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 to exhaust the remedy before the Dispute Resolution Panel (DRP) before seeking judicial intervention. The Court highlighted the importance of addressing all issues before the DRP and refrained from making observations on the assessment's merits to ensure a fair consideration by the DRP. The appellant was granted liberty to approach the DRP, with findings regarding the assessment's merits vacated for comprehensive review by the DRP.

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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.

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