Case Law Details
Giesecke And Devrient India Pvt Ltd Vs Deputy Commissioner of Income Tax 2.1 & Ors (Delhi High Court)
In a recent judgment, the Delhi High Court ruled that Assessing Officers (AO) must strictly adhere to the Arm’s Length Price (ALP) determined by the Transfer Pricing Officer (TPO) in international transactions, as mandated by the Income Tax Act, 1961.
The case, titled Giesecke And Devrient India Pvt Ltd Vs Deputy Commissioner of Income Tax 2.1 & Ors, revolved around an adjustment made by the AO to the total income of the assessee, amounting to a substantial sum of INR 25,58,68,79,196/-. This adjustment included the ALP determined by the TPO for certain international transactions, as well as an additional amount related to the demerger of the assessee’s business.
The assessee challenged the AO’s order, arguing that the adjustment made by the AO exceeded the scope of the TPO’s determination and violated the provisions of Section 92CA of the Act, which governs the determination of ALP in international transactions.
The High Court, after careful consideration of the legal provisions and precedents, upheld the assessee’s argument. It emphasized that Section 92CA mandates that the AO refer the matter to the TPO for determining the ALP of international transactions. Furthermore, the Court cited relevant case law and CBDT instructions, which underscored the mandatory nature of such referrals and the requirement for the AO to adhere to the TPO’s determination while computing the total income of the assessee.
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