PCL Foods Private Limited Vs Additional / Joint/ Deputy/ACIT /ITO (ITAT Delhi)
ITAT Delhi held that DRP is a quasi-judicial authority and is required to issue directions on all the objections raised by assessee. Failure to adjudicate certain components results into violation of principles of natural justice. Accordingly, matter set aside to file of DRP.
Facts- During scrutiny assessment, TPO noted that assessee has entered into international transaction with its AE. The TPO after considering ten comparables, proposed an adjustment to the value of international transaction amounting to Rs. 18,70,34,202/. After the receipt of the order u/s 92CA(3) of the Act, dated 29.10.2019, the AO passed a draft assessment order u/s 144C of the Act, dated 18.12.2019, making the above adjustment and also making other disallowances.
Conclusion- Held that the Ld. DRP has confined its adjudication only to bank charges, without dealing with or recording any finding in respect of the other elements such as treasury expenses, interest expenses on working capital loans, etc., which were specifically raised by the assessee before it. Thus, such an approach renders the order of the Ld. DRP non-speaking and incomplete to that extent. The Ld. DRP, being a quasi-judicial authority, is required under section 144C(5) and (8) of the Act to issue directions on all objections raised by the assessee. The failure to adjudicate certain components of the assessee’s objection goes to the root of the matter and amounts to violation of the principles of natural justice. Since all these issues in view of our above observations require factual verification from the audited financial statements of each comparable, and as neither the TPO nor the Ld. DRP has carried out such verification in detail, we consider it appropriate to set aside this issue to the file of the Ld. DRP.
