Xchanging Solutions Limited Vs DCIT (ITAT Bangalore)
In this case, the core issue revolved around transfer pricing adjustments and whether the AO/TPO validly implemented ITAT directions. Earlier, the ITAT had remanded the issue of 5 comparables to the DRP, while certain other issues were remanded to the TPO.
The Tribunal observed that DRP and TPO are not parties before ITAT, and therefore, directions should ordinarily be given only to the Assessing Officer. The earlier remand to the DRP created a procedural irregularity, as the DRP can act only when invoked through the statutory mechanism under Section 144C.
Although the Revenue argued that the assessee had already been given an opportunity before DRP, the ITAT held that the original direction to DRP was not properly implemented, and such procedural lapse cannot prejudice the assessee.
Accordingly, the Tribunal excluded all 5 disputed comparables and directed the AO to recompute ALP without them, thereby granting relief to the assessee. The appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. This appeal is filed for assessment year 2011 – 12 against the assessment order passed by the Deputy Commissioner Of Income Tax, Circle 7 (1) (1), Bangalore (The learned AO) passed in pursuance of direction of the learned Dispute Resolution Panel’s wherein the income tax appellate tribunal vide its order dated 19 January 2022 in ITA a No. 492/Bangalore/2015 and subsequent miscellaneous application No. 61/Bangalore/2022 dated 26/8/2022 was passed.
