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2021 (3) TMI 1082 - HC - Income TaxRectification u/s 154 - Transfer pricing adjustments - It is submitted that under the guise of invoking his power under Section 154 of the Act seeks to review the assessment order - Jurisdiction of TPO to conduct a transfer pricing adjustment once the assessment has been completed by the Assessing Officer under Section 143(3) - HELD THAT - it is seen that the assessee at no point of time questioned the jurisdiction of the Assessing Officer to implement the directions of the TPO vide order dated 16.03.2006. The thin line of argument which is now placed before us is by referring to the printed notice form under Section 154 which was issued to the assessee. The order passed by the TPO shows that the assessee had cooperated in the proceedings and their authorized representative i.e. AGM (Finance) of the company has attended the hearings on various dates. The conduct of the assessee clearly demonstrates that they rightly understood the legal position and the present attempt of the assessee to question the jurisdiction of the Assessing Officer deserves to be rejected. Even before CIT(A) no where the jurisdiction of the Assessing Officer has been questioned. - CIT(A) proceeded to decide the matter on merits and passed orders dated 30.09.2016. The assessee carried the matter on appeal to the Tribunal and once again the assessee never raised any contention with regard to the validity of the notice dated 28.03.2006. Thus considering this factual situation we are of the clear view that the present attempt of the assessee is not tenable and accordingly rejected. The assessment order dated 28.02.2006 is an order under Section 143(3) and not an order under Section 92C(3) of the Act. - The argument of the assessee before us is that the Assessing Officer has exercised jurisdiction under Section 92C(3) and the TPO parallely cannot exercise his power under Section 92CA. On facts the assessee is wrong. Thus the assessee having been fully aware of the factual position the faint attempt made before us alleging the question to be a substantial question of law is not sustainable. We draw support to this conclusion from not only the decision in Samtel India Ltd. 2012 (9) TMI 806 - SUPREME COURT but the decision in K.Ravindranathan Nair 2000 (11) TMI 3 - SUPREME COURT wherein it was held that unless the finding of the Tribunal on facts is perverse the question of considering the correctness of the order in an appeal under Section 260A of the Act would not arise. Substantial question of law No.1 is answered against the assessee. Assessee is estopped from contending that the TNMM is the MAM after having adopted the CUP method in their TP study at the first instance - TPO has observed that from the steps listed down in his order it is clear that the assessee company has adopted weighted average method for comparison of the transactions and Rule 10A of the Income Tax Rules 1962 clearly gives the definition of uncontrolled transaction. Assessee was not non-suited on the ground that he is estopped from raising the plea that TNMM method cannot be adopted as the MAM but on facts the TPO held that such plea is not tenable. The matter went before the CIT(A) who took note of the report and then additional submissions were made by the assessee. No doubt in one sentence in the order passed by the CIT(A) there is an observation that the authorized representative of the assessee is resorting to approbate and reprobate and that is a species of estoppel and that substituting TNMM method for CUP method is an after thought. If one reads these two sentences dis-juncted from the other portion of the order of the CIT(A) one may get an impression that the CIT(A) concluded that the assessee is estopped from raising a contention that they seek for adopting a different MAM. However the order of the CIT(A) has to be read as a whole and in doing so we have to read the order in its entirety wherein the CIT(A) has referred to the earlier transactions the grounds of appeal the additional grounds of objections and then proceeded to adjudicate the matter - CIT(A) referred to the remand report in extenso and held that the order passed by the TPO has answered the assessee s arguments and he has accepted the findings recorded by the Assessing Officer in the remand report and the speaking order passed by the TPO and accordingly confirmed the additions made. Therefore it would be incorrect to pick out couple of sentences from the order of the CIT(A) and to state that the assessee has been shut out on the ground of estoppel we are fully convinced that the assessee s case was dealt with on merits at every stage from the stage of the order passed by the CIT(A) as well as the remand report and the CIT(A) has recorded reasons as to why he is convinced on facts that the findings recorded by the TPO is an answer to the assessee s arguments. Assessee has not been non-suited on the ground of estoppel but the entire matter has been analysed on facts and a finding has been rendered. This finding has been reappreciated by the Tribunal which can be seen from paragraph 8.0 of the order. No doubt in paragraph 11.0 the Tribunal made an observation that the reopening of assessment is possible as per the provisions of Section 147 of the Act. In our view such issue will not raise in the present case. In the preceding paragraphs while answering the substantial question of law No.1 have assigned reasons as to why the assessee is precluded from raising any contention with regard to the jurisdiction of the officer to issue notice dated 28.03.2006 apart from rendering a finding as to the purport and scope of the notice qua the assessment order under Section 143(3) dated 28.02.2006 and the order dated 16.03.2006 under Section 92CA(3) of the Act. We hold that there is no summary rejection of the assessee s plea that TNMM alone should be adopted but findings of fact have been recorded and affirmed by the last fact finding forum namely the Tribunal. Therefore substantial questions of law 2 and 3 are answered against the assessee. CUP method necessary adjustments are required to be made in order to arrive at the ALP and under Rule 10B(1)(a)(ii) the price can be adjusted to account for any differences between the international transaction - We find that this issue has been elaborately dealt with by the TPO as well as examined for its correctness by the CIT(A) and the Tribunal. We remind ourselves that we are exercising jurisdiction under Section 260A of the Act and required to answer a substantial question of law and not reappreciate the factual position.Therefore we find that there is no substantial question of law arising for consideration on this issue. Accordingly the same stands rejected. Tribunal fell in error in remanding the issue of trading segment to the CIT(A) when all the facts to adjudicate the issue were before it and applicability of CUP method itself was in question - As could be seen from the finding recorded by the Tribunal it is the assessee who had requested to remit the matter back to the CIT(A) for adjudication for which the Revenue did not object and accordingly the matter was remanded back to the CIT(A) to decided the same on merits. Before us the assessee does not state that no such request was made to the Tribunal but rather seek to argue the matter on merits stating that comparison of SPCEN with SPCEN-HMI is not appropriate and that the assessee s case is supported by Mill Test Certificate produced for the imports made by the assessee. These issues cannot be adjudicated by us in an appeal under Section 260A and the assessee having pleaded before the Tribunal for a remand which was not objected to by the Revenue is precluded from now contending before this Court that the Tribunal fell in error in remanding the issue of trading segment to CIT(A). No substantial question of law.
