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TMI Blog2020 (9) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... The matter of dispute is in the e-return filed for the assessment year 20082009 in which the first respondent as the Transfer Pricing Officer (TPO) found the royalty paid by the assessee / appellant company to the Holding Company was higher (3.47%) than the average royalty rates of four comparable companies (2.54%) thus concluding that the Arm's length price of the royalty paid was in excess and therefore Rs. 106.67 crores was disallowed ie., in other words added to the taxable income. The Draft Assessment Officer passed the order under Section 143/3 of IT Act read with Section 92 CA. The assessee / appellant company filed its objections in form 35 A before the Dispute Resolution Panel (DRP), Chennai which rejected the objections. A rectification petition was filed before the DRP disputing the inconsistency in arriving at the royalty expenses. However, the final assessment order was passed on 29.10.2012 without considering the objections of the assessee / appellant company. An appeal in form 36 B was filed by the assessee / appellant company with the Income Tax Appellate Tribunal (ITAT). The Dispute Resolution Panel (DRP) issued revised order stating that certain mistake had c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... automobile sector and whether it is higher than the royalty paid by the appellant company. The TPO went much beyond the ITAT order thus exposing the lack of any proper scientific approach in determining this all important aspect of Arm length price as regards the royalty paid. Further, the denial of natural justice by the TPO by not issuing a show cause notice aggravated the matter, it was contended. 4. The first respondent represented by the learned counsel Mrs. Hema Muralikrishnan contended that the former was right in determining whether the transactions pertaining to the royalty paid were within Arm's length or not. It was contended that the royalty paid to sales ratio cannot be constant every year and it was imperative to make a comparative study with other comparable companies. Further contention of the learned counsel was that the ITAT had never considered the royalty rates of the Industry from the Wikipedia. It was argued that in 2007-08, the TPO herself had mentioned the average royalty of the Industry as 4.7 which was higher than the 4.22 of the appellant company. But, the assessees were not able to satisfactorily substantiate that the same average rates conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nology and the use of brand' as in assessee / appellant company. Such inherent deficiencies were pointed out thereby making the entire system faulty and fraught with loopholes. 8. Now, it is revealed, during the course of the arguments that the TPO's order was accepted by the Assessing Officer and the final order of assessment was passed in November 2019. It is not clear whether the assessee / appellant approached the DRT with objections against the draft assessment order. The assessee / appellant ought to have approached the ITAT against this final order of assessment. In such circumstances, this Court opines that the remedies are available in the system and the assessee / appellant ought to have approached the ITAT before approaching this Court, but instead challenged the TPO's order in this Court. We may note, even in the first instance the assessee did the same thing by approaching the Tribunal against the final assessment made. Certainly, as done by it earlier, all the issues can be agitated before the Tribunal. 9. In the WP.No.22508 of 2017, in the final order, the Single Judge had also observed that "this Court is of an undoubted opinion that the writ petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 964 SC 1419), Titagarh Paper Mills case ((1983) 2 SCC 433) and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation." We do not find any of the circumstances as laid down by the Supreme Court available before us. 14. Ratio laid down in Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal, ((2014) 1 SCC 603):- The entire issues framed, in our considered view, are covered by the recent judgment of the Supreme Court referred above. Considering the jurisdiction of this Court under Article 226 of the Constitution of India, it has been held therein in the following manner: "10. In the instant case, the only question which arises for our consideration and decision is whether the High Court was justified in interfering with the order passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of self-imposed restraint that the writ petition will not be entertained if an effective remedy is available to the aggrieved person and observed: "7. ... The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up." 13. In Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 this Court observed: (SCC pp. 440-41, para 11) "11. ... It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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