VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED, MUMBAI V. PRINCIPAL COMMISSIONER OF INCOME TAX - 11, MUMBAI

ITA 3070/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1818 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Appeal Filed On: 10-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S. PADMAJA
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Revision of order; Depreciation; Transfer pricing; Search and seizure; International transaction; Assessment record; Set aside
• Section: 263; 143(3); 92E; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI PAWAN SINGH, JM ITA NO. 3070/MUM/2018 ( ASSESSMENT YEAR: 2015 - 16 ) VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED UNIT NO. 33, KALPATARU SQUARE, OF F. ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI - 400 059 VS. PR. CIT - 11, ROOM NO. 468, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 PAN/GIR NO. AADCV 076 H ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI JITENDRA SINGH RESPONDENT BY : SHRI S. PADMAJA DATE OF HEARING : 30.08.2018 DATE OF PRONOUNCEMENT : 22.11 .2018 O R D E R PER SHAMIM YAHYA, A. M.: THIS A PPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER U/S. 263 OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) OF THE PR. COMMISSIONER OF INC OME TAX, MUMBAI ( PR .CIT(A) FOR SHORT) DATED 22.03.2018 AND PERTAINS TO THE A SSESSMENT YEAR (A.Y.) 2015 - 16 . 2. T HE GROUNDS OF APPEAL READ AS UNDER : 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE NOTICE ISSUED UNDER SECTION 263 OF THE A CT AND THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE PRINCIPAL COMMISSIONER OF INCOME TAX ('PR. CIT') ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER ('LEARNED AO') U/S 143(3) OF THE ACT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 2 ITA NO. 3070/MUM/2018 VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE EXERCISE OF JURISDICTION BY PR. CIT U/S 263 IS BAD IN LAW AND WITHOUT ANY BASIS AS THE SAME HAS BEEN DONE ON MERE ASSUMPTION AND THEREF ORE, THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT 'ISSUED BY THE LEARNED AO IS NOT ERRONEOUS AND THERE IS NO PREJUDICE TO THE INTEREST OF REVENUE. 3. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE PR. CIT HAS ERRED IN EXERC ISING ITS JURISDICTION UNDER SECTION 263 TO HOLD THAT THE AO SHOULD HAVE MANDATORILY REFERRED THE MATTER TO THE TRANSFER PRICING OFFICER ('TPO'). THE PR. CIT HAS FAILED TO APPRECIATE THAT THE WORDS 'HE MAY' AS USED IN SECTION 92CA ARE PRECEDED BY 'NECESSAR Y AND EXPEDIENT'. HENCE, BY NOT MAKING REFERENCE TO THE TPO, NO ERROR HAS BEEN COMMITTED BY THE AO. 4. