2020 (2) TMI 1733 - HC - Income Tax

ITAT exercising the power of remand to DRP - Tribunal justification in remanding the matter back to the DRP to examine the issue whether the appellant had conceded that it had a permanent establishment in India - HELD THAT - We find that the Tribunal in its very detailed order recorded the rival submissions of the parties. In this background in our view there was no purpose of remanding the matter back to the DRP on a small aspect namely whether the appellant had made any concession with regard to the existence of its PE in the India. The same was a matter of record if at all. The Tribunal could have decided the said issue and all other issues arising from answer to the said issue or in consequences thereof. We therefore answer the question framed in favour of the appellant. We set aside the impugned order in so far as the operative direction contained in paragraph 88 is concerned. We however make it clear that the Tribunal shall limit its consideration to the aforesaid aspects since the aspect of issuance of notice under Section 147/148 stands concluded against the assessee.

Summary

Issues involved:
1. Correctness of ITAT's power of remand to DRP.
2. Abdication of duty by ITAT as the final fact-finding authority.
3. Justifiability of remand by ITAT when all necessary facts and evidence were before it.

Analysis:
1. The primary issue in this case was whether the ITAT was correct in law in exercising the power of remand to the DRP. The appellant contended that the Tribunal was not justified in remanding the matter back to the DRP to examine the issue of whether the appellant had conceded the existence of a permanent establishment in India. The Tribunal's order directed the matter to be sent back to the DRP for further examination. The appellant argued that since the issue of concession was a matter of record, the Tribunal should have decided it and all other related issues without remanding it. The High Court agreed with the appellant, stating that there was no purpose in remanding the matter on a small aspect that was already on record. The Court set aside the impugned order and directed the Tribunal to limit its consideration to the specific aspects mentioned, as the issue of notice under Section 147/148 was already concluded against the assessee.

2. The second issue raised was whether the ITAT abdicated its duty as the final fact-finding authority by remanding the matter. The appellant argued that the Tribunal should have examined the concession made by the appellant regarding the existence of a permanent establishment in India before proceeding to determine the liability towards taxation. The High Court noted that the Tribunal had recorded the rival submissions of the parties in detail and found that remanding the matter back to the DRP on a small aspect was unnecessary. The Court ruled in favor of the appellant, stating that the Tribunal should have decided the issue and related matters itself without remanding it.

3. The final issue was whether the remand by the ITAT was warranted when all necessary facts and evidence were before it. The appellant contended that since all essential facts and evidence were already presented and heard in detail by the ITAT, remanding the matter was not justified. The High Court agreed with the appellant's argument and set aside the impugned order, directing the Tribunal to limit its consideration to specific aspects mentioned in the judgment. The Court left all rights and contentions of the parties open and scheduled the next appearance before the Tribunal on a specified date.

In conclusion, the High Court found in favor of the appellant on all the issues raised, setting aside the remand order by the ITAT and directing the Tribunal to limit its consideration to specific aspects without unnecessary remand.