Issues Involved:
1. Jurisdiction of the Assessing Officer under Section 154. 2. Rejection of TNMM Method and adoption of CUP Method. 3. Estoppel from changing the most appropriate method. 4. Rejection of adjustment for quantity discount under Rule 10B(3). 5. Remanding the issue of trading segment to the CIT(A). Issue-wise Detailed Analysis: 1. Jurisdiction of the Assessing Officer under Section 154: The assessee argued that the Assessing Officer lacked jurisdiction to rectify the assessment order under Section 154 since there was no "mistake apparent on the record" as on the date of the original assessment order. The court noted that the assessee never raised this jurisdictional issue before the Assessing Officer, CIT(A), or the Tribunal. The court held that the assessee's conduct precluded it from raising such a contention for the first time in this appeal. The court emphasized that the assessment order dated 28.02.2006 was passed under Section 143(3) and not under Section 92C(3), and the reference to the TPO was made prior to the assessment order. Consequently, the court rejected the assessee's contention and upheld the jurisdiction of the Assessing Officer to rectify the order under Section 154. 2. Rejection of TNMM Method and adoption of CUP Method: The court examined whether the Tribunal was right in rejecting the TNMM Method adopted by the assessee and upholding the CUP Method. The TPO initially adopted the CUP Method, and the assessee argued for the TNMM Method during the appellate proceedings. The court found that the TPO and CIT(A) had analyzed the facts and concluded that the CUP Method was the most appropriate method. The court noted that the TPO had considered the internal comparables and concluded that the CUP Method was suitable. The court held that the Tribunal did not summarily reject the TNMM Method but analyzed the facts and confirmed the CUP Method. Therefore, the court answered this issue against the assessee. 3. Estoppel from changing the most appropriate method: The assessee contended that it was not estopped from changing the most appropriate method during the assessment proceedings. The court acknowledged the legal position that there is no estoppel in law and that the duty of the Assessing Officer is to compute the total income in accordance with the provisions of the Act. However, the court found that the TPO, CIT(A), and Tribunal had not foreclosed the assessee solely on the ground of estoppel but had analyzed the facts and concluded that the CUP Method was the most appropriate method. The court held that the assessee was not non-suited on the ground of estoppel but based on the factual analysis. Therefore, this issue was also answered against the assessee. 4. Rejection of adjustment for quantity discount under Rule 10B(3): The assessee argued that necessary adjustments for quantity discount should be made under Rule 10B(3) to arrive at the ALP. The court noted that the TPO, CIT(A), and Tribunal had elaborately dealt with this issue and concluded that the prices of Non-AE and AE were after volume discount, and further allowance for volume discount was not called for. The court emphasized that it was exercising jurisdiction under Section 260A and not reappreciating the factual position. Therefore, the court found no substantial question of law arising for consideration on this issue and rejected the same. 5. Remanding the issue of trading segment to the CIT(A): The assessee contended that the Tribunal erred in remanding the issue of the trading segment to the CIT(A) when all the facts were before it. The court noted that the assessee had requested the Tribunal to remit the matter back to the CIT(A) for adjudication, and the Revenue did not object. The court held that the assessee, having pleaded for a remand before the Tribunal, was precluded from contending that the Tribunal fell in error in remanding the issue. Therefore, the court found no substantial question of law on this issue and rejected it. Conclusion: The court dismissed the appeal and answered all the substantial questions of law against the appellant-assessee, upholding the decisions of the lower authorities and the Tribunal.
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