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PR. CIT HAS ERRED ON FACTS AND IN LAW IN ASSUMING JURISDICTION UNDER SECTION 263 O F THE ACT WHEN THE ASSESSMENT ORDER W A S PA SSED AFTER MAKING INQUIRIES AND HENCE THE NOTICE AND ORDER ISSUED UNDER SECTION 263 OF THE ACT ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 3. BRIEF FACTS OF THE CASE ARE THAT THE PR. C IT IN THIS CASE HAS OB SERVED AS UNDER: ON VERIFICATION OF THE ASSESSMENT RECORDS FOR A.Y.2014 - 15, IT WAS NOTICED BY THE PR. CIT THAT THE ASSESSEE COMPANY ENTERED INTO LARGE INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES (AE). THE CASE WAS SELECTED FOR SCRUTINY UNDER CA SS AND THE FOLLOWING ISSUES WERE IDENTIFIED: A) OUTWARD FOREIGN REMITTANCE B) DEPRECIATION CLAIM C) OTHER DEDUCTION CLAIMED D ) PAYMENT TO RELATED PERSONS MISMATCH E) SALES TURNOVER MISMATCH F) LARGE INTERNATIONAL TRANSACTIONS (FORM 3CEB) 4. THE PR. CIT FURTHER NOTED THAT THE CBDT IN INSTRUCTION 3/2016 DATED 10 TH MARCH, 2016 HAS ISSUED GUIDELINES FOR IMPLEMENTATION OF TRANSFER PRICING PROVISIONS WHEREIN AT PARA 3.2 IT SAYS 3.2 ALL CASES SELECTED FOR SCRUTINY, EITHER UNDER THE COMPUTER ASSISTED SCRUTINY S ELECTION [CASS] SYSTEM OR UNDER THE COMPULSORY MANUAL SELECTION SYSTEM [IN 3 ITA NO. 3070/MUM/2018 VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED ACCORDANCE WITH THE CBDT'S ANNUAL INSTRUCTIONS IN THIS REGARD - FOR EXAMPLE . INSTRUCTION NO. 6/2014 FOR SELECTION IN F.Y 2014 - 15 AND INSTRUCTION NO. 8/2015 FOR SELECTION IN F.Y 2015 - 16) , ON THE BASIS OF TRANSFER PRICING RISK PARAMETERS [IN RESPECT OF INTERNATIONAL TRANSACTIONS OR SPECIFIED DOMESTIC TRANSACTIONS OR BOTH] HAVE TO BE REFERRED TO THE TPO BY THE AO, AFTER OBTAINING THE APPROVAL OF THE JURISDICTIONOL PRINCIPAL COMMISSIONER OF INCOME - TAX (PCIT) OR COMMISSIONER OF INCOME - TAX (CIT). THE FACT THAT A IN THE PRESENT CASE LARGE INTERNATIONAL TRANSACTIONS (FORM 3CEB) IS LISTED AS ONE OF THE CASS REASONS IN ITD SYSTEM, THERETO RE, MAKING THIS A FIT CASE FOR REFERENCE TO THE TRANSFER PRICING OFFICER ( TPO), THE TRANSFER PRICING OFFICER HAS BEEN MANDATED BY THE INCOME TAX ACT TO CHECK IF THE INTERNATIONAL TRANSACTIONS WERE CARRIED OUT AT ARMS LENGTH PRICE OR NOT, AND HAS BEEN EMPOWERED TO MAKE UPWARD REVISION IF HE FEELS THE TRANSACTIONS WERE NOT CARRIED OUT AT ARMS LENGTH PRICE. THE POWERS OF ASSESSING OFFICER TO DETERMINE ARMS LENGTH PRICE HAVE BEEN DIVESTED. THEREFORE, A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 WAS ISSUED T O THE ASSESSEE ON 30.01.2018 BY THE PR. CIT CALLING FOR EXPLANATION AS TO WHY THE ASSESSMENT ORDER UNDER QUESTION BEING PREJUDICIAL AND ERRONEOUS SHOULD NOT BE SET ASIDE/CANCELLED. THE HEARING OF THE CASE WAS FIXED ON 06.02.2018. 5. THE ASSESSEE RESPONDED AS UNDER: 6.1 THE ASSESSEE OFFICE R HAS PASSED THE ORDER AFTER DUE APPLICATION OF MIND AS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE DETAILS WITH RESPECT INTERNATIONAL TRANSACTIONS WITH ASSOSCIATED ENTERPRISES WERE CALLED FOR BY THE ASSESSING OFFICER AND THE SAME WERE EXAMINED BY HIM. THE ASSESSING OFFICER THEREFORE HAS DULY APPLIED HIS MIND IN EXAMINING THE INTERNATIONAL TRANSACTIONS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. 