TMI Blog2011 (7) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... .S. Amar Kumar for the Appellant. M.V. Seshachala for the Respondent. JUDGMENT V.G. Sabhahit, J. This is an appeal filed by the petitioner in writ petition No. 29389/2010 being aggrieved by the order dated 8-2-2011 wherein the learned Single Judge of this Court has disposed of the writ petition by holding that the direction issued by the Dispute Resolution Panel (hereinafter referred to as DRP for short) is not in violation of section 144C(5) or (8) of the Act and directing the petitioner to approach the Assessing Officer within one month from the date of receipt of copy of this order who in turn to take further action in accordance with law within two months thereafter. 2. The material facts necessary for the disposal of this appeal are as follows:- The assessee had filed its return for the year ending 2006-07 declaring the income of Rs. 2,12,18,961. The return of income was processed under section 143(1) of the Income-tax Act(hereinafter referred to as 'the Act') on 10-9-2007. Subsequently the case was selected for scrutiny as per the guidelines issued by the Board and notice was issued under section 143(2) dated 5-10-2007 was served upon the assessee. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued to the assessee giving an opportunity to give reasons as to why deduction under section 10A be not denied to it. The assessee was required to make its submissions by 23-8-2010. The assessee vide its letter dated 23-8-2010 requested to adjourn the matter by three weeks. Since time barring matter was involved, a short adjournment was given and hearing was fixed on 26-8-2010. Sri Kaushik Mukarjee attended on 26-8-2010 and filed return submissions. The matter was discussed with him. (i) The assessee has pointed out the limitations on scope of DRP proceedings and referred to sub-sections (1), (2), (5) and (8) of section 144C. It has been stated that the para 3.2 of the order passed by TPO is neither a finding nor was it within the scope of TPO to return any such finding. According to the assessee the scope of the TPO's proceedings was limited to whether or not the comparables selected by GEITC for the purpose of determining ALP were acceptable. It has also been submitted that deduction under section 10A had been allowed since assessment year 2002-03 and could not be questioned in the present proceedings. (ii) We have considered the submissions made by the assessee. As pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Assessing Officer and insofar as it relates to the conclusion arrived at as referred to above regarding the order of TPO which is appealable under section 253(1)(d) of the Income-tax Act read with Rule 14 of the DRP Rules. 3. However, being aggrieved by directions issued as per (iv) (v) referred to above, the appellant filed Writ Petition No.29389/2010 contending that the said directions issued by the DRP which is binding upon the Assessing Officer is wholly without jurisdiction and suffers from lack of inherent jurisdiction and wherefore the same is liable to be set aside. The learned Single Judge negatived the contention of the appellant after considering the contentions of the learned counsel appearing for the parties and held that the order passed by the DRP insofar as it relates to direction Nos. (iv) (v) as referred to above in the order of DRP is not violative of section 144C(5) or (8) of the Act. However, the learned Single Judge ordered that the petitioner can approach the Assessing Officer within one month from the date of receipt of copy of the order who in turn shall take further action in accordance with law within two months thereafter. Being aggrieved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view take very long time with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been proposed to be inserted so as to provide inter alia the Dispute Resolution Panel as an alternative dispute mechanism. This amendment will take effect from 1st October, 2009." The learned Senior counsel has taken us through the proposed draft order and also the order of the DRP and submitted that what was challenged in the writ petition was only directions (iv) (v) as referred to above, as in respect of other findings of the DRP regarding the Arm's Length Price the same is binding on the Assessing Officer and the order passed by the Assessing Officer is appealable. 7. The learned counsel appearing for the respondents submitted that the order passed by the DRP issuing directions (iv) (v) is justified and cannot be said to be wholly without jurisdiction. The learned counsel su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative plea that the Assessing Officer should decide the claim of the assessee in regard to the material is wholly without jurisdiction in view of the provisions of section 144C(6)(a) wherein the power of DRP is not extended to any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order and if such orders and directions are permitted to be allowed the same would defeat the very object with which the alternate dispute resolution is provided and wherefore direction No. (v) is wholly without jurisdiction and is liable to be set aside as the said direction suffers from inherent lack of jurisdiction in exercise of the writ jurisdiction of this Court. So far as direction No. (iv) is concerned, the rival contentions have to be considered in the light of the provisions of sections 92C and 144C. It is well settled that in view of the decision of the Hon'ble Supreme Court in Ge India Technology Centre (P.) Ltd. v. CIT [2010] 327 ITR 456/193 Taxman 234 that while construing the jurisdiction the consequences in the Income-tax Act, every word has to be given meaning. In the said case the Hon'ble Supreme Court was considering the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. (15) For the purposes of this section,- (a) "Dispute Resolution Panel" means a collegium of three Commissioners of Income-tax constituted by the Board for this purpose; (b) "eligible assessee" means - (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any foreign company." It is clear on a reading of the above said sub-sections of 144C that the provisions of section 144C(4), cannot be read de hors the power of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed (E) 32,58,26,375 Excess claimed (F=E-D) 44,49,280 Therefore it is clear from the proposed draft order that as per the proposed draft order the Arms Length Price fixed by the TPO was accepted and the claim made by the appellant was reduced by Rs. 44,49,280 but in the proposed draft order there may be deduction of Rs. 32,13,77,095. However, as per the direction issued by DRP it is clear that the DRP has issued a direction to the Assessing Officer by holding that the appellant assessee is not entitled to any reduction under section 10A it would be binding on the Assessing Officer in view of the provisions of section 144C(13) and wherefore having regard to the facts and circumstances of this case that in a proposed draft order there was no proposal to hold that the assessee is not entitled to any benefit under section 10A of the Act and what was proposed was only rejection of the excess claim of Rs. 44,49,280 the direction issued by the DRP is wholly without jurisdiction and suffers from inherent lack of jurisdiction and amenable to judicial review under article 226 of the Constitution of India. 12. However, it is necessary to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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