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TMI Blog2018 (7) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent has erroneously come to the conclusion that the ITAT has committed an error in respect of fixing the Transfer Prices. The learned Senior Counsel is of an opinion that the order impugned is an error apparent on record in view of the fact that the findings arrived by the ITAT ,after adjudication, in its order has been declared as erroneous by the respondents for which the respondent has no jurisdiction or authority. It is contended that no show cause notice was issued in respect of the differences now raised by the first respondent in the notice for revising the royalty payment. 3.The contentions of the writ petitioner is that the issue drawing strength from the earlier decision of the Bench of the Tribunal for the preceding assessment year, wherein there was a categorical finding by the Transfer Pricing Officer(TPO) that the average rate of royalty payment in the industry was 4.7%. Further, the contention of the writ petitioner is that the average royalty payment in automotive sector from the study of 35 licenses is 4.7%, which is higher than the appellant's average rate of royalty payment of 3.60%. 4.By showing the screen shot details, the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O). 6.Pursuant to the order of the ITAT , the Transfer Pricing Officer(TPO) had granted several hearings to the writ petitioner and finally passed an order on 27.03.2017, which is under challenge in the present writ petition. Thus, the writ petitioner has made an attempt to maintain the present writ petition on merits of the issues i.e., how the arm's length price has to be determined. 7.This Court is of an opinion that the said issue cannot be adjudicated in a writ petition and these factual disputes are to be adjudicated by the competent authorities and by the ITAT . Bye-passing all these Appellate Forums, the writ petitioner cannot approach this Hon'ble Court under Article 226 of the Constitution of India for adjudicating these factual issues in respect of considering the arm's length price to be determined. 8.The learned counsel appearing on behalf of the respondents opposed the contentions raised on behalf of the writ petitioner by stating that the writ petition itself is not maintainable. The present writ petition has been filed, challenging the order passed by the Deputy Commissioner of Income Tax Transfer Pricing Officer(TPO). Based on the records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision for the preceding year, we have already decided that the average rate of royalty payment in the industry has to be considered in the case of the assessee for determining the arm's length price and if the same is more than the rate of royalty payment made by the assessee, then no adjustment is required. Since the Ld.A.R has pointed out that in the case of the assessee the rate of Royalty payment is less than the rate prevalent in the industry we hereby direct the learned TPO to verify the same and decide the matter in the light of our above decision. To that extent, the order of the Tribunal stands corrected and modified." 10.It is urged before this Court that the ITAT has not decided the matter in respect of the factual details and the particulars involved in the case of the writ petitioner. Contrarily, the ITAT remanded the matter back for re-adjudication. When the process of re-adjudication is undertaken by the competent authority/respondents, they are duty bound to verify all the records once again and decide the matter on merits and in accordance with law. On receipt of the order of remand from the ITAT , the respondents had undertaken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that certain factual details based on the records can be re-adjudicated or verified once again when the matter was remanded back for re-consideration. Though there is a finding recorded by the ITAT during the course of presenting the case, ultimately the case was remanded to the original authority for re-consideration by the ITAT . When the case was remanded back for re-adjudication, the findings made by the ITAT cannot be taken or relied upon as it is. The very purpose of remanding the matter to the original authority by the Courts/Tribunals are to ensure that all the records and relevant factors are to be re-considered, re-adjudicated and a revised order is to be passed. When the order of the ITAT is unambiguous and when the case of the writ petitioner was remanded back for reconsideration in the hands of the original authorities, then the original authorities are bound to conduct an enquiry by verifying the original records once again and re-adjudicate the matter, re-consider the factual aspects and accordingly, pass a final order. The said exercise was done in the present case. Thus, this Court do not find any error on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by reducing only the Excise duty from the gross sales and not reducing the other two items, viz, landed cost of imported components and cost of standard bought-out components. This has been done only to bring down the royalty ratio as seen from the chart, which is re-presented in a comparative form in the table below to enable totaling of crucial columns which has been avoided by the Petitioner: (Figures in Rs.in crores) Market Model Net Sales as per RBI guideline s Sales for royalty ratio purposes Royalty Rate Royalty Ratio* Royalty amount (1) (2) (3) (4) (5) (6) (7) Domestic Santro 2533.97 2953.85 5% of value in col.3 4.29 126.70 Accent 218.32 279.02 5% of value in col.3 3.91 10.92 Sonata 16.23 48.99 5% of value in col.3 1.66 0.81 Getz 343.45 519.58 5% of value in col.3 3.31 17.17 Elantra 3.95 13.43 5% of value in col.3 1.47 0.20 Verna 692.20 1251.71 5% of value in col.3 2.77 34.61 i-10 1080.52 1240.37 100 $ each for 44488 cars 1.44 17.84 Export Santro 1164.36 1605.37 8% of value in col.3 5.80 93.15 Accent 149.33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and records. Thus, the principles of natural justice has been complied with and there is no question of issuing any further show cause notice in respect of the discrepancies now arrived by the Transfer Pricing Officer(TPO). This apart, if at all the writ petitioners are aggrieved, they are at liberty to approach the Disputes Resolution Panel and thereafter the ITAT for complete adjudication of their grievances, if any exists. 