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TMI Blog2022 (12) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... 021, and the order impugned in the present appeal is the rectification order dated 31st May 2021, we are not in a position to deal with the said grievance of the assessee. It is for the assessee to pursue the grievances against any additions or disallowances made in the original assessment proceedings in appeals against the original assessment order, and in the case, for whatever reasons, the said appeal has been inadvertently missed out, it is for the assessee to file the appeal at least now, along with the condonation petition, and the bench dealing with such an appeal and the condonation petition, if any, will take a call on whether or not such a delay can be condoned, and, if necessary, on the merits of the grievance of the assessee. As also bearing in mind the entirety of the case, we vacate the impugned rectification order dated 31st March 2021 passed by the AO u/s 154 r.w.s. 143(3) and 144C(13), as also the related orders passed by the Dispute Resolution Panel and the Transfer Pricing Officer. The original assessment order dated 30th March 2021 stands restored, accordingly. The assessee gets relief to this limited extent. - ITA No.: 1352/Mum/2021 - - - Dated:- 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee was awarded a contract by the Oil And Natural Gas Ltd ( ONGC India) for the supply of floating, production, storage and offloading ( FPSO ) vessels, and, for providing, inter alia , operations and maintenance (O M) services to ONGC for a period of seven years. It was in this backdrop that the assessee had entered into a bareboat charter party‟ with its associated enterprise, Armada D1 Pte Ltd, Singapore. During the relevant previous year, the assessee made a payment of Rs 439,20,62,681to its AE for the bareboat charter party hire, and when the matter came up for ascertainment of the arm‟s length price, before the Transfer Pricing Officer, an ALP adjustment of Rs 131,40,70,214 was recommended. Accordingly, the Assessing Officer proposed to make an ALP adjustment of Rs 131,40,70,214 in the draft assessment order. Aggrieved, the assessee carried the matter in appeal before the Dispute Resolution Panel. The Dispute Resolution Panel, with detailed analysis in a very elaborate order, concluded that the DRP is of the considered view that, after examining the transaction in payment of hire/lease charges to the AE by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions on the point of Dispute Resolution Panel‟s limited jurisdiction to rectify only such mistakes as are mistakes apparent on record‟, even if those actually be mistakes, in the proposed rectification proceedings, and also on the point that, as a matter of fact, and in law, what are perceived as mistakes are not mistakes at all. It was pointed out that what is being sought by the Transfer Pricing Officer is not the rectification of mistakes apparent on record but a review of its directions. It was also submitted that, in the garb of seeking rectification of mistakes apparent on the record, the TPO is questioning the statutory powers of the DRP under the Act and the Rules, and attempting to question findings of fact and law drawn by the DRP . It was also pointed out that the directions of the DRP were made non-appealable specifically in line with the decision of the Government to minimize litigation , and that, by filing the present petition, which seeks a review of the DRP directions, the learned TPO is not only acting against the provisions of the law in force but also against the entire spirit in which DRP mechanism was formed . Coming to the specific poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relied upon to delete TP adjustment made by the TPO, it was pointed out that what has been relied upon by the DRP was the certificate and the documents referred to were in support of that certificate, and, therefore, the grievance of the TPO is incorrect; (viii) as regards the lack of opportunity to the TPO to offer comments on the documents submitted on 27.8.2020, an effort was made to demonstrate as to how the scheme of the law does not visualize each new evidence to the confronted to the TPO, and, that, in any event, the TPO was given enough opportunity to present his case; (ix) and (x) as regards the claim that no restriction on benchmarking ALP without comparable(s) under the Other Method, as claimed by the DRP and restricting application of second criterion of Other Method to when comparables are not available , it was explained as to judicial precedents relied upon in support of these proposition are not applicable to the facts of this case and that has also been discussed at length in the DRP order; (xi) as regards the allegation of obverse interpretation of rule 10B(2)(b)‟, it was explained that the correctness of an interpretation can not be challenged in a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as incorrect appreciation of the provisions of law and procedure, such as: (i) The name of M/s. Husky-CNOOC Madura Ltd. (HCML) was not 'redacted' in the agreement. It was specifically mentioned in para 9 of the affidavit dated 26.08.2020 furnished by the assessee with the redacted copy of the agreement. This fact is also mentioned in para 9 and 10 of the direction. Besides, it is also mentioned on pages 12, 17 and 18 of the redacted FPSO lease contract. (Refer para 3.1 of the MA) (ii) The agreement has two parts, one, ' FPSO lease contract for BD field development' and two, ' FPSO lease contract'. The second part provides for supply of 'operation of the FPSO / agreed services.