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Issues involved:
The judgment involves issues related to the presence of bias in the Dispute Resolution Panel (DRP) due to the jurisdictional Commissioner's involvement, rejection of contentions regarding appropriate remuneration of the Indian entity at arm's length, and denial of opportunity for cross-examination of individuals whose statements were used against the assessee. Bias in DRP Panel: The appeal raised concerns about bias in the DRP due to the presence of the jurisdictional Commissioner, leading to a request for restoration to the file of the Assessing Officer (AO). Citing precedents, the learned Counsel highlighted the need to address possible bias/conflict of interest, supported by the posting order of the jurisdictional Commissioner. The objection to the presence of the jurisdictional CIT on the DRP panel formed the primary basis of the appeal. Remuneration of Indian Entity: The contention regarding the appropriate remuneration of the Indian entity at arm's length was raised by the assessee, emphasizing rebates/incentives paid directly to the Indian entity by vendors. The AO's rejection of these contentions without examination and the DRP's non-consideration despite objections were challenged. The need for a fresh examination by the AO on this issue was stressed, supported by documents submitted to the AO/DRP and a request for cross-examination of relevant individuals. Cross-Examination Rights: The denial of the opportunity for cross-examining individuals whose statements were relied upon by the Revenue was another key issue. The assessee's request for cross-examination was made but not considered, leading to objections regarding natural justice principles. The need for AO to allow cross-examination to contest/justify/accept the statements was emphasized, highlighting the foreign company's right to cross-examine individuals in such proceedings. Decision and Directions: After considering the contentions from both parties, the Tribunal found merit in the objections raised and decided to set aside the orders of the AO and DRP. The entire assessment was restored to the file of the AO for fresh examination, focusing on the issues of appropriate remuneration of the Indian entity and the right to cross-examination. The Tribunal directed the AO to provide an opportunity for cross-examination and allowed the submission of relevant documents. The DRP, without the jurisdictional CIT/DIT, was instructed to consider objections raised by the assessee and issue necessary directions. Conclusion: The appeal filed by the assessee was allowed for statistical purposes, with the orders of the AO and DRP being set aside. The assessment procedure was restored to the file of the AO for re-examination, ensuring the rights of the assessee to present relevant documents and cross-examine individuals. The judgment aimed to address the issues raised by the assessee regarding bias, remuneration, and cross-examination, emphasizing the principles of natural justice and fair assessment procedures.
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