2021 (8) TMI 1364 - HC - Income Tax

Dismissed Writ Appeal stresses exhausting DRP remedy first

The High Court dismissed the Writ Appeal challenging a transfer pricing order under the Income Tax Act for Assessment Year 2015-16, emphasizing the need ... Validity of order passed TPO u/s 92CA(3) - non follow the earlier decision of the Tribunal in the assessee's own case - as argued though the assessee had placed reliance on the decision of the Tribunal in the assessee's own case, wherein, identical issue was considered in [2018 (5) TMI 2069 - ITAT CHENNAI] TPO did not even refer to the said decision and mechanically passed the order - HELD THAT:- TPO has passed the order, dated 30.10.2018, pertaining to Assessment Year 2015-16, wherein, certain observations have been made with regard to the Arms Length Price. Whether the said adjustment suggestion made in the order dated 30.10.2018 is sustainable on facts can very well be examined by the DRP, which has been conferred with sufficient jurisdiction in terms of Section 144-C of the Act. Therefore, in our considered view, the appellant should not bypass the said remedy. That apart, we note that, as against the order passed by the Tribunal, which was referred to by the assessee before the TPO, which according to the assessee covers the issue, the Revenue has filed a Tax Case Appeal before this Court and the said appeal has been entertained and is pending since the year 2018. Since each of the Assessment Year is separate by itself, the assessee can very well agitate all issues before the DRP. It is true that, if identical transactions have been considered for the earlier Assessment Years or for the subsequent Assessment Years, unless there are cogent reasons for the TPO/Assessing Officer to take a different view, normally, the trend in which the assessment has been made will not be upset or a different view will not be recorded. In any event, all issues can very well be agitated by the appellant/assessee before the DRP. We find that, in the counter affidavit filed by the respondent in the writ petition, certain factual issues have been set out to sustain their contention that the decision of the Tribunal for the Assessment Year 2013-14 would not apply. There are also other averments made touching upon the merits of the matter. The assessee has also filed a rejoinder affidavit to the counter affidavit. In the impugned order, we also find that the learned Single Bench has made certain observations or recorded the submissions of the Revenue, touching upon the merits. In our considered view, if the appellant has to avail the remedy provided under Section 144-C of the Act, before the DRP, then the Court would not be justified in making any observation touching upon the merits of the assessment and all issues should be left open. Writ Appeal is dismissed and the order passed by the learned Single Bench is affirmed, giving liberty to the appellant/assessee to approach the DRP. Issues:Challenging transfer pricing order under Income Tax Act for Assessment Year 2015-16 without exhausting remedy before Dispute Resolution Panel (DRP).Analysis:The writ petitioner filed a Writ Appeal against the order passed by the Transfer Pricing Officer (TPO) under Section 92CA(3) of the Income Tax Act for the Assessment Year 2015-16. The petitioner contended that the TPO did not consider the decision of the Tribunal in the petitioner's own case, leading to a challenge based on lack of judicial discipline. The Single Bench noted that the petitioner could approach the Dispute Resolution Panel (DRP) if aggrieved by the TPO's order before filing a writ petition, emphasizing the need to exhaust this remedy before seeking judicial intervention.The High Court observed that the TPO's order contained certain observations regarding the Arms Length Price, suggesting that the DRP was the appropriate forum to examine the sustainability of these adjustments under Section 144-C of the Act. The Court highlighted the importance of not bypassing the DRP remedy and mentioned a pending Tax Case Appeal filed by the Revenue related to the Tribunal's decision referred to by the assessee. Each Assessment Year was considered separate, allowing the assessee to raise all issues before the DRP, especially if similar transactions were involved in other years.The Court dismissed the Writ Appeal, affirming the Single Bench's order and granting liberty to the appellant to approach the DRP. It emphasized that all factual and legal issues should be raised before the DRP, and the Court refrained from making observations on the merits of the assessment to ensure a fair consideration by the DRP in accordance with the law. The findings touching upon the merits of the matter were vacated, leaving the appellant free to present all issues before the DRP for a comprehensive review.