TaxTMI 
TaxTMI 
TaxTMI 
2011 (11) TMI 111
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....f India. It is engaged in the research activities and provides information technology enabled services primarily to its associate enterprises. During the year under consideration it had entered into international transactions with Evalueserve Ltd., Bermuda, which comprised of provision of IT enabled back office services and reimbursement of travelling expenses. While computing the arm's length price, the assessee selected transactional net margin method (TNMM) and in applying such method it used the profit level indicator of net operating profit/operating cost. It also selected external comparables using a scientific screening process involving various quantitative and qualitative filters to arrive at independent companies with a comparable....
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....as added the said amount to the income of the assessee. The assessee preferred to file objections against the said draft assessment order on 27th January, 2010 and after recording the filing of objections and presence of the assessee, ld. DRP has upheld the addition with the following observations:- "Having considered the arguments of assessee representatives, the written arguments submitted and the draft assessment order, the DRP finds that all the questions raised by the assessee have been answered in details by the TPO and the A.O. in the draft order. The rejection to comparable are based on detailed reasoning and after applying reasonable filters. The denial of working capital adjustment as also capacity adjustment is based on cogent r....
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....h the parties. In ground Nos.1 and 2, the grievance of the assessee are as under:- "1. That on the facts and in the circumstances of the case and in law, the order passed by the Ld. Assessing Officer ("A.O.") is bad in law and void ab-initio. 2. That on the facts and in the circumstances of the case and in law, the reference made by the Ld. A.O. suffers from jurisdictional error as the Ld. A.O. did not record any reasons in the draft assessment order based on which he reached the conclusion that it was "expedient and necessary" to refer the matter to the Ld. Transfer Pricing Officer ("TPO") for computation of the arm's length price, as is required under section 92CA(1) of the Income Tax At, 1961 ("Act")." 8. In other gr....
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....the variation made by the Assessing Officer or he can file objections either to Dispute Resolution Panel or to the Assessing Officer. Since the assessee had filed his objections with DRP, then, under sub-section (5) the DRP, upon receipt of objection is under obligation to issue directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment and under sub-section (6) such directions which are put up under sub-section (5) would be further considering the following documents: (a) draft order; (b) the objection filed by the assessee; (c) the evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, valuation officer, or TPO or any other authority; (e) records relating ....
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....5), as it can be seen in the present case, are not speaking about what objections were raised by the assessee and how they have been found to be not acceptable. Ld. DRP has simply observed that all the questions raised by the assessee have been answered in detail by the TPO and by the Assessing Officer in the draft order. The rejection of comparables are based on detailed reasoning and after applying reasonable filters. The denial of working capital adjustment as also capacity adjustment is based on cogent reasoning, use of current data has been found more appropriate and fresh search has been rejected as there is no valid reason. Similarly, the DRP has rejected the other grounds. Therefore, the order passed by the ld. DRP is a non-speaking....
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....1 is quashed and the matter is remanded to the said respondent to adjudicate afresh. Be it noted, when a quasi-judicial authority deals with a lis [sic], it is obligatory on its part to ascribe cogent and germane reasons as the same is the heart (sic] and soul of the matter and further, the same also facilitates appreciation when the order is called in question before the superior forum. Needles to say that the competent authority, while passing the order, shall keep in mind the order dated 29th November, 2010 wherein we had directed that the period from the date of filing the write petition and four weeks after its disposal shall stand excluded, while computing the limitation for the department to pass an assessment order. The writ petiti....