In view of the relevant provisions of the Act, the Assessing Officer has to determine whether the transaction involved is an international transaction and he may either determine the arm’s length price of the said transaction on its own or where necessary, subject to approval of the Commissioner, refer the same to the Transfer Pricing Officer (TPO). The reference to the TPO under Section 92CA(1) of the Act was transaction specific and not entity based.
The Tribunal placing reliance on CBDT circular No. 3 of 2003 dated 20 May 2003 and decision of the High court in Amadeus India Pvt Ltd Vs. ACIT (ITA No. 5203/De1/2010) and decisions of co-ordinate benches in Diageo India Pvt. Ltd. v. DCIT (ITA No. 8602/Mum/2010) and 53i Info tech Ltd Vs. DCIT  136 TTJ 641 (MUM) held that the TPO is empowered to determine the ALP of only the ‘referred’ transactions and a fresh reference from the AO needs to be sought with regard to the new transactions discovered by the TPO.
Without adjudicating on the issue whether the Advertisement, Marketing and Sales Promotion expenditure incurred by the taxpayer can be characterised as an international transaction as per Section 92B of the Act, the Tribunal held that the assumption of jurisdiction by the TPO in working out ALP is not justified and directed the AO to delete the adjustment made by the TPO.