Case Law Analysis - Can Additional Commissioner of Income Tax act as the Transfer Pricing Officer? - Indian Transfer Pricing perspective

Can Additional Commissioner of Income Tax act as the Transfer Pricing Officer?

Can Additional Commissioner of Income Tax (‘ACIT’) act as the Transfer Pricing Officer (‘TPO’) as mentioned in the section 92CA of the act?

The above question was recently addressed by the Hon’ble DelhiITAT in case of Transcend MT Services Private Limited (Formerly known as HeartlandInformation and Consultancy Services Private Limited).

Facts before the ITAT

In the above-mentioned matter, there existed Transfer Pricing adjustment made by the TPO. The order was passed by Additional Commissioner of Income Tax. Before the Hon’ble ITAT proceedings the Assessee undertook an additional ground that the Additional Commissioner of Income Tax does not have any jurisdiction and cannot act ass TPO under chapter X of the Income Tax Act, 1961.

Assessee's and Department Representative's contention

As per the Assessee, Section 92CA (by way of explanation) provides that TPO means a Joint Commissioner of Income Tax (‘JCIT’) , Deputy Commissioner or Assistant Commissioner of Income tax (DCIT / ACIT); hence only the JCIT / DCIT / ACIT can be appointed as the TPO and are authorized. Accordingly, Additional Commissioner of Income Tax is not covered under the definition of the Transfer Pricing Officer.

The Department representative opposed the additional ground raised by the assessee by mentioning that as per the Act, the definition of Joint Commissioner of Income Tax, 1961, also includes Additional Commissioner of Income Tax, 1961. Therefore, the order passed by the learner TPO is with proper jurisdiction and authority.

ITAT's ruling

The ITAT concurred with the view of the Department Representative and observed that as per section 2(28C) of the act wherein it is mentioned that Joint Commissioner means a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income Tax under section 117(1). Hence, the ITAT dismissed the additional ground raised by the Assessee stating that the same does not have any merit.

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