‟ The second part is the comparable transaction with the concerned instant transaction and not the first part. (Refer para 3.1 of the MA) (iii) The comparable FPSO was contracted for exploration/ exploitation of oil and gas in the Madura stait which is evident from the redacted copy of the agreement. The TPO has also acknowledged the same in para 3.1 and 3. 2. The information that the comparable FPSO has molten sulphur and H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions/orders based on arbitrary exercise of a discretion would never help in development of TP jurisprudence‟. (Refer to para 3.9.2 to 3.9.7) (xi) The TPO ignored the second additional evidence furnished which, was the clause C.3 of the bid evaluation, criteria in the bid tender, document issued by the ONGC at the time of initiating the tender for the project, offering price preferences of 10% to domestic bidders. (xii) In the second virtual hearing the Addl. CIT (TP)/ TPO accepted that there were no case of apparent mistake/ error in the directions except on two points, namely, consideration of actuals in benchmarking the actual transaction of the instant assessment year, two, consideration of element of service tax in the payment by the ONGC . (Refer para 3.4.2/ 3.4.3 of the MA and para 3 of the rejoinder) (xiii) The other points in the MA and the rejoinder do not require counter discussions or justifications in this order because these were already considered, discussed and disposed off in a speaking manner in the directions. 5. We need not go into what is apparent' or 'not apparent', because the law in this regard is settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee . In exercise of these powers, and vide notification no. 84/2009 [F.NO. 142/22/2009-TPL]/S.O. 2958(E) dated 20-11-2009, the Central Board of Direct Taxes has notified the Income-tax (Dispute Resolution Panel) Rules, 2009 (hereinafter referred to as the DRP Rules). We further find that rule 13 of the DRP Rules prescribes that After the issue of directions under rule 10, if any mistake or error is apparent in such direction, the panel may, suo motu, or on an application from the eligible assessee or the Assessing Officer, rectify such mistake or error, and also direct the Assessing Officer to modify the assessment order accordingly . As a plain and careful reading of rule 13 makes it unambiguous, the rectification powers, under rule 13, by the Dispute Resolution Panel can be exercised only in one of the three circumstances namely, (a) suo motu, i.e. on its own by the DRP; (b) on an application made by the eligible assessee , or (c) on an application made by the Assessing Officer. The scheme of rule 13 does not visualize any rectification of mistake, by the Dispute Resolution Panel, on an application by the Transfer Pricing Officer. The applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that ..A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions. this court while spelling out the scope of the power of a High Court under article 226 of the Constitution ruled that an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record . . While on this issue, one may also usefully take note of Hon‟ble jurisdictional High Court‟s judgment in the case of CIT Vs Ramesh Electric Trading Co [(1993) 203 ITR 497 (Bom)] wherein Their Lordships have, inter alia , observed that the power of rectification of mistake apparent from the record can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Emphasis, by underlining, supplied by us; paragraph 5 of the DRP‟s order extracted earlier), it is beyond any dispute or controversy that there was no occasion for the Dispute Resolution Panel to pass the directions dated 22nd April 2021- not only because the rectification proceedings in question were on the basis of an application made by an authority which was not permitted to file such an application, but also because it was a common position that there was no mistake apparent in the directions issued by the Dispute Resolution Panel. We have noted that the Dispute Resolution Panel, having rejected the rectification application filed by the Transfer Pricing Officer and having held that there is no mistake apparent in the direction dated 3rd November 2020, have proceeded to rectify these DRP directions nevertheless. Undoubtedly, if the DRP was of the opinion that there are mistakes apparent in the directions issued by the DRP, they could have taken a suo motu cognizance of the same and initiated the proceedings by the issuance of show-cause notice, setting out clearly the reasons as to why such proceedings not be initiated, but that exercise has not been carried out. What ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to pursue the grievances against any additions or disallowances made in the original assessment proceedings in appeals against the original assessment order, and in the case, for whatever reasons, the said appeal has been inadvertently missed out, it is for the assessee to file the appeal at least now, along with the condonation petition, and the bench dealing with such an appeal and the condonation petition, if any, will take a call on whether or not such a delay can be condoned, and, if necessary, on the merits of the grievance of the assessee . 11. In the result, the appeal is partly allowed in the terms indicated above. 4. We see no reasons to take any other view of the matter than the view so taken us- more so when all the related material facts, including wordings of the orders of the authorities below- in material respects, are similar. We, therefore, uphold the plea of the assessee to the extent that the impugned rectification order dated 31st May 2021 is quashed, as the directions dated 22nd April 2021 passed by the DRP and the resultant TPO s order dated 31st May 2021 giving effect to these directions, stand quashed. The observations made in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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