Sobha City Vs ACIT (ITAT Bangalore)
No addition for transfer pricing (TP) adjustment related to Specified Domestic Transactions (SDT).
Conclusion: The reference to TPO for transfer pricing adjustment in respect of specified domestic transactions mentioned in clause (i) of section 92BA was not valid, as the said provision had been omitted. Accordingly, AO was directed to delete the addition relating to specified domestic transactions made u/s 92CA however, the matter was restored to the file of the AO with the direction to examine the claim of expenditure in accordance with the provisions of section 40A(2).
Held: Assessee was a partnership firm and was engaged in real estate development business. It had entered into Specified Domestic Transactions during the year. Hence the SDT transactions were referred to TPO, who made Transfer pricing adjustments to the tune of Rs.14.26 crores. DRP also confirmed the adjustment made by TPO and hence, AO completed the assessment by making addition of Rs.14.26 crores towards Transfer pricing adjustment. It was held that the reference to the TPO in respect of specified domestic transactions mentioned in clause (i) of sec.92BA was not valid, as the said provision had been omitted. Accordingly, AO was directed to delete the addition relating to specified domestic transactions made u/s 92CA e Act. However, the matter was restored to the file of the AO with the direction to examine the claim of expenditure in accordance with the provisions of section 40A(2).
FULL TEXT OF THE ORDER OF ITAT BENGALORE
The assessee has filed this appeal challenging the assessment order dated 28-08-2018 passed by the assessing officer u/s 143(3) r.w.s 144c(13) of the Income-tax Act,1961 [‘the Act’ for short] in pursuance of directions given by Ld Dispute Resolution Panel (DRP). The solitary issue contested in this appeal relate to the Transfer Pricing adjustment in respect of Specified Domestic Transactions (SDT).
2. The assessee herein is a Partnership firm and is engaged in real estate development business. It has entered into Specified Domestic Transactions during the year. Hence the SDT transactions were referred to the Transfer Pricing Officer (TPO), who made Transfer pricing adjustments to the tune of Rs.14.26 crores. The Ld DRP also confirmed the adjustment made by TPO and hence the AO completed the assessment by making addition of Rs.14.26 crores towards Transfer pricing adjustment.
3. Before us, the assessee has raised a legal issue, the ground related thereto reads as under:-
