Assessee

Revenue

The assessee contended that the TPO’s jurisdiction under section 92CA was restricted to determining the ALP of international transactions and did not extend existence of a PE or the consequent taxability of business profits under the India-Singapore DTAA.

The Revenue contended that the assessee had entered into international transactions with its associated enterprise, the AO was justified the TPO for determination of their ALP. It submitted that the assessee had not challenged the reference before the AO at the appropriate stage.

The assessee further submitted that the AO’s reference did not identify any specific international transaction between the assessee and the Indian company for which ALP determination was sought. Hence, a general reference was invalid.

The Revenue maintained that the Indian company was carrying on actual business on behalf of the assessee and, considering the additional functions performed by it, the relevant transactions were required to be examined.

Court’s Judgement

The Tribunal held that the TPO’s jurisdiction under section 92CA is transaction-specific and confined to determining the ALP of an identified international transaction. Determination of PE existence and consequent taxability under the DTAA falls within the AO’s jurisdiction and could not be transferred to the TPO

The Tribunal held that a general reference without identifying the specific international transaction could not constitute a valid reference under section 92CA. Further, the AO had not independently examined the PE issue and had merely relied on the TPO’s findings; consequently, the assessment proceedings could not be sustained