In Brief
The Principal Commissioner of Income Tax made a transfer pricing adjustment of Rs 2,89,82,746 against the respondent company without referring the matter to a Transfer Pricing Officer (TPO) as mandatorily required by CBDT Instruction No.3/2003. The Supreme Court held that while the assessment order itself was valid, the transfer pricing adjustment was bad in law because it violated the mandatory procedural requirement of referring international transactions exceeding the Rs 5 crore threshold to the TPO before making any adjustment. The Court allowed the appeal and remitted the matter to the Assessing Officer to follow proper procedures under Section 92CA.
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