The Delhi High court held that the prematurely pronouncing on issues of comparables, TP Adjustments and methods for making TP adjustments definitely curtails the discretion of the Assessing Authorities.
The DRP had made certain directions for the guidance of the Transfer Pricing Officer (TPO) under section 144C(5) of the Act, which is binding on the TPO who makes the TP adjustments in the assessment relating to international transactions under the Chapter X of the Income Tax Act, especially enacted for these purposes.
The Single Judge has dismissed the Writ Petition as premature finding that against the order of the learned TPO when passed in consequence of the directions given by the DRP, there is an appeal remedy available to the Assessee before the learned Tribunal and therefore, the questions of facts coupled with the questions of law sought to be raised before the DRP and before this court under the Writ Jurisdiction, can be first agitated before the learned Tribunal as well.
The Assessee has further remedy by way of appeal to this court on the substantial questions of law arising from the order of the Tribunal under section 260A of the Income Tax Act.
The Division Judge Bench of Justice Vineet Kothari and Justice M.S. Ramesh opined that 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 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.
“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,” the court said.
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