Case Law Details
New Delhi Television Limited Vs Dispute Resolution Panel 2 & Anr (Delhi High Court)
In the case of New Delhi Television Limited vs. Dispute Resolution Panel 2 & Anr, the Delhi High Court deliberated upon the statutory framework concerning Transfer Pricing Officer (TPO) proceedings under Section 92CA of the Income Tax Act. The court emphasized that when an Assessing Officer (AO) identifies an international or specified domestic transaction, they must refer the matter to the TPO for determining the Arm’s Length Price (ALP). The TPO’s decision is binding on the AO, who must then compute the assessee’s income in line with the ALP.
The court clarified that while Section 92CA(1) mentions only the AO’s authority to refer matters to the TPO, the Income Tax Appellate Tribunal (ITAT) also holds the power to make such references during appeals. This interpretation stems from the ITAT’s jurisdiction to review directions issued by the Dispute Resolution Panel (DRP) and delve into broader aspects beyond international transactions. The court reasoned that Section 153(3) allows the ITAT to order a “fresh assessment” or a new determination under Section 92CA, implying the authority to directly remit matters to the TPO.
Examining the factual context, the court noted that the ITAT’s order directing certain aspects to be reconsidered by the TPO was accepted without contest by the respondents. Subsequently, the TPO issued an order in line with the ITAT’s directives. The respondents’ subsequent appeals to the High Court focused solely on the merits of the ITAT’s decision, not contesting the TPO’s action.
Based on these considerations, the court concluded that once the TPO had issued its order, the AO was obligated to proceed with assessment as per Section 92CA(4) of the Act. Thus, the court underscored the procedural clarity and the binding nature of TPO determinations in transfer pricing matters under the Income Tax Act.
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