Comparex India P. Ltd. vs. ITO, Circle 4 (2), New Delhi

Parties Involved

Facts Summary

The assessee filed its return of income for the Assessment Year 2018-19 declaring a total income of Rs. 4,53,71,290/-. The case was selected for complete scrutiny under CASS. Notices under sections 143(2) & 142(1) of the Income Tax Act, 1961 were issued and served on the assessee. The case was referred to the Transfer Pricing Officer (TPO) under section 92CA(1) of the Act, and an adjustment to international transactions of Rs. 2,24,36,553/- was proposed by the TPO. A show-cause notice along with a draft assessment order was issued to the assessee. After providing an opportunity for personal hearing, the draft assessment order was passed by the NFAC, Delhi on 15.09.2021. The assessee filed objections before the Dispute Resolution Panel (DRP) and the DRP passed an order on 03.06.2022 with directions to the Assessing Officer/TPO. The final assessment order was passed by the jurisdictional Assessing Officer on 28.07.2022, sustaining the adjustments as per the draft assessment order after considering the directions of the DRP.…

Legal Issues

• 1. On the facts and in law, the Hon'ble DRP, the Learned TPO and the Ld. AO erred in making an adjustment of INR 2,24,36,553/- to the total income of the Appellant on account of the difference in the arm's length price ('ALP') of its international related party transactions under the provisions of Section 92CA(4) of the Act.
• 2. On the facts and in law, the Hon'ble DRP has grossly erred in restoring certain transfer pricing matters to the Ld. TPO and Ld. AO, which is in gross violation of section 144C(8) of the Act and thus, the final assessment order passed dated 28 July 2022 is bad in law and deserves to be quashed.
• 3. On the facts and in law, the Ld. TPO/ Ld. AO erred in not following the directions of Hon'ble DRP and thereby violating the provisions of Section 144C(10) read with Section 144C(13) of the Act, thereby rendering the assessment proceedings bad and invalid in law.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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