2015 (2) TMI 1084 - AT - Income Tax

Transfer pricing adjustment - additional evidence provided by the assessee not admitted - Held that - DRP has not followed the directions of the Tribunal. The evidence filed by the assessee before it should have been taken on record as per section 144(C) (6) (c) of the Act and it goes into the root of the matter and are necessary for adjudication of the appeal. In these circumstances we are of the considered opinion that the additional evidence provided by the assessee should be admitted. In the result we admit these additional evidences. As these evidences have to be considered on merit we set aside the matter to the file of the AO for fresh adjudication after obtaining a report from TPO. The TPO shall pass an order De-novo after providing adequate opportunity to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Appeal against the order of Assessing Officer under sections 143(3) and 144C of the Income Tax Act, 1961.
2. Re-appraisal of data provided by the assessee before the Transfer Pricing Officer (TPO) on availing intra-group services.
3. Consideration of additional evidence by the Dispute Resolution Panel (DRP) and its impact on the assessment.

Analysis:
1. The appeal was filed by the assessee against the Assessing Officer's order under sections 143(3) and 144C of the Income Tax Act, 1961. The ITAT, in a previous order, remitted the matter to the DRP for fresh consideration as the objections raised by the assessee were rejected without a speaking order. The ITAT directed the DRP to decide the issue afresh based on the data provided by the assessee before the TPO concerning intra-group services.

2. The DRP, following the ITAT's directions, limited its re-appraisal to the data provided by the assessee on availing intra-group services. The DRP considered the transfer pricing study and various letters submitted by the assessee to the TPO. It was emphasized that the sufficiency of evidence to justify payments for services from group companies needed to be assessed based on the documentation presented before the TPO. The DRP concluded that the assessee failed to establish both the receipt of management services and the arm's length values of such services.

3. The assessee, aggrieved by the DRP's decision, filed an appeal and sought admission of additional evidence not considered by the DRP. The ITAT, after considering the submissions, held that the DRP did not follow the Tribunal's directions and should have admitted the evidence filed by the assessee. The ITAT allowed the admission of additional evidence and set aside the matter to the Assessing Officer for fresh adjudication, with instructions to obtain a report from the TPO and provide adequate opportunity to the assessee. Consequently, the appeal of the assessee was allowed for statistical purposes.

In conclusion, the ITAT's judgment addressed the issues of re-appraisal of data on intra-group services, consideration of additional evidence, and the proper adjudication process, ensuring fair treatment and adherence to legal provisions in the assessment proceedings.