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TMI Blog2012 (10) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... een considered by the DRP. Therefore, the order of Ld DRP is set aside and remit the issue back to the file of Ld DRP for re-adjudication - in favour of assessee by way of remand. - IT Appeal No. 5301 (Delhi) of 2010 - - - Dated:- 21-9-2012 - Rajpal Yadav And T.S. Kapoor, JJ. S.R. Dinodia for the Appellant. Smt. Veena Joshiu, Smt. Anusha Khurana and Piyush Jain for the Respondent. ORDER T.S. Kapoor, Accountant Member - This is an appeal filed by the assessee against the order of DRP dated 30.9.2010. The grounds raised by the assessee are as under:- 1.0 That the assessment order passed by the Assessing Officer under Section 143(3) read with Section 144C on the directions given by the DRP is bad in law. 2.0 That the DRP has grossly erred in dismissing various objections filed by the appellant in a summary manner and without proper application of mind on the various issues raised before it. 3.0 That the DRP's order is against the judicial principles required judicial orders to be speaking order. 4.0 That the DRP/Assessing Officer/TPO have grossly erred in law and on facts in the circumstances of the appellant's case in making additions of Rs. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsidy/support received towards its advertisement cost is one-sided and faulty. The assessee has treated the subsidy received as its income in its books of account and in the transfer pricing analysis report also it was treated as such. However, the TPO disagreed with this treatment and held that the subsidy received by the assessee was not operating revenue receipt and thus excluded it from the income and thus distorting the PLI of the assessee in comparison to the comparable cases. 14.0 The TPO failed to appreciate that the receipt of subsidy/advertisement support from the AE was very much impliedly a receipt on revenue account and it should not have been excluded from the income. 15.0 Without prejudice as an alternative the TPO ought to reduce the expenses on advertisement and sales promotion by the amount of subsidy/advertisement support against the said expenditure on advertisement and sales promotion. 16.0 That the A.O./TPO has grossly erred in concluding that even the local transaction are covered in Transfer Pricing although the same are neither with associated enterprises nor are they international transactions within the meaning and context of section 92CA of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated to the CPO-local division that he had brought the CPO - Local segment within the TP net. 25.0 That the TPO failed to appreciate that Modi Hoover is not a comparable company of the assessee, and has included the same in his transfer pricing analysis. 26.0 The TPO failed to appreciate that the PLI of the CPO-Local segment is an Internal CUP for the PLI of the CPO-Imported segment. 27.0 That the A.O./TPO has grossly erred in law for not giving the benefit on account of the proviso to section 92C(2) of the Income Tax Act, 1961, which allows an adjustment of +/- 5% to the arm's length price determined by the TPO and that price at which the transactions have actually been undertaken. 28.0 That the approach of the TPO is completely at variance and inconsistent with the approach of the CIT (A), who has adjudicated in favour of the assessee in AY 2004-05, on exactly the same point of controversy. This is against judicial consistency and discipline especially when the department has accepted the verdict of the CIT(A) by not going in appeal to the Hon'ble ITAT on this issue. 29.0 The TPO has failed to appreciate that there has been no change either in law or in facts of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, vary or substitute any of the aforesaid grounds or raise an additional ground if it becomes necessary to do so in interest of justice. 2. At the outset, the Ld AR stated that DRP has not passed a speaking order and has issued only one page order whereas the assessee had filed its objections against the draft order of the Ld Assessing Officer running into 426 pages. He further stated that the DRP has not considered even a single argument/document submitted by the assessee. Moreover, he stated that this issue is already covered by the order of Hon'ble ITAT in the case of assessee for assessment year 2002-03 wherein it has been held that the marketing support subsidy received by the assessee is operating in nature and this judgment of Hon'ble ITAT is final as the Department has not filed any appeal u/s 260 of the Act before the Hon'ble High Court. Therefore, in view of the above, he argued that matter may be set aside to the office of DRP for fresh adjudication in view of ITAT's order for assessment year 2002-03 and in view of various objections and documents filed by the assessee. 3. The Ld DR was unable to controvert the contention of Ld counsel. 4. We have duly considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation to record reasons operates as a deterrent against possible arbitrary action by the executive authority invested with the judicial power." In Mahabir Prasad Santosh Kumar v. State of U.P. AIR 1970 SC 1302, the hon'ble Supreme Court while quashing the cancellation of the petitioner's licence by the District Magistrate, observed (page 1304) : "Recording of reasons in support of a decision on a disputed claim by a quasi-judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim. If the order is subject to appeal, the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may determine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just." In Woolcombers of India Ltd. v. Woolcombers Workers Union AIR 1973 SC 2758, the hon'ble Supreme Court quashed the award passed by the Industrial Tribunal on the ground that it was not supported by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing process. Another reason which compels making of such an order is based on the power of judicial review which is possessed by the High Court under article 226 and the Supreme Court under article 32 of the Constitution. These courts have the power under the said provisions to quash by certiorari a quasi-judicial order made by an administrative officer and this power of review can be effectively exercised only if the order is a speaking order. In the absence of any reasons in support of the order, the said courts cannot examine the correctness of the order under review. The High Court and the Supreme Court would be powerless to interfere so as to keep the administrative officer within the limits of the law. The result would be that the power of judicial review would be stultified and no redress being available to the citizen, there would be insidious encouragement to arbitrariness and caprice. If this requirement is insisted upon, then they will be subject to judicial scrutiny and correction." If we look the order of Ld DRP extracted (supra) in the light of above proposition, it will reveal that DRP has not applied its mind. The assessee has filed objections running into more ..... X X X X Extracts X X X X X X X X Extracts X X X X
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