2014 (4) TMI 114 - AT - Income Tax

Transfer pricing adjustments - Adjustment u/s 92CA assessee is pleading that Ld. DRP should have passed a proper and speaking order dealing with the objections and submissions of the assessee - Held that - settled law that appellate orders even in administrative case should be consistent with Rule of natural justice - Interest of justice in this case will be served, if matter is remitted to file of Ld. DRP - Ld. DRP is directed to consider issue afresh and properly deal with objections and submissions of assessee by way of passing a speaking order - Following the decision of Hon ble Jurisdictional High Court in the case of Vodafone Essar Ltd. vs. DRP & Others 2011 (12) TMI 22 - Delhi High Court , matter remanded back Decided in favor of Assessee.

Summary

Issues:
1. Whether the Ld. DRP erred in law and on facts by summarily rejecting the appellant's objections and disregarding the material placed on record thereby not following the procedure laid down u/S. 144C(5), 144C(6) & 144C(7) of the I.T. Act.

Detailed Analysis:
The appeals were against the Orders of the Ld. Assessing Officer passed u/S. 143(3)/144C of the I.T. Act for the assessment years 2007-08 & 2008-09. The primary issue raised by the assessee was that the Ld. DRP erred in law and on facts by summarily rejecting the objections and disregarding the material placed on record, not following the prescribed procedure under the IT Act. The company was involved in international transactions related to the purchase of electricity meters for resale, availing management services, paying interest on external commercial borrowings, and reimbursement of expenses.

For the assessment years in question, the Transfer Pricing Officer (TPO) made adjustments to the income of the assessee under Section 92CA. The objections raised by the assessee before the Ld. DRP were rejected, and the Ld. DRP affirmed the actions of the TPO. The assessee contended that the methodology adopted for benchmarking its international transactions was appropriate, but the TPO did not accept it and made upward adjustments to the income.

The assessee argued that the Ld. DRP should have passed a proper and speaking order dealing with the objections and submissions. Citing a relevant decision of the Jurisdictional High Court, the assessee requested the matter to be remitted back to the Ld. DRP for proper consideration. The Tribunal found that the appellate orders should adhere to the Rule of natural justice and directed the Ld. DRP to reconsider the issue, deal with the objections and submissions of the assessee, and pass a speaking order. The Tribunal allowed the appeals for statistical purposes, emphasizing the importance of a fair hearing and consideration of relevant case laws.

In conclusion, the Tribunal held that the matter should be remitted to the Ld. DRP for a fresh consideration in accordance with the principles of natural justice. The assessee should be granted a fair opportunity to present their case, and the Ld. DRP should properly address the objections and submissions while considering recent case laws on the subject.