2016 (5) TMI 454 - HC - Income Tax

Mumbai has a Chief Principal Commissioner of Income Tax at the helm of all the Chief Commissioners in Mumbai. Thus they must be having a system in place of keeping a record of question of law which have been admitted or dismissed by this Court so that a consistent stand is taken by the Revenue when a similar questions arises before the same or different bench of this Court.

Summary

Issues:
Transfer pricing adjustment - International transactions vs. all business transactions of the Assessee.

Analysis:
The main issue in this judgment revolves around whether transfer pricing adjustment should only be made in respect of international transactions or if it should be extended to all business transactions of the Assessee at the entity level. The Court referred to previous cases where similar issues were raised by the Revenue, such as Commissioner of Income Tax Vs. M/s. Tara Jewels Exports Pvt. Ltd., Commissioner of Income Tax Vs. Goldstar Jewellery Design (P.) Ltd., and Commissioner of Income Tax Vs. Ratilal Becharlal & Sons. In those cases, the Court held that transfer pricing adjustments are restricted only to international transactions and should not be applied to all transactions, including those with non-Associated Enterprises.

The Court expressed concern over the inconsistent approach taken by the Revenue in different cases and highlighted the need for a consistent stand on legal issues. The Court noted that the Revenue failed to point out relevant decisions in subsequent cases, despite the availability of favorable judgments. The Court emphasized the importance of maintaining a consistent position on legal matters, especially when represented by the same counsel in multiple cases.

In response to the Revenue's lack of action in serving orders and providing necessary information, the Court directed the counsel for the Revenue to serve copies of the order to the respective Commissioners of Income Tax and the Chief Principal Commissioner of Income Tax in Mumbai. The Court also instructed the Commissioners to file affidavits detailing how their commissionerates keep records of appeal orders at the admission stage to ensure a consistent approach on legal issues.

Additionally, the Respondent was directed to serve a copy of the order upon the Central Board of Direct Taxes (CBDT). The appeal was adjourned to a later date to allow the Revenue's counsel to address the queries raised by the Court and to ensure proper communication and compliance with the Court's directions.