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May 2026

Assessment — International transaction — Computation of arm’s length price — Reference to TPO — No variation made by TPO in his order — Whether assessee is “eligible assessee” — Assessee is neither non-resident nor foreign company as contemplated u/s. 144C(15)(b)(ii) — Assessee can be stated to be an “eligible assessee” only if there is variation referred to in section 144C(1) consequent to order of TPO u/s. 92CA(3) — Assessee is not eligible assessee u/s. 144C(15)(b) — Held by High Court that AO cannot pass draft assessment order u/s. 144C(1) — Draft assessment order, final assessment order and notice of demand and penalty set aside.

By Keshav Bhujle | Ritu Punjabi, Advocates
Reading Time 4 mins

7. Classic Legends (P) Ltd. v. Assessment Unit: (2026) 484 ITR 550 (Bom):

Date of order 09/09/2025:

Ss. 92CA(3), 143(3), 144C, 156, 270A, and 271AAC of ITA 1961

Assessment — International transaction — Computation of arm’s length price — Reference to TPO — No variation made by TPO in his order — Whether assessee is “eligible assessee” — Assessee is neither non-resident nor foreign company as contemplated u/s. 144C(15)(b)(ii) — Assessee can be stated to be an “eligible assessee” only if there is variation referred to in section 144C(1) consequent to order of TPO u/s. 92CA(3) — Assessee is not eligible assessee u/s. 144C(15)(b) — Held by High Court that AO cannot pass draft assessment order u/s. 144C(1) — Draft assessment order, final assessment order and notice of demand and penalty set aside.

In respect of the international transaction of the assessee company the Assessing Officer made a reference to the Transfer Pricing Officer u/s. 92CA of the Income-tax Act, 1961. Pursuant to this reference, the Transfer Pricing Officer issued notices to the petitioner and thereafter passed an order u/s. 92CA(3) accepting that the international transactions entered into by the assessee with its associated enterprises

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