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2022 (12) TMI 241 - AT - Income TaxRectification of mistake u/s 154 - TP Adjustment - arm's length price adjustment - DRP directions no ALP adjustment was made by the Assessing Officer - DRP is of the considered view that, after examining the transaction in payment of hire/lease charges to the AE by the assessee on the parameters narrated the transaction is at arm‟s length and does not require any upward adjustment - whether the Dispute Resolution Panel was justified in passing the impugned order ? - whether the TPO was justified in given effect, vide his order to the directions contained in the said order? whether, based on this rectification order passed by the Dispute Resolution Panel and based on the TPO's resultant order giving effect thereto? and, whether the AO was justified in, based on these order, passing the impugned order making an addition as an arm‟s length price adjustmen? - HELD THAT:- As a plain and careful reading of rule 13 makes it unambiguous, the rectification powers, under rule 13, by the Dispute Resolution Panel can be exercised only in one of the three circumstances – namely, (a) suo motu, i.e. on its own by the DRP; (b) on an application made by the eligible assessee, or (c) on an application made by the Assessing Officer. The scheme of rule 13 does not visualize any rectification of mistake, by the Dispute Resolution Panel, on an application by the TPO. The application filed by the Transfer Pricing Officer before the Dispute Resolution Panel, irrespective of its nomenclature, was liable to be dismissed for this short reason itself. As for the observations of the Dispute Resolution Panel on the nomenclature of the application filed by the Transfer Pricing Officer, whatever be the nomenclature, it was unambiguously a petition seeking rectification of mistake as evident from his opening words in the first paragraph to the effect “(t)his MA is being filed for rectifying various mistakes apparent on record in the order of the learned DRP which are being delineated in the following paragraphs”. When the object and purpose of the application is unambiguous, nothing really turns on the terminology used to describe the said application. We have noted that the Dispute Resolution Panel, having rejected the rectification application filed by the Transfer Pricing Officer and having held that there is no mistake apparent in the direction dated 3rd November 2020, have proceeded to rectify these DRP directions nevertheless. Undoubtedly, if the DRP was of the opinion that there are mistakes apparent in the directions issued by the DRP, they could have taken a suo motu cognizance of the same and initiated the proceedings by the issuance of show-cause notice, setting out clearly the reasons as to why such proceedings not be initiated, but that exercise has not been carried out. Whatever rectification has been carried out is on the basis of an application made by the Transfer Pricing Officer- an application which was not maintainable at all, and even after holding that there was no apparent mistake in the DRP directions, whereas a finding of the mistake being a mistake apparent in the DRP directions was a sine qua non for invoking the jurisdiction under rule 13. We are of the considered view that the directions dated 22nd April 2021 passed by the Dispute Resolution Panel are unsustainable in law, and we must quash the same. Once the directions passed by the DRP stand quashed, the order passed by the Transfer Pricing Officer to give effect to these directions and the impugned rectification order passed by the Assessing Officer to give effect to the TPO's order, must also stand quashed. Ordered, accordingly. All other related grievances with respect to the ALP adjustment as raised in this appeal, in view of the above findings, are rendered infructuous and academic, and do not call for any specific adjudication. We may,however, add that this order is without prejudice to any such order as the DRP may, within the permissible framework of the law- including on the limitation aspect, pass under rule 13 on its own or on an application by such parties as are permitted to file such an application.
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