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2019 (5) TMI 951 - HC - Income TaxTP Adjustment - writ against DRP order - admission of additional documents - constitution & working of DRP - reject the methodology adopted by the petitioner for the reason that the segmental profit and loss had not been disclosed as part of the financial statements and were also not certified by an external Chartered Accountant - rejection claim of assessee for the reason that remand report of the TPO as incomplete - HELD THAT:- The intent and purpose of constituting the DRP, with three high ranking Commissioners that have exclusive jurisdiction for the said purpose, is to provide effective and speedy resolution of transfer pricing disputes. DRP is thus expected to use every measure possible to resolve a dispute before it. DRP, in the present case, rejects the petitioners’ claim solely on the reasoning that the report of the TPO was incomplete. If at all further information was required, the DRP is expected to have called for the said information to equip itself with the necessary material to come to a reasoned conclusion. Its conclusion will depend upon independent application of mind to all relevant facts and circumstances but such an exercise has to be undertaken in a judicious manner, taking cognizance of all relevant factors. The fact that the DRP has, in the present case, accepted the request to admit additional documents and seek a remand report from the assessing officer can only mean that the panel was of the view that further examination of the issue by the Department was called for. Having done this, the purpose is lost if the exercise is not carried through to its logical conclusion. The remand report of the TPO states that the addition was unwarranted on facts but the DRP reasons that the aspect of ‘cost’ being included in the sales was not examined by the officer. Certainly the DRP is not bound to accept the conclusions of the officer in the report, but the Panel could well have sought a clarification, or directed the officer to carry out further verification in this regard. Set-aside the order of the DRP dated 16.12.2016 and direct rehearing of the matter, in regard to the adjustment relating to ₹ 634,773,087/-. The DRP will decide the issue de novo, calling for such information as it deems necessary either from the Assessing Officer or the petitioner, and after affording an opportunity of personal hearing to the petitioner. Seeing as the matter pertains to Assessment Year 2011-12, the DRP will conclude the hearing within a period of two months from date of receipt of a copy of this order. The writ petition is allowed in the aforesaid terms.
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