2015 (5) TMI 900 - AT - Income Tax

TP addition - Dispute Resolution Panel deleting the addition of TP regarding super normal profit of one comparable company having variation in PLI ranging from (-) 13.55% to 113.49% and in TNNM - whether AO erred in filing an appeal against the directions of DRP passed under section 144C(5)? - Held that - There is no dispute that the objections against the draft order of the Assessing Officer were filed by the assessee on 23.12.2010 which were rejected by the DRP in-liminie on a technical ground that the same were not signed by the Managing Director of the assessee. On further appeal, the Tribunal restored the matter to the record of the DRP for deciding the objections on merits. Therefore, it is not a case of filing of fresh objection before the DRP but the matter was restored by the Tribunal to the record of the DRP for consideration of the objections filed by the assessee on 23.12.2010 on merits. In the case in hand, the objections were filed on 23.12.2010, therefore, the directions passed by the DRP on the objections filed by the assessee are binding on the Assessing Officer. The order of this Tribunal restoring the matter to the record of the DRP for deciding the objections filed by the assessee on merits would not change the factum of filing the objections by the assessee on 23.12.2010 and therefore the direction of the DRP dated 11.03.2014 are in respect of the objections dated 23.12.2010 can t be challenged by the Assessing Officer. The appeal filed by the Assessing Officer is not maintainable as the Assessing Officer is not permitted to file the appeal against the directions of the DRP in respect of the objections filed by the assessee dated 23.12.2010 which is prior to 01.07.2012 - Decided against revenue.

Summary

Issues:
1. Maintainability of appeal filed by Revenue against directions of DRP.
2. Exclusion of Mold-tek Technologies Ltd. from list of comparables.

Issue 1: Maintainability of appeal filed by Revenue against directions of DRP

The case involved an appeal by the Revenue and cross objections by the assessee against an assessment order under the Income Tax Act for the assessment year 2007-08. The Revenue challenged the deletion of addition of TP regarding super normal profit and exclusion of a comparable company. The assessee objected to the maintainability of the Revenue's appeal, citing the date of objections filed. The Tribunal analyzed the timeline of objections, noting that objections were filed before the DRP on 23.12.2010 and later reconsidered after Tribunal's direction. The Tribunal interpreted the relevant provisions of the Act, emphasizing that prior to the amendment, the Revenue was not allowed to file an appeal against DRP's directions. The Tribunal concluded that as objections were filed before 01.07.2012, the Revenue's appeal was not maintainable, and the directions of the DRP were binding on the Assessing Officer.

Issue 2: Exclusion of Mold-tek Technologies Ltd. from list of comparables

The dispute centered around the exclusion of Mold-tek Technologies Ltd. from the list of comparables by the DRP. The Revenue challenged this exclusion, arguing that the objections filed by the assessee should be considered as filed afresh after Tribunal's direction. However, the Tribunal rejected this argument, emphasizing that the objections were originally filed on 23.12.2010 and were not considered as fresh objections. The Tribunal highlighted the statutory provisions and amendments, clarifying that the Assessing Officer could not challenge the DRP's directions based on objections filed before 01.07.2012. Consequently, the Tribunal dismissed the Revenue's appeal as not maintainable and allowed the cross objections of the assessee in part.

In conclusion, the Tribunal ruled that the appeal filed by the Revenue was not maintainable due to objections being filed before 01.07.2012, and upheld the exclusion of Mold-tek Technologies Ltd. from the list of comparables. The judgment provided a detailed analysis of the legal provisions and timelines, ensuring adherence to statutory requirements and precedents in tax law.