2019 (4) TMI 1393 - HC - Income Tax

Rectification u/s 254 - Non consideration of specific ground raised - TP adjustment on Payment of 'Corporate fees' - admission of additional evidence allowed - Tribunal neither considered itself nor ask the AO to re- decide - HELD THAT - As before the Tribunal the assessee had raised specific ground to challenge the addition on Payment of 'Corporate fees' . In fact, this was the substantial part of the Petitioner's challenge in the Appeal before the Tribunal. In support of such ground, the Petitioner had also sought permission to produce additional evidence. Such permission was granted. Additional evidence was allowed to be brought on record. Thereafter the choice before the Tribunal was either to ask the Assessing Officer to take such additional evidence into account and re- decide the issue or to do itself. Unfortunately, the Tribunal did neither. Tribunal disposed of the Petitioner's Appeal without giving any answer to the Petitioner's challenge to the addition made by the Assessing Officer. The power of rectification of the Tribunal flowing from section 254(2), howsoever, restricted, would definitely be available in a situation like the present one. When the Appellant before the Tribunal raises a ground, presses the ground in service, it is the duty of the Tribunal to dispose of such ground and give its opinion thereon. A ground which is raised and not given up when remains undecided in the judgment of the Tribunal, gives rise to an error on the face of record, which is rectifiable. The impugned order of the Tribunal is set aside. The Petitioner's request for rectification of the original judgment of the Tribunal dated 18/10/2017 is granted.

Summary

Issues Involved:
Transfer Pricing Adjustments - Provision of application engineering services, Payment of 'Corporate fees'; Rectification of Tribunal's order regarding additional evidence and Transfer Pricing Adjustments.

Transfer Pricing Adjustments:
The Petitioner, a company, filed a return of income for the assessment year 2012-2013, which was scrutinized by the Assessing Officer leading to Transfer Pricing Adjustments suggested by the Transfer Pricing Officer. The Assessing Officer incorporated these adjustments in a draft order, which was upheld by the Dispute Resolution Panel. The Petitioner appealed to the Tribunal disputing the adjustments related to Corporate fees. The Tribunal allowed additional evidence but did not address the substantial challenge to the Corporate fees adjustment. The Tribunal, later on, deleted the Corporate fees adjustment. The Petitioner sought rectification as the Tribunal did not direct the Assessing Officer to reconsider the Corporate fees addition based on the additional evidence. The Tribunal rejected the rectification application, stating it cannot review its decision. However, the High Court held that the Tribunal should have exercised rectification powers as the Petitioner's challenge remained unanswered, and the Tribunal failed to give an opinion on the Corporate fees challenge. The High Court set aside the Tribunal's order and granted the Petitioner's request for rectification, reviving the Appeal for deciding the Corporate fees challenge.

Rectification of Tribunal's Order:
The Petitioner filed an Application for rectification before the Tribunal, arguing that the Tribunal allowed additional evidence but did not direct the Assessing Officer to reconsider the Corporate fees addition based on it. The Tribunal rejected the Application, stating it cannot review its decision. The High Court held that the Tribunal should have exercised rectification powers in this case. The Petitioner's challenge to the Corporate fees addition remained unanswered, and the Tribunal failed to give an opinion on it. The High Court set aside the Tribunal's order, granted the Petitioner's request for rectification, and revived the Appeal for deciding the Corporate fees challenge.

This analysis provides a detailed overview of the legal judgment involving Transfer Pricing Adjustments and the rectification of the Tribunal's order, ensuring a comprehensive understanding of the issues and their resolution by the High Court.