6.2 THE ASSESSEE HAS FURTHER STATED THAT SINCE NO TP ADJUSTMENT WAS MADE IN HIS CASE FOR AY 2011 - 12 AND AY 2012 - 13, AND THE INTERNATIONAL TRANSACTIONS BEING OF SIMILAR NATURE IN THE PRESENT AY NO MATERIAL CHANGE IN FACTS HAS OCCURRED AND THEREFORE THE AO DID NOT FEEL IT NECESSARY TO REFER THE MATTER TO THE TPO. 6. HOWEVER, THE PR. CIT WAS NOT CONVIN CED. HE REJECTED THE ASSESSEES SUBMISSIONS AND HELD AS UNDER: 4 ITA NO. 3070/MUM/2018 VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED 7.1 THE CONTENTION OF THE ASSESSEE THAT THE DETAILS RELATING TO INTERNATION AL TRANSACTIONS WERE CALLED FOR BY THE AO AND EXAMINED, THEREFORE PROVING THAT THE AO HAS APPLIED HIS MIND TO THE MAT TER HOLDS NO MERIT, AS THE CBDT INSTRUCTION 3/2016 DATED 10 TH MARCH 2016 HAS MADE IT VERY CLEAR THAT THE AO IS ONLY SUPPOSED TO LOOK INTO THE FACT THAT WHETHER A REFERENCE TO A TPO IS REQUIRED TO BE MADE OR NOT. THE INCOME TAX ACT 1961 HAS VESTED ALL POWER S OF DECIDING THE ALP IN MATTERS OF INTERNATIONAL TRANSACTION WITH THE TPO. THEREFORE THE ONLY APPLICATION OF MIND THAT WAS REQUIRED OF THE AO WAS TO DECIDE WHETHER A REFERENCE TO THE TPO WAS TO BE MADE OR NOT. IN THIS CASE THE PARAMETERS IDENTIFIED BY THE CASS INCLUDE THE EXAMINATION OF THE LARGE INTERNATIONAL TRANSACTION AS REPORTED IN FORM 3CEB, MAKING IT. A CASE WHERE A REFERENCE TO THE TPO WAS MANDATORY AS STIPULATED BY THE INSTRUCTION 3/2016 DATED 10 TH MARCH, 2016, FAILURE TO DO SO BY THE ASSESSING OF FICER HAS RENDERED THE ASSESSMENT ORDER DATED 12.04.2017 ERRONEOUS, AS HE FAILED TO ABIDE BY THE STANDING INSTRUCTIONS OF CBDT. 7.2 THE ASSESSEE HAS FURTHER CONTENDED THAT THERE WAS NO REVISION OF THE ALP WITH RESPECT TO THE INTERNATIONAL TRANSACTION I N THE PREVIOUS YEARS I.E AY 2011 - 12 AND AY 2012 - 13, THEREFORE THE REFERENCE TO THE TPO WAS NOT REQUIRED AS THERE WERE NO CHANGES IN THE MATERIAL FACTS OF THE CASE. THE CONTENTION OF THE ASSESSEE HOLDS NO MERIT AS EVERY ASSESSMENT IS A FRESH ASSESSMENT WHER E FACTS AND MATERIAL ON RECORD HAVE TO BE EXAMINED AFRESH. THE FAILURE ON PART OF THE ASSESSING OFFICER TO NOT REFER THE MATTER TO THE TPO WHEN LARGE INTERNATIONAL TRANSACTIONS WERE CLEARLY REQUIRED TO BE EXAMINED BY THE TPO AS PER THE INSTRUCTION 3/2016 D ATED 10 TH MARCH 2016 OF THE CBDT AND AS MANDATED BY THE INCOME TAX ACT, 1961 RENDERS THE ORDER PASSED DATED 12.04.2017 PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 8. IN LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES AND AFTER TAKING DUE COGNIZANCE OF THE SUBM ISSIONS MADE BY THE ASSESSEE DURING THE COURSE OF PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 IT IS HELD THAT THE ASSESSMENT ORDER DATED 13.10.2016 PASSED U/S 143(3) OF THE ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE REFORE THE SAME IS HEREBY SET ASIDE WITH DIRECTION TO THE ASSESSING OFFICER TO PASS AN ASSESSMENT ORDER AFTER MAKING A REFERENCE TO THE TRANSFER PRICING OFFICER FOR DETERMINING THE ALP UNDER SECTION 92CA(3) OF THE INCOME TAX ACT, 1961 WITH RESPECT TO THE I NTERNATIONAL TRANSACTIONS CARRIED OUT WITH AE, AFTER TAKING THE NECESSARY ADMINISTRATIVE APPROVAL AS PRESCRIBED BY RELEVANT P ROVISIONS. 