Quislex Legal Services Pvt.Ltd., Hyd, ... vs Assessee

2. The assessee in the present case is a company which is engaged in the business of legal process outsourcing. The return of income for the year under consideration was filed by it on 24.09.2010 declaring total income of Rs.17,746 under the normal provisions of the Act and book profit of Rs.2,10,21,684 under section 115J of the Act. In the assessment completed under section 143(3) vide order dated 04.01.2013, the income declared by the assessee company in its return of income was accepted by the A.O. The record of the said 2 ITA.No.209/Hyd/2015 Quislex Legal Services P. Ltd., Hyderabad.

assessment subsequently came to be examined by the Ld. CIT and on such examination, he found that the price charged by the assessee company for the international transactions entered into with it's A.E. aggregating to Rs.19.95 crores was accepted by the A.O. as at arms length without referring the matter to the TPO. He also noted that even the T.P. study report in Form No.3CEB was not filed by the assessee company along with the return of income and the same was not insisted upon by the A.O. even during the course of assessment proceedings. According to the learned CIT, the assessment made by the A.O. under section 143(3) thus was erroneous as well as prejudicial to the interests of the Revenue inasmuch as the same was completed without making proper and adequate enquiries as warranted in the facts of assessee's case. He therefore issued a notice under section 263 on 25.11.2014 requiring the assessee to show cause as to why the assessment made by the A.O. should not be revised. In reply, it was submitted on behalf of the assessee that the A.O. had a discretion to refer the international transactions with A.E. to the TPO and the discretion exercised by the A.O. in not making such a reference in any case could not be said to have caused any prejudice to the interests of the Revenue. This explanation of the assessee was not found acceptable by the Ld. CIT and he set aside the assessment made by the A.O. under section 143(3) holding the same to be erroneous as well as prejudicial to the interests of the Revenue with a direction to the A.O. to pass a fresh assessment 3 ITA.No.209/Hyd/2015 Quislex Legal Services P. Ltd., Hyderabad.

order after making reference to the TPO to determine the arms length price of the international transactions of the assessee company with it's A.E. and after considering the consequential claim of the assessee for deduction under section 10A afresh. Aggrieved by the Order of the Ld. CIT passed under section 263, the assessee has preferred this appeal before the Tribunal.

3. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the issue involved in the present case is squarely covered inter alia by the decision of the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd., vs. CIT (2012) 345 ITR 193 (Delhi) wherein it was held that the CBDT circular stating that wherever the aggregate value of an international transaction exceeds the prescribed limit, the case should be picked-up for scrutiny and reference under section 92CA of the Act be made to the TPO is binding on the A.O. and failure to make such a reference results into the assessment order made by the A.O. to be erroneous as well as prejudicial to the interests of the Revenue calling for revision under section 263 by the Ld. CIT. In the present case, the international transactions of the assessee company with it's A.E. were more than the limit of Rs.15 crores specified in the relevant CBDT circular and this being the undisputed position, we hold, respectfully following the decision of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd., (supra), that the order made by the A.O. under section 143(3) without making a reference to the TPO was erroneous as 4 ITA.No.209/Hyd/2015 Quislex Legal Services P. Ltd., Hyderabad.

well as prejudicial to the interests of the Revenue calling for revision by the Ld. CIT under section 263 of the Act. We, therefore, uphold the order of the Ld. CIT passed under section 263 and dismiss the appeal of the assessee.

4. In the result, appeal of the assessee is dismissed.

Order pronounced in the open Court on 03.06.2015.

Sd/- Sd/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 03rd June, 2015.

VBP/-

Copy to

1. Quislex Legal Services P. Ltd., Hyderabad - 32.

C/o. Sri S. Rama Rao, Advocate, Flat No.102, Shriya's Elegance, 3-6-643, Street No.9, Himayatnagar, Hyderabad - 500 029.

2. Asst. Commissioner of Income Tax, Circle 16(3), Hyderabad.

3. Commissioner of Income Tax-IV, Hyderabad.

4. Addl. CIT, Range-16, Hyderabad.

5. D.R. I.T.A.T. "B" Bench, Hyderabad.

6. Guard File