2023 (10) TMI 702 - HC - Income Tax

Territorial Jurisdiction of Madras High Court against TP Adjustment - AO at Hyderabad have issued the order - HELD THAT - As per section 127 of the Act read with section 260A of the Act and also from the order of the Hon'ble Apex Court ABC Papers Limited 2022 (8) TMI 863 - SUPREME COURT stating that the High Court, under whose jurisdiction the assessing officer has passed the order, will have the jurisdiction to entertain the appeal. We are of the opinion that this tax case appeal cannot be maintainable within the High Court of judicature at Madras, as the entire assessment proceedings including the final assessment order un/s 143(3) r/w section 92CA(3) r/w section 144C(5) of the Act, were done / completed by the authorities at Hyderabad and the amalgamation of the appellant company got approval from the Central Government only on 25.07.2017. At this juncture, the learned counsel for the appellant sought liberty to the appellant to go before the jurisdictional High Court of Telangana to work out their remedy. Granting such liberty to the appellant, this tax case appeal stands disposed of.

Summary

Issues:
The judgment involves issues related to transfer pricing adjustments, international transactions, jurisdiction of the High Court, and the amalgamation of companies.

Transfer Pricing Adjustments:
The Tax Case Appeal dealt with substantial questions of law regarding adjustments to the Arm's Length Price for receivables from associated enterprises. The Tribunal's decision on the adjustment in respect of outstanding receivables was challenged, particularly concerning the delay in realization and the interest rate charged on delayed receivables.

International Transactions:
The case involved international transactions entered into by the appellant, leading to a reference to the Transfer Pricing Officer for determining the arm's length price. The Transfer Pricing Officer made adjustments, and the Assessing Officer passed a draft assessment order, which was later revised based on objections raised by the appellant.

Jurisdiction of the High Court:
The judgment highlighted the importance of the jurisdiction of the High Court based on the location of the assessing officer who passed the order. It referenced a Supreme Court decision emphasizing that the High Court within whose jurisdiction the assessing officer operates has the authority to entertain appeals, ensuring consistency and judicial discipline.

Amalgamation of Companies:
The judgment noted the amalgamation of the appellant company into another entity, affecting the jurisdiction of the ITAT. The ITAT transferred the appeal to a different jurisdiction, raising concerns about the correct forum for appeal based on the location of the assessing officer.

The High Court of Madras, in its judgment, emphasized the significance of the assessing officer's jurisdiction in determining the appropriate forum for appeals. It concluded that the tax case appeal could not be maintainable in the Madras High Court due to the completion of assessment proceedings by authorities in Hyderabad and the subsequent amalgamation approved by the Central Government. The appellant was granted liberty to pursue remedies in the jurisdictional High Court of Telangana, leading to the disposal of the appeal without costs.