CIT v. Amadeus India Pvt. Ltd. (2013) 351 ITR 92(Delhi) (High Court)

S.92CA: Avoidance of tax- Transfer Pricing-Powers-No power to determine arm's length of transaction not

referred to him-Provision empowering Transfer Pricing Officer to determine arm's length price of any

international transaction other than that referred to him is prospective in operation.

The activity of the assessee is to provide connectivity to the host system by its computer programmes online. The

assessee entered into international transactions with associated enterprises. The Assessing Officer referred only the international transactions mentioned in Form 3CEB but not the issue of advertisement, marketing and promotion expenses to the Transfer Pricing Officer. The Transfer Pricing Officer took upon himself the consideration of the question as to whether the advertisement, marketing and promotion expenditure was in the nature of an international transaction. Having concluded that it was an international transaction, he adjusted an amount of Rs. 32,92,83,589 attributable to the difference. On a question whether the Transfer Pricing Officer could have determined the arm's length price in respect of an international transaction which was not specifically referred to him by the Assessing Officer, the Tribunal took the view that the Transfer Pricing Officer could not have done so. On appeal by revenue the Court dismissing the appeal, held that(i) that it was not within the domain of the Transfer Pricing Officer to determine whether a particular transaction, which had come to his notice, but which had not been referred to him, was or was not an international transaction and then to go on and determine the arm's length price thereof.

(ii) That there is nothing in the statute to indicate that sub-section (2A) was introduced in section 92CA in a manner so as to operate with retrospective effect. Sub-section (2A) expands the jurisdiction of the Transfer Pricing Officer 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 Transfer Pricing Officer and, therefore, sub-section (2A) can only have prospective effect from June 1, 2011, and would have no application to the assessee's case which was in respect of the assessment year 2006- 07.Order of Tribunal is affirmed. (A. Y.2006-2007 )