7. A GAINST THE ABOVE ORDER , THE ASSESSEE IS IN APPEAL BEFORE US . 8. W E HAVE HEARD BOTH THE COUNSEL AND PERUSED T HE REC ORDS . THE LD. COUNSEL OF THE ASSESSEE REFERRED TO A CBDT INSTRUCTION NO. 3/2016 [F.NO.500/9/2015 - APA - II], DATED 5 ITA NO. 3070/MUM/2018 VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED 10.03.2016 . T HE LEARNED LD. COUNSEL OF THE ASSESSEE FURTHER REFERRED TO THE D ELHI ITAT DECISION IN THE CASE OF M/S. AMIRA PURE FOODS PVT. LTD. V S. THE PR. CIT (IN SA NO. 451/DEL/2017 & ITA NO. 3205/DEL/2017 VIDE ORDER DATED 29.11.2017). 9. P ER CONTRA , LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE IS NO WHISPER WHATSOEVER IN THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS MADE ANY E NQUIRY WHATSOEVER ON THE SUBJECT. HE RELIED UPON THE ORDER OF THE PR. CIT. 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT THE PR. CIT IN THIS CASE HAS EXERCISED HIS POWER U/S. 26 3 OF THE ACT AS IN HIS OPINION THE ISSUE BEFORE THE A.O. REQU IRED REFERENCE TO THE TRANSFER PRICING OFFICER (TPO FOR SHORT) , WHICH THE A.O. HAS FAILED TO DO. IN THIS CONNECTION, THE PR. CIT HAS REFERRED TO CBDT CIRCULAR NO.3/2016 IN THIS REGARD. IN THIS REGARD, WE MAY GAINFULLY REFER TO THE PARAGRAPH 3.1 TO 3.3 OF T HE ABOVE SAID CIRCULAR WHICH READS AS UNDER: 3.1 THE POWER TO DETERMINE THE ARM'S LENGTH PRICE (ALP) IN AN INTERNATIONAL TRANSACTION OR SPECIFIED DOMESTIC TRANSACTION IS CONTAINED IN SUB - SECTION (3) OF SECTION 92C. HOWEVER, SECTION 92CA PROVIDES THAT WHER E THE ASSESSING OFFICER (AO) CONSIDERS IT NECESSARY OR EXPEDIENT SO TO DO, HE MAY REFER THE COMPUTATION OF ALP IN RELATION TO AN INTERNATIONAL TRANSACTION OR SPECIFIED DOMESTIC TRANSACTION TO THE TPO. FOR PROPER ADMINISTRATION OF THE INCOME - TAX ACT, THE BO ARD HAS DECIDED THAT THE AO SHALL HENCEFORTH MAKE A REFERENCE TO THE TPO ONLY UNDER THE CIRCUMSTANCES LAID OUT IN THIS INSTRUCTION. 3.2 ALL CASES SELECTED FOR SCRUTINY, EITHER UNDER THE COMPUTER ASSISTED SCRUTINY SELECTION [CASS] SYSTEM OR UNDER THE COMPU LSORY MANUAL SELECTION SYSTEM (IN ACCORDANCE WITH THE CBDT'S ANNUAL INSTRUCTIONS IN THIS REGARD - FOR EXAMPLE. INSTRUCTION NO. 6/2014 FOR SELECTION IN F.Y 2014 - 15 AND INSTRUCTION NO. 8/2015 FOR SELECTION IN F.Y 2015 - 16), ON THE BASIS OF TRANSFER PRICING RIS K PARAMETERS [IN RESPECT OF INTERNATIONAL TRANSACTIONS OR SPECIFIED DOMESTIC TRANSACTIONS OR BOTH] HAVE TO BE REFERRED TO THE TPO BY THE AO, AFTER OBTAINING THE APPROVAL OF THE JURISDICTIONAL PRINCIPAL COMMISSIONER OF INCOME - TAX (PCIT) OR COMMISSIONER OF I NCOME - TAX (CIT). THE FACT THAT A CASE HAS BEEN SELECTED FOR 6 ITA NO. 3070/MUM/2018 VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED