Adarsh Kumar Goel, J. - (1.) THIS petition questions application of transfer pricing provisions in Chapter X of the IT Act, 1961 (for short, "the Act") to the petitioner and quashing of notices under Sections 148 and 92CA(3) of the Act.
(2.) CASE set out in the petition is that the petitioner is a company incorporated under the laws of USA and is, thus, a foreign company under Section 2(23A) of the Act. It has a branch office in India. It is a part of International Coca Cola Corporate Group. The said group has other companies operating in India incorporated under the Companies Act, 1956. The petitioner obtained permission under Section 29(1)(a) of the Foreign Exchange Regulation Act, 1973 (FERA) to operate a branch office in India to render services to Coca Cola Group companies, as per conditions mentioned in the application for the said permission. There is a service agreement between the petitioner on the one hand and Britco Foods Company (P) Ltd. (Britco) on the other. As per the said agreement, the petitioner provides advisory services to Britco to advise, monitor and coordinate the activities of bottlers, in consideration of which the petitioner receives fee calculated on the basis of actual cost plus 5 per cent The petitioner was assessed under the Act for the asst. yr. 1998 -99 on 31st March, 2004. The AO, however, formed an opinion that income of the petitioner, chargeable to tax for the said year, had escaped assessment within the meaning of Section 147 of the Act. A notice dt. 30th March, 2005 was issued under Section 148 of the Act, requiring the petitioner to file a return and thereafter, some further information was sought from the petitioner for the purpose of assessment. The petitioner filed reply to the said notice, seeking reasons for proposed reassessment. The reasons indicated that the AO referred to Section 92 of the Act, which enables the AO to determine profits which may reasonably deemed to have been derived, when less than ordinary profits are shown to have been derived by a resident. It was further stated in the said reasons that as per order dt. 7th Feb., 2005 under Section 92CA(3) for the asst. yr. 2002 -03, passed by the TPO -I, the profit declared by the petitioner was abnormally low, on account of which ALP had been fixed. On that account, the income of the assessee had escaped assessment. Similar notices were issued for the asst. yrs. 1999 -2000, 2000 -01 and 2001 -02.
(3.) ON 14th July, 2005, notice under Section 92CA(3) of the Act was issued by the Addl. CIT acting as TPO, on a reference made by the AO under Section 92CA(1) of the Act for the asst. yr. 2003 -04, to determine ALP. Identical notices were issued for the asst. yrs. 2004 -05, 2005 -06 and 2006 -07. The AO made assessment in respect of income of the petitioner for the asst. yr. 2002 -03 vide order dt. 24th March, 2005 after getting determined ALP of services rendered by the petitioner to its associated company, thereby enhancing the income of the assessee. Against the said order, the petitioner has preferred an appeal which is still pending before the Appropriate Authority.;