2024 (3) TMI 951 - HC - Income Tax

Validity of order of ITAT allowing Applications filed u/s 254(2) - Rectification versus Review of order - TP Adjustment - Comparability analysis done by ITAT - HELD THAT - ITAT had clearly rendered incompatible and inconsistent findings. In fact we are constrained to observe that paras 12 and 21 were clearly contradictory. It was thus not only imperative but also expedient in the interest of justice for the ITAT to recall its order of 29 September 2020 and correct a manifest error apparent on the record. If that route had not been adopted, it would have left the Transfer Pricing Officer TPO as well as the Assessing Officer with an unresolvable quandary. We further note from a reading of the order dated 18 October 2022 that the ITAT has presently kept the issue of comparability vis-a-vis PSL open for its own consideration, and insofar as Sasken is concerned the matter has been remitted to the file of the TPO. In that view of the matter no prejudice as such stands caused to the appellant.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Review of decision by Income Tax Appellate Tribunal (ITAT) under Section 254(2) of the Income Tax Act, 1961.

Condonation of Delay:
An application was filed seeking condonation of 86 days delay in filing the appeal, which was granted by the court for reasons stated in the application. The application was disposed of.

Review by ITAT under Section 254(2):
The Commissioner of Income Tax-07 sought to impugn the ITAT's order dated 18 October 2022 and raised questions regarding the review power of ITAT under Section 254(2) of the Act. The impugned order was passed on a Miscellaneous Application by the respondent-assessee after the appeal had already been disposed of. The ITAT had made contradictory findings regarding the comparability of Persistent Systems Ltd. and Sasken Communication Technology Ltd. The court observed the inconsistencies in the ITAT's original order and stated that it was necessary for the ITAT to recall its order and correct the error. The ITAT has kept the issue of comparability with Persistent Systems Ltd. open for consideration and remitted the matter concerning Sasken to the Transfer Pricing Officer. The court found that the appeal did not raise any substantial question of law and dismissed it.