SCRUTINY ON A TP RISK PARAMETER BECOMES CLEAR FROM A PERUSAL OF THE REASONS FOR WHICH A PARTICULAR CASE HAS BEEN SELECTED AND THE SAME ARE INVARIABLY AVAILABLE WITH THE JURISDICTIONAL AO. THUS, IF THE REASON OR ONE OF THE REASONS FOR SELECTION OF A CASE FOR SCRUTINY IS A TP RISK PARAMETER, THEN THE CASE HAS TO BE MANDATORILY REFERRED TO THE TPO BY THE AO, AFTER OBTAINING THE APPROVAL OF THE JURISDICTIONAL PCIT OR CIT. 3.3 CASES SELECTED FOR SCRUTI NY ON NON - TRANSFER PRICING RISK PARAMETERS BUT ALSO HAVING INTERNATIONAL TRANSACTIONS OR SPECIFIED DOMESTIC TRANSACTIONS, SHALL BE REFERRED TO TPOS ONLY IN THE FOLLOWING CIRCUMSTANCES: ( A ) WHERE THE AO COMES TO KNOW THAT THE TAXPAYER HAS ENTERED INTO INT ERNATIONAL TRANSACTIONS OR SPECIFIED DOMESTIC TRANSACTIONS OR BOTH BUT THE TAXPAYER HAS EITHER NOT FILED THE ACCOUNTANT'S REPORT UNDER SECTION 92E AT ALL OR HAS NOT DISCLOSED THE SAID TRANSACTIONS IN THE ACCOUNTANT'S REPORT FILED; ( B ) WHERE THERE HAS BE EN A TRANSFER PRICING ADJUSTMENT OF RS. 10 CRORE OR MORE IN AN EARLIER ASSESSMENT YEAR AND SUCH ADJUSTMENT HAS BEEN UPHELD BY THE JUDICIAL AUTHORITIES OR IS PENDING IN APPEAL; AND ( C ) WHERE SEARCH AND SEIZURE OR SURVEY OPERATIONS HAVE BEEN CARRIED OUT U NDER THE PROVISIONS OF THE INCOME - TAX ACT AND FINDINGS REGARDING TRANSFER PRICING ISSUES IN RESPECT OF INTERNATIONAL TRANSACTIONS OR SPECIFIED DOMESTIC TRANSACTIONS OR BOTH HAVE BEEN RECORDED BY THE INVESTIGATION WING OR THE AO. 11. IN THIS REGARD, THE L D. COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE CBDT IN THE ABOVE SAID CIRC ULAR HAD PROVIDED IN PARA 3.2 ABOVE THAT FIRSTLY THE CASES WHICH ARE SELECTED FOR S SCRUTINY ON THE BASIS OF TRANSFER PRICING RISK PARAMETER S , T HEY HAVE TO BE REFERRED TO THE TP O B Y THE A.O. MANDATORILY. PARA 3.3 OF THE ABOVE CIRCULAR MENTIONS THAT THE CASE S WHICH ARE SELECTED FOR SCRUTINY ON NON TRANSFER PRICING RISK PARAMETERS BUT ALSO HAVE INTERNATIONAL TRANSACTION OR SPECIFIED DOMESTIC TRANSACTIONS SHALL BE REFERRED TO THE TPO O NLY IN A CERTAIN CIRCUMSTANCES AS MENTIONED ABOVE. THE GRIEVANCE OF THE LD. COUNSEL OF THE ASSESSEE IS THAT THE PR. CIT HAS NOT SPECIFIED AS TO IN WHICH OF T HE CLAUSE OF THE SAID CIRCULAR THE ASSESSEES CASE IS FALLING INTO. FROM A READING OF THE PR. CIT S ORDER, 7 ITA NO. 3070/MUM/2018 VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED IT IS APPARENT THAT HE HAS MENTIONED PARA 3.2 OF THE CIRCULAR. HENCE, THE GRIEVANCE OF THE ASSESSEE IS NOT AT ALL RELEVANT. IN THIS REGARD, WE NOTE THAT THE PR. CIT IN HIS ORDER HAS NOTED PARAGRAPH 2 AS UNDER: ON VERIFICATION OF THE ASSESSMENT REC ORDS FOR A.Y.2014 - 15, IT WAS NOTICED THAT ASSESSEE COMPANY ENTERED INTO LARGE INTERNATIONAL TRANSACATIONS WITH ASSOCIATED ENTERPRISES (AE ) . THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE FOLLOWING ISSUES WERE IDENTIFIED: A) OUTWARD FOREIGN REMITTANC E B) DEPRECIATION CLAIM C) OTHER