's length price in relation to the international transaction which has been referred to him by the assessing officer and such computation of the arm's length price in relation to the said international transaction has to be done in terms of section 92C the Act. On a plain reading of section 92CA, it can be seen that it is not within the domain of the TPO to determine whether a particular transaction, which has come to his notice, but which has not been referred to him, is or is not an international transaction and then to go on and determine the arm's length price thereof. That, is in the exclusive jurisdiction of the assessing officer. It ought to be pointed out that these views are on the basis of the provisions of section 92CA, as applicable to the assessment year 2006-07, that is, prior to the introduction of sub-section (2A) of section 92CA by virtue of the Finance Act, 2011 with effect from 01.06.2011. Insofar as the present appeal is concerned, section 92CA would have to be read without sub-section 2A. There is nothing in the statute to indicate that sub-section (2A) was introduced in a manner so as to operate with retrospective effect. Sub-section (2A) expands the jurisdiction of the TPO by empowering him to determine the arm's length price of any international transaction other than an international transaction referred to him by the assessing officer under sub-section (1) of section 92CA. This is clearly an expansion of the jurisdiction of the TPO and, therefore, sub-section (2A) can only have prospective effect from 1-6-2011 and would have no application to the present appeal which is in respect of the assessment year 2006-07.