18.In respect of the ground of error apparent on record, it is contended on behalf of the respondents that the findings made by the ITAT need not be taken into account as a conclusive one in view of the fact that the ITAT had a doubt in respect of these factual aspects and remanded the matter back. The very intention of the ITAT for remanding the matter back is to make the authorities to reconsider the entire issues, more specifically, the royalty payment. Such being the scope of the order passed by the ITAT , the respondents had not violated the orders passed by the ITAT and the petitioner cannot insist the respondents that the average rate of royalty payment recorded by the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elements of the constitutional structure. (These cannot be catalogued but can only be illustrated): (1) The supremacy of the Constitution. (2) Republican and Democratic form of government and sovereignty of the country. (3) Secular and federal character of the Constitution. (4) Demarcation of power between the Legislature, the executive and the judiciary. (5) The dignity of the individual secured by the various freedoms and basic rights in Part III and the mandate to build a welfare State contained in Part IV. (6) The unity and the integrity of the Nation. 2. Holiness Kesavananda Bharati Sripadagalvaru v. State of Kerala and Anr. [MANU/SC/0445/1973 : (1973) 4 SCC 225]. That separation of powers between the legislature, the executive and the judiciary is the basic structure of the Constitution is expressly stated by Sikri, C.J. 3. P. Kannadasan and Ors. v. State of T.N. and Ors. [MANU/SC/0650/1996 : (1996) 5 SCC 670] the Supreme Court noted that the Constitution of India recognised the doctrine of separation of powers between the three organs of the State, namely, the legislature, the executive and the judiciary. The Court said: It must be remembered that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and Supreme Court) is empowered by the Constitution to declare a law made by the legislature (Parliament and State legislatures) void if it is found to have transgressed the constitutional limitations or if it infringed the rights enshrined in Part III of the Constitution. (v) The doctrine of separation of powers applies to the final judgments of the courts. Legislature cannot declare any decision of a court of law to be void or of no effect. It can, however, pass an amending Act to remedy the defects pointed out by a court of law or on coming to know of it aligned. In other words, a court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. (vi) If the legislature has the power over the subject-matter and competence to make a validating law, it can at any time make such a validating law and make it retrospective. The validity of a validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation law it removes the defect which the courts had found in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Sachdev and Ors. vs. State of Maharashtra and Ors. (07.02.2011 - SC) : MANU/SC/0103/2011 It is well settled that ordinarily relief Under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.) 3. Commissioner of Income Tax and Ors. v. ChhabilDass Agarwal, MANU/SC/0802/2013 : 2014 (1) SCC 603, as follows: Para 15. while it can be said that this Court has recognised some exceptions to the Rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in ThansinghNathmal case, Titaghur Paper Mills case and other similar judgments that the High Court will not entertain a petition Under Article 226 of the Constitution if an effective alternative remedy is avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative remedy it is within the jurisdiction of discretion of the High Court to grant relief under Article 226 of the Constitution. At the same time, it cannot be lost sight of that though the matter relating to an alternative remedy has nothing to do with the jurisdiction of the case, normally the High Court should not interfere if there is an adequate efficacious alternative remedy. If somebody approaches the High Court without availing the alternative remedy provided the High Court should ensure that he has made out a strong case or that there exist good grounds to invoke the extraordinary jurisdiction. 6. K.S. Rashid and Sons v. Income Tax Investigation Commission and Ors., AIR (1954) SC 207; Sangram Singh v. Election Tribunal, Kotah and Ors., AIR (1955) SC 425; Union of India v. T.R. Varma, AIR (1957) SC 882; State of U.P. and Ors. v. Mohammad Nooh, AIR (1958) SC 86 and M/s K.S. Venkataraman and Co. (P) Ltd. v. State of Madras, AIR (1966) SC 1089, Constitution Benches of the Supreme Court held that Article 226 of the Constitution confers on all the High Courts a very wide power in the matter of issuing writs. However, the remedy of writ is an absolutely discret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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