2015 (5) TMI 1198 - AT - Income Tax

TP Adjustment - A.O. passed a draft assessment order - assessee filed objections before the Dispute Resolution Panel (D.R.P.). Thereafter the D.R.P. passed its order u/s 144C(5) of the Act. Thereafter the A.O. passed order u/s 143(3) read with section 144C - HELD THAT - We find that the D.R.P. has not passed a speaking order in this case for both the A.Ys. The assessee has raised a number of contentions before the D.R.P. and none of these contentions were considered by the D.R.P. Under these circumstances we have no other alternative but to remand the matter back to the file of the D.R.P., with a direction that D.R.P. shall pass a speaking order on each and every contention raised by the assessee. It shall also give its views on various case laws cited by the assessee. In the result both these appeals are set aside to the file of the A.O. and are treated as allowed for statistical purposes.

Summary

Issues: Appeals against orders of Assessing Officer under Income Tax Act for AY 2006-07 and 2007-08, Transfer Pricing adjustments, non-speaking order by Dispute Resolution Panel (D.R.P.)

Analysis:
1. Background and Facts: The appellant, an IT company, provided back office support services to group companies on a cost-plus basis during FY 2005-06. The appellant operated on a risk-insulated basis and was entitled to a tax holiday under section 10A of the Income Tax Act. The appellant engaged in international transactions with Associated Enterprises (AEs) for the provision of IT-enabled services.

2. Transfer Pricing Dispute: The appellant filed a Transfer Pricing Study Report for both AYs, which was referred to the Transfer Pricing Officer (T.P.O.) for determining the arm's length price. The T.P.O. proposed adjustments, leading to a draft assessment order by the Assessing Officer (A.O.). The appellant raised objections before the Dispute Resolution Panel (D.R.P.), which passed a non-speaking order under section 144C(5) of the Act.

3. Appellate Tribunal's Decision: The Appellate Tribunal found that the D.R.P. failed to provide a detailed reasoning in its order and did not address the contentions raised by the appellant. As a result, the Tribunal remanded the matter back to the D.R.P. with directions to pass a speaking order addressing all contentions and case laws cited by the appellant. The appeals were set aside to the file of the A.O. and treated as allowed for statistical purposes.

4. Conclusion: The Appellate Tribunal allowed both appeals of the assessee for AY 2006-07 and 2007-08 due to the non-speaking order issued by the D.R.P. The Tribunal emphasized the importance of a detailed and reasoned decision by the D.R.P. in transfer pricing disputes. The matter was remanded back to the D.R.P. for a comprehensive review and decision based on the contentions raised by the appellant.

This summary provides a detailed analysis of the legal judgment, highlighting the key issues, facts, transfer pricing dispute, the Tribunal's decision, and the conclusion regarding the appeals under the Income Tax Act for the respective assessment years.