2014 (10) TMI 105 - HC - Income Tax

High Court quashes Tribunal orders for lack of clarity, directs fresh consideration

The High Court quashed the Tribunal's orders from January and May 2011 due to lack of clarity in the correction made regarding arm's length price ... Reduction of 5% of ALP u/s 92CA(2) – Tribunal did not considered the earlier order of the assessee – Held that:- The Tribunal's order has resulted in unnecessary confusion and chaos - The Tribunal ought to be aware and realise if any order passed by it in the prior AYs is followed for the successive years in relation to the same Assessee, then, it must indicate with sufficient clarity, the issue dealt with, the number of the appeal and the date of its order - The reference to the order must be correctly denoted - If it refers to some orders of the prior AYs, then it must also indicate in clear terms as to whether such an order has been delivered in consolidated Appeals of the Assessee and Revenue or whether in isolated appeal or successive appeals of either of them - It is only thereafter the higher Court will be in a position to appreciate the point involved in the matter – thus, the order of the Tribunal in relation to the claim of reduction of 5% of arm's length price of international transaction in view of proviso to section 92C(2) is set aside and the matter is remitted back to the Tribunal for fresh consideration – Decided in favour of revenue. Issues:Appeal challenging Tribunal's order, Correction sought in original order, Mistake in arm's length price reduction, Tribunal's exercise of powers, Confusion in Tribunal's orders, Quashing of Tribunal's orders, Restoration of Appeals for fresh decision.Analysis:1. The High Court heard a Revenue Appeal against the Income Tax Appellate Tribunal's order related to an Assessment Year. The Tribunal had partly allowed two Appeals, one by the Assessee and the other by the Respondent, on 5th January 2011.2. The Assessee moved an application seeking correction in the Tribunal's order, specifically regarding a mistake in the reduction of arm's length price. The Assessee argued that the Tribunal erred in stating the issue was decided against the Assessee in the preceding year, while it was actually in favor of the Assessee. The Tribunal's decision was based on a prior order related to the same Assessee and Assessment Year.3. The Revenue's counsel contended that the Tribunal's correction raised a question of law on the reduction of arm's length price under section 92C(2) of the Income Tax Act. The High Court reviewed previous Tribunal orders related to the same Assessment Year and criticized the lack of clarity in the Tribunal's references to prior orders, leading to confusion.4. The High Court found that the Tribunal's order lacked clarity on the correction made and the basis for it, causing uncertainty about which previous order was considered. Due to this ambiguity, the High Court quashed the Tribunal's orders from January and May 2011 and restored the Appeals to the Tribunal for a fresh decision on the specific question of arm's length price reduction.5. The High Court directed the Tribunal to reconsider the matter without influence from the previous orders, allowing both parties to present their case fully. The Court emphasized that it had not expressed any opinion on the merits of the case and urged the Tribunal to prioritize and expedite the resolution of the matter due to its age.