The Delhi High Court while granting the partial relief to Microsoft India held that the remand is not a power to be exercised by ITAT in a routine manner but to be used sparingly.
The assessee, Microsoft India (R&D) Pvt. Ltd. is a private limited company that was set up in India in May 1998 and is a subsidiary of Microsoft Ireland Research Ltd. (99.99% shareholding), the ultimate parent company being Microsoft Corporation, USA. The Assessee is engaged in rendering software development services and information technology-enabled services.
The Assessee filed its return of income declaring an income and the same was processed under Section 143(1) of the Act. The case of the Assessee was selected for scrutiny assessment and notice under Section 143(2) was issued.
The Assessee filed an Audit Report in Form No. 3CEB declaring six international transactions. Its case was selected for scrutiny and the AO referred the matter to the Transfer Pricing Officer for determination of Arm’s Length Price (ALP) of the international transactions. The TPO proposed transfer pricing adjustment towards Software development services.
The draft order under Section 144C was framed by the AO. Aggrieved with the same, the Assessee filed its objections before the DRPwhich were disposed of vide order with certain directions. Accordingly, pursuant to the order of the DRP, final assessment order under Section 143(3)/144C was framed by the AO determining the total taxable income.
The Assessee preferred an appeal against the assessment order vide before the ITAT.
Mr. Nageshwar Rao, the counsel for the assessee submitted that the ITAT has erred in restoring for adjudication, the questions of law to the file of the AO, thereby allowing him a second inning on a topic which both the AO and the DRP have already considered.
The coram consisting of Justices Sanjeev Narula and Manmohan held that when the requisite materials and the intervening decision of the jurisdictional high court was available for deciding the issue urged by the Assessee, the Tribunal ought to have arrived at a conclusion rather than remanding the matter back to the Assessing Officer.
Therefore, the court directed the ITAT to take up and decide the corporate tax grounds urged by the Assessee in its appeals, and the appeal of the Assessee is restored to the file of the ITAT for AY 2011-12 to a limited extent.Subscribe Taxscan AdFree to view the Judgment