Case Law Details
Mitchell Drilling India Private Limited vs. DCIT (ITAT Delhi)
It is elementary that the ALP is determined of an `international transaction’, which has been defined in section 92B of the Act. The term `transaction’, for the purposes of the Chapter–X containing transfer pricing provisions, has been defined in clause (v) of section 92F to include an arrangement, understanding or action in concert. It shows that the ALP is always determined of an international transaction, which is genuine, but may be formal or in writing and whether or not intended to be enforceable by legal proceeding. If a transaction itself is not genuine, there can be no question of applying the transfer pricing provisions to it. In such an eventuality of a supposed genuine transaction turning out to be non-genuine, all the consequences which would have flowed for a real transaction, are reversed. In other words, certain deductions which would have been otherwise allowed in case of a genuine international transaction, are denied. Nitty-gritty of the matter is that only a declared and accepted genuine international transaction can be subjected to the transfer pricing regulations. If an international transaction is proved to be not genuine, the transfer pricing provisions are not triggered.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS
This appeal by the assessee is directed against the final assessment order passed by the Assessing Officer (AO) under Section 143(3) read with Section 144(C) of the Income-tax Act, 1961, (hereinafter also called `the Act’) on 26.10.2010 in relation to the Assessment Year 2006-07.
2. Briefly, stated the facts of the case are that the assessee is a joint venture between M/s Mitchell Drilling International Pty Limited and Rajbhara Consultants Pvt. Ltd. in such a way that Mitchell holds 61% of its share capital with Rajbhara holding the remaining 39%. The assessee is engaged in the development of burgeoning CBM industry, directional drilling and innovative turnkey management projects within the Oil & Gas industry. A return declaring total income of Rs.26,42,940/- was filed. The assessee reported five international transactions in Form No. 3CEB. The AO made a reference to the Transfer Pricing Officer (TPO) for determining the arm’s length price (ALP) of the international transactions.
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