HC refuses to Prematurely pronounce in case related to Transfer Pricing
IN THE HIGH COURT OF JUDICATURE AT MADRAS
The Relevant Text of the Order as follows :
5. On the other hand, the learned Counsel for the Revenue, Ms.Hema Muralikrishnan supported the impugned order and submitted that the mixed questions of facts and law can be agitated by the Assessee even before the Tribunal even though the order to be passed by the Assessing Officer is a mere consequence, in pursuance of the binding directions of the DRP, which comprises of three higher level officers of the Department, and that mechanism has been created in the Act to cut short the process of assessment and for applying the guidance of higher committee in the form of DRP by the TPO, lest the individual officers may take different individual views of the matter. He submitted that Writ Jurisdiction in such cases should not be allowed to be invoked by the Assessees at this premature stage and the learned Single Judge was right in dismissing the Writ Petition as premature.
6. To allay the unfounded fears of the Assessee, she has further drawn our attention to the Affidavit filed by the third Respondent viz., the Assistant Commissioner of Income Tax, Large Tax Payer Unit II, Chennai, Dr.S.R.Nedumaran. In paragraph 3 of his Affidavit, it is clearly stated that no adjustments in respect of domestic or third party transaction shall be made by the Transfer Pricing Officer or Dispute Resolution Panel. Paragraph 3 of the said Affidavit is quoted below for ready reference:-
“3. In any event, notwithstanding the above and without prejudice it is submitted that there is no adjustment made in respect of domestic or third party transactions by the Transfer Pricing Officer or Dispute Resolution Panel. The adjustments made relate to International transactions only. Hence, there is no basis to raise a question of law. The chart filed by the appellant at page 32 of thetyped set of papers is his understanding/ interpretation of the order of the DRP. It is submitted that no adjustments were made to domestic transaction and hence the case laws quoted by the appellant have no relevance to the facts of the case.”
7. Accordingly, the learned Counsel for the Revenue has submitted that the apprehension of the Appellant/Assessee in the present case that there will be a mix up of domestic transactions and TP Adjustments can be made only for international transaction is unfounded, as the Department is very clear in its approach and TP Adjustments which can be made only to the international transactions covered by the definition given in Section 92B in the Chapter X, by the Revenue Authorities. Therefore she submitted that the Assessee may approach the learned Assessing Officer and if it is aggrieved by the order passed by the Assessing Officer, they have a further remedy of appeal before the learned Tribunal and then further appeal on substantial questions of law before the High Court under Section 260A of the Act.
8. Having heard the learned Counsel for the parties, we are of the opinion that the present Writ Appeal deserves to be dismissed as there is no merit. We cannot appreciate the arguments of the learned Senior Counsel for the Assessee that on the question of law, the DRP has disregarded the case laws of other High Courts. A mere discussion of such case laws but not applying to the facts cannot be said to be any disregard to the law laid down by the other High Courts in this respect. We cannot accept the submission of the learned Counsel further on the ground that merely because the order of the DRP may be binding on the Assessing Officer, against whose order, the appeal can be filed only before the learned Tribunal, a shortcut could be provided to the Assessee in such cases to invoke the Writ Jurisdiction, which itself has three tiers of remedies; before the High Court, two tiers, viz., the learned Single Judge dealing with the Writ Petition and the intra-Court Writ Appeal before Division Bench and then if the matter is taken up to the Hon’ble Supreme Court by way of Special Leave Petition under Article 136 of the Constitution of India. If the matter is dragged through in these three tiers, it would be impossible for the orders of the DRP to be executed by the Assessing Officer and the Tribunal to apply its mind to the factual aspects of the matter for a long period. It is needless to say that even the questions of law which are coupled or mixed with the findings of fact can be raised and argued before the concerned authorities below, including the TPO and before the learned Tribunal. Such a digression from the normal channel of the remedies provided in the Act in the said Chapter, need not be cut short by allowing the Assessee to invoke the Writ Jurisdiction in such cases.
9. In our considered opinion, this digression is self defeating and defeats the very purpose of quicker assessments sought to be achieved in the special law relating to international transactions envisaged in the Chapter X of the Income Tax Act provided for assessment of international transactions, so that an image of balanced approach by IT authorities can be projected on the international horizons. Many other developed countries provide for such quicker management of tax dispute resolution.
10. In view of the undertaking given by the Respondents in paragraph 3 of the Affidavit of the Assistant Commissioner that they are going to apply for TP Adjustments only to international transactions, even the aforesaid unfounded apprehension of the Assessee is not justified.
11. The learned Counsel for the Assessee also wanted to take us through the charts of the factual scenario which will obtain, if the directions of the DRP are implemented by the Assessing Officer for which he is bound. We are not inclined to go into the exercise of facts and figures at this stage at all, lest it affects the lower authorities in any manner and prejudices the case of either the Assessee or the Revenue. A regular appeal on substantial question of law, under Section 260A of the Act is provided in the Income Tax Act, 1961 and on those questions of law, if at all they would arise from the order of the learned Tribunal, the Assessee has a remedy even before this Court, and later before the Hon’ble Supreme Court on regular appeal.
12. This stream lined procedure, provided under the Act should not normally be allowed to be breached in such cases where a deeper analysis of facts has to be done by the authorities under the Act up to the Tribunal and a factual exercise has to be undertaken by them with regard to comparables, TP Adjustments and methods for making TP adjustments as prescribed in Rule 10B and Section 92C of the Act. Prematurely pronouncing on these issues, definitely curtails the discretion of the Assessing Authorities in this regard and as we have said above, it is a self defeating exercise, which the High Court in its Writ Jurisdiction should be reluctant to undertake.
13. Therefore we are not inclined to interfere with the order of the learned Single Judge and leaving it free for the Assessee to raise all the objections before the learned Assessing Officer and then before the learned Tribunal in the manner provided under law.
14. The present Writ Appeal is therefore liable to be dismissed and the same is accordingly dismissed. No costs. Consequently, CMP Nos.18592 and 20114 of 2017 are also closed.
Tags: Judgement, High Court
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