DEDUCTION CLAIMED D) PAYMENT TO RELATED PERSONS MISMATCH E ) SATES TURNOVER MISMATCH F ) LARGE INTERNATIONAL TRANSACTIONS (FORM 3CEB) 12. FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEES CASE WAS ALSO SELECTED FOR SCRUTIN Y FOR ISSUES WHICH ALSO INVOLVE LARGE INTERNATIONAL TRANSACTION (FORM 3CEB) WHICH FALL UNDER THE TRANSFER PRICING RISK PARAMETERS. THUS, IT IS AMPLY CLEAR THAT THE CASE WAS SELECTED FOR SCRUTINY ON TRANSFER PRICING RISK PARAMETERS AS WELL AS NON TRANSFER P RICING RISK PARAMETERS. BY NO STRETCH OF IMAGINATION, IT CAN BE SAID THAT THE CASE WAS SELECTED FOR SCRUTINY ON NON TRANSFER PRICING RISK PARAMETERS ONLY. ONCE IT IS EVIDENT THAT THE CASE WAS SELECTED FOR SCRUTINY ON THE TRANSFER PRICING RISK PARAMETER, TH E CASE FALLS UNDER PARA 3.2 OF THE ABOVE CBDT CIRCULAR WHICH REQUIRES REFERENCE TO THE TPO BY THE A.O. MANDATORILY. THERE IS NO EXCEPTION IN THIS REGARD. HENCE, THE LD. COUNSEL OF THE ASSESSEES GRIEVANCE THAT THE LD. CIT(A) HAS NOT SPECIFIED AS TO WHETHER THE CASE IS FALLING UNDER PARA 3.2 OR 3.3 OF THE CBDT CIRCULAR IS CLEARLY NOT SUSTAINABLE. IT IS AMPLY CLEAR THAT THE CASE WAS FALLING UNDER PARA 3.2 ABOVE AND REFERENCE TO THE T PO WAS MANDATORY. IT IS SETTLED LAW THAT THE CBDT CIRCULARS ARE BINDING ON RE VENUE AUTHORITIES. THE ASSESSEES CONTENTION THAT IN 8 ITA NO. 3070/MUM/2018 VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED EARLIER YEARS THE MATTER WAS R EFERRED TO THE TPO , N O TRANSFER PRICING ADJUSTMENT WAS MADE, CANNOT AT ALL BE AN EXCUSE FOR THE A.O. FOR NOT REFERRING THE MATTER TO THE TPO. A S ALREADY EXPLAINED HEREIN ABO VE THERE IS NO DISCRETION TO THE A.O. IN THIS REGARD. ONCE IT IS SO H E LD THE ASSESSMENT ORDER PASSED IS CLEARLY ERRONEOUS SO AS TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CASE LAW FROM THE DELHI ITAT REFERRED BY THE LD. COUNSEL OF THE ASSESSEE A S ABOVE IS CLEARLY NOT APPLICABLE HERE AS IN THAT CASE THE ITAT HAD GIVEN A FINDING THAT THE SAID CASE LAW WAS SELECTED FOR SCRUTINY ON NON TRANSFER PRICING RISK PARAMETERS. 13. IN THE BACKGROUND OF THE AFORESAID DISCUSSION, IN OUR CONSIDERED OPINION , IN LIGHT OF THE CBDT CIRCULAR ABOVE, IT WAS INCUMBENT UPON THE A.O. TO REFER THE TRANSFER PRICING MATTER TO THE TPO. THE A.O. HAVING FAILED TO DO SO, THE CASE ADMITTEDLY FALLS UNDER THE JURISDICTION OF THE PR. CIT AS AN ORDER BY THE A.O. WHICH IS ERRONEOUS S O AS TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE BACKGROUND OF THE AFORESAID DISCUSSION, WE UPHOLD THE ORDER PASSED BY THE PR. CIT. 14. IN THE RESULT, THE ASSESSEES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 22.11.2018 SD/ - SD/ - ( PAWAN SINGH ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 22.11.2018 ROSHANI , SR. PS 9 ITA NO. 3070/MUM/2018 VARIAN MEDICAL SYSTEMS INTERNATIONAL INDIA PRIVATE LIMITED COPY OF THE ORDER FORWARDED TO : 1. THE APPELLA NT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI