The Tribunal had to consider the following ground of appeal:
“The reference to the Transfer Pricing Officer u/s 92CA of the Income Tax Act, 1961 by the Assessing Officer was illegal being contrary to (i) the binding Instruction No. 3/2003, (ii) the provisions of Section 92CA and the binding decision of the Special Bench in the case of Aztec Software and Technology Services Ltd. 107 ITD 141 (Bang) (SB). Consequently, the impugned assessment is time barred and, therefore, bad in law.”
Tribunal held that ; CBDT’s Instruction No. 3/2003 is binding on the AO. Consequently, the ALP of international transactions where the quantum is less than Rs. 5 crore has to be determined by the AO and cannot be referred to the TPO. If such reference is made, it is invalid and the extended time for completing the assessment is not available to the AO. The assessment is void as it is time-barred. ( ITA No. 4363/del/2010, dt. 23.03.2018)(AY. 2006-07)
Calance Software Pvt. Ltd. v. DCIT ( 2018) 92 taxmann.com 164( Delhi)(Trib) , www.itatonline.org
S. 92CA: Reference to transfer pricing officer – CBDT’s Instruction No. 3/2003 is binding on the AO. Consequently, the ALP of international transactions where the quantum is less than Rs. 5 crore has to be determined by the AO and cannot be referred to the TPO. If such reference is made, it is invalid and the extended time for completing the assessment is not available to the AO. The assessment is void as it is time-barred [ S.119, 144C ]