2013 (3) TMI 489 - HC - Income Tax

Determination of the arms length price - benefit of adjustment of 5% denied - Held that - In view of the observations of the Supreme Court in the case of K.V. Pilliah and Sons (1966 (10) TMI 35 - SUPREME COURT) it is apparent that merely because the Tribunal confirmed the findings of the lower appellate authority it does not mean that the Tribunal has acted illegally or irregularly. In the present case, the Tribunal had examined the findings of the Commissioner of Income Tax (Appeals) in detail and had given an opportunity to the departmental representative to controvert or rebut the findings and conclusions arrived at by the CIT (Appeals). However, despite that opportunity, it is recorded in the order, that the departmental representative had not been able to controvert those findings and point to any material to enable the Tribunal to take a view other than the view taken by the CIT (Appeals). It is in these circumstances that the Tribunal concurred with the view taken by the CIT (Appeals). It is also not the case of the revenue that the departmental representative had made certain points controverting the findings of the CIT (Appeals), which have not been taken into account by the Tribunal. Had that been done, possibly, the revenue would have filed an application under section 254 of the Income Tax Act, 1961 for rectification but that has also not been done. In these circumstances, no substantial question of law which arises for our consideration in these appeals. The appeals are dismissed.

Summary

Issues: Determination of arms' length price, Tribunal confirming findings of CIT (Appeals) without recording own findings.

Analysis:

1. Determination of arms' length price: The appeals in question pertain to the assessment years 2003-04, 2004-05, and 2005-06, focusing on the determination of the arms' length price. The Tribunal extensively analyzed this issue, quoting the decision of the Commissioner of Income Tax (Appeals) and ultimately confirmed the findings for lack of cogent reasons from the revenue to challenge them. The Tribunal specifically mentioned that neither party provided any basis or material to dispute the CIT (Appeals) findings, leading to the upholding of the arms' length price determination in favor of the assessee.

2. Confirmation of CIT (Appeals) findings by Tribunal: The revenue contended that the Tribunal should have recorded its own findings rather than merely affirming the CIT (Appeals) conclusions. However, referencing a Supreme Court decision, it was established that when the Tribunal agrees entirely with the lower authority and has no additional grounds to support its decision, it is not illegal or irregular. In this case, the Tribunal thoroughly examined the CIT (Appeals) findings, allowing the departmental representative a chance to challenge them. Despite this opportunity, the representative failed to present any material to counter the CIT (Appeals) findings, leading the Tribunal to concur with the lower authority's decision. The absence of any new points raised by the revenue for consideration further solidified the Tribunal's stance, resulting in the dismissal of the appeals.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of providing substantial grounds to challenge lower authority findings. The judgment highlights the significance of presenting compelling arguments supported by evidence in tax assessment matters to warrant a review of arms' length price determinations.