Chapter XX-C permits consideration of earlier agreements with Form 37-I when assessing the statutory statement

Under Chapter XX-C of the Income-tax Act, the Appropriate Authority is not confined to the proforma agreement filed in Form 37-I and may consider earlier private agreements accompanying the form when they are relevant. The statutory scheme treats Form 37-I as the operative statement, but it does not exclude connected contractual material from consideration. The Delhi High Court held that the Authority erred in assuming such prior agreements were irrelevant and directed reconsideration after taking those agreements into account.

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Issues: Whether the Appropriate Authority, while acting under Chapter XX-C of the Income-tax Act, 1961, was required to consider the earlier private agreements accompanying Form 37-I and not confine itself only to the proforma agreement filed in Form 37-I.

Analysis: The scheme of sections 269UC, 269UD and 269UK of the Income-tax Act, 1961, as explained in the earlier decisions referred to in the judgment, shows that Form 37-I is the statutory statement on which the Authority acts, but it does not follow that the Authority is barred from looking at earlier agreements where they are relevant and accompany the statutory form. The reasoning in the earlier Delhi decision was treated as still supporting the proposition that a proforma agreement may be examined along with the prior agreement, and the Court found that the Authority had erred in proceeding on the assumption that such material could not be considered.

Conclusion: The objection that the earlier agreements could not be looked into was rejected, and the Authority was directed to reconsider the matter after taking the agreements into account.

Ratio Decidendi: In proceedings under Chapter XX-C, the Appropriate Authority is entitled to consider relevant prior agreements accompanying Form 37-I, and it cannot decline jurisdiction on the mistaken footing that only the statutory proforma agreement is relevant.

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