Case Note & Summary
The petitioner, M/s. Hindalco Industries Ltd., filed a writ petition under Article 226 of the Constitution challenging (i) an order dated 31 October 2011 passed by the Additional Commissioner of Income-tax, Transfer Pricing Officer -1(5); (ii) a reference made on 9 October 2009 by the Assistant Commissioner of Income-tax to the Transfer Pricing Officer; and (iii) the approval granted by the Commissioner of Income-tax – VI. The petitioner had filed its return of income on 30 September 2008, along with Form 3CEB under Section 92E of the Income-tax Act, 1961 read with Rule 10E of the Income-tax Rules, 1962, disclosing international transactions worth Rs.2267 crores with its associated enterprises. The Assessing Officer made a reference to the Transfer Pricing Officer on 9 October 2009, and the TPO passed an order on 31 October 2011. The petitioner challenged these actions on the ground that the reference was made without proper approval under Section 92D of the Act. The court examined the provisions and found that the reference was invalid due to lack of proper approval, and consequently, the TPO's order was also invalid. The court allowed the petition and quashed the reference and the order.
Headnote
A) Income Tax - Transfer Pricing - Reference to TPO - Approval under Section 92D - The issue pertained to the validity of a reference made by the Assessing Officer to the Transfer Pricing Officer without obtaining the requisite approval under Section 92D of the Income-tax Act, 1961. The court held that the reference was invalid as the approval was not obtained from the specified authority, and consequently, the order passed by the TPO was also invalid. (Paras 1-10)
B) Income Tax - Transfer Pricing - Form 3CEB - Certification by Chartered Accountant - The petitioner had filed Form 3CEB along with its return, certifying international transactions with associated enterprises. The court noted that the form was duly certified by a Chartered Accountant and contained all required particulars under Section 92E. (Paras 2-3)
Issue of Consideration
Whether the reference made by the Assessing Officer to the Transfer Pricing Officer and the subsequent order passed by the TPO are valid in the absence of proper approval under Section 92D of the Income-tax Act, 1961.
Final Decision
The court allowed the writ petition and quashed the reference dated 9 October 2009 made by the Assistant Commissioner of Income-tax to the Transfer Pricing Officer and the order dated 31 October 2011 passed by the Additional Commissioner of Income-tax, Transfer Pricing Officer -1(5).
Law Points
- Transfer pricing reference requires proper approval under Section 92D
- Section 92CA
- Section 92E
- Form 3CEB
- Rule 10E
Case Details
2011 LawText (BOM) (12) 76
WRIT PETITION (L) NO. 2782 OF 2011
DR. D.Y. CHANDRACHUD, A.A. SAYED
Mr. S.E. Dastur, Sr. Advocate with Mr. Madhur Agarwal, Mr. Pankaj R. Toprani and Ms. Kadambari Surve for the Petitioner. Mr. B.M. Chatterjee with Mr. Tejveer Singh for the Respondent.
M/s. Hindalco Industries Ltd.
The Addl. Commissioner of Income-tax Transfer Pricing Officer – 1(5) & Ors.
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Nature of Litigation
Writ petition under Article 226 of the Constitution challenging transfer pricing reference and order.
Remedy Sought
Quashing of the reference dated 9 October 2009, the order dated 31 October 2011, and the approval granted by the Commissioner.
Filing Reason
The petitioner challenged the validity of the reference made by the Assessing Officer to the Transfer Pricing Officer and the subsequent order passed by the TPO on the ground that the reference was made without proper approval under Section 92D of the Income-tax Act, 1961.
Issues
Whether the reference made by the Assessing Officer to the Transfer Pricing Officer was valid without proper approval under Section 92D of the Income-tax Act, 1961.
Whether the order passed by the Transfer Pricing Officer was valid in the absence of a valid reference.
Submissions/Arguments
The petitioner argued that the reference was made without obtaining the requisite approval under Section 92D of the Income-tax Act, 1961, and therefore the reference and the subsequent order were invalid.
The respondent argued that the approval was properly obtained and the reference was valid.
Ratio Decidendi
The reference made by the Assessing Officer to the Transfer Pricing Officer under Section 92CA of the Income-tax Act, 1961 requires proper approval under Section 92D. In the absence of such approval, the reference is invalid, and consequently, any order passed by the TPO based on such reference is also invalid.
Judgment Excerpts
In these proceedings under Article 226 of the Constitution, the Petitioner has sought to challenge (i) An order dated 31 October 2011 passed by the Additional Commissioner of Income-tax, Transfer Pricing Officer -1(5); (ii) A reference made on 9 October 2009 by the Assistant Commissioner of Income-tax to the Transfer Pricing Officer; and (iii) The approval granted by the Commissioner of Income-tax – VI.
Procedural History
The petitioner filed a return of income on 30 September 2008. The Assessing Officer made a reference to the Transfer Pricing Officer on 9 October 2009. The TPO passed an order on 31 October 2011. The petitioner filed a writ petition on an unspecified date challenging these actions.
Acts & Sections
- Income-tax Act, 1961: 92D, 92E, 92CA
- Income-tax Rules, 1962: 10E
