Red Hat India Private Limited Vs. Principal Commissioner of Income Tax-6, Mumbai

Parties Involved

Facts Summary

The assessee, Red Hat India Private Limited, filed its original return declaring nil taxable income and disclosed an international transaction in the nature of royalty with its associated enterprise, Red Hat Inc. Upon finalisation of its books of account, the assessee noticed that royalty income pertaining to assessment year 2011-12 had accrued to it, though owing to a timing mismatch the same had been reflected in the succeeding year. In order to offer such income in the correct year of accrual, the assessee filed a revised return voluntarily offering the royalty income to tax in the year under appeal. The reassessment proceedings were initiated by issuance of notice under section 148, and the Assessing Officer made a reference to the Transfer Pricing Officer under section 92CA. It is an admitted and incontrovertible position on record that the Transfer Pricing Officer did not pass any order under section 92CA(3). The reassessment was thereafter completed under section 143(3) read with section 147 without making any transfer pricing adjustment. The learned Principal Commissioner thereafter initiated proceedings under section 263 on the premise that the reassessment order is erroneous and prejudicial to the interests of the Revenue.…

Legal Issues

• 1. Whether the reassessment order is erroneous for not considering a non-existent order of the Transfer Pricing Officer.
• 2. Whether the reassessment order is prejudicial to the interests of the Revenue.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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