Case Law Details
Ampacet Cyprus Limited Vs DCIT (ITAT Mumbai)
The issue under consideration is whether transfer pricing adjustment as notional interest and charging it to tax, disregarding the provisions of Article 11 of India Cyprus DTAA is justified in law?
ITAT states that, in the event of a doubt about the correctness of the earlier decision or, extending that logic a little further, correctness of the path the earlier decisions have traversed to come to a conclusion, it is open to the bench to make a reference to for constituting a larger bench for considering the same. In the case of Union of India v. Paras Laminates (P.) Ltd., Hon’ble Supreme Court recognized the right of the President to constitute Special Benches, and observed that “It is true that a Bench of two members must not lightly disregard the decision of another Bench of the same Tribunal on an identical question. The rationale of this rule is the need for continuity, certainty and predictability in the administration of justice. Persons affected by decisions of Tribunals or courts have a right to expect that those exercising judicial functions will follow the reason on ground of the judicial decision in the earlier cases on identical matters. It is, however, equally true that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness of an earlier decision if and when subsequent proceedings bring to light what is perceived by them as an erroneous decision in the earlier case. In such circumstances, it is but natural and reasonable and indeed efficacious that the case is referred to a larger Bench. This is what was done by the Bench of two members who, in their reasoned order, pointed out what they perceived to be an error of law in the earlier decision and stated the points for the President to make a reference to a larger Bench. It is not sinful either, and is perfectly natural- as we will see in a short while, to entertain doubts about correctness of the path that the coordinate benches have traversed. There is, thus, no heroism in perpetuating an error in approach to a judicial exercise. The conclusions, even after the exercise of detailed analysis, may or may not be the same as the coordinate benches have arrived, even if rather serendipitously, but that does not really matter. Once ITAT realize that there was something lacking in our approach last time, there cannot be any justification in continuing to adopt the same approach yet again. It is, after all, one of the fundamental duties, under article 51A(h) of the Constitution of India, of every citizen to have, inter alia, the “spirt of inquiry of reform”. It is in this backdrop, and without making any observations on correctness or otherwise of the conclusions arrived at by the coordinate benches, ITAT deem it fit and proper to refer the additional grounds of appeal raised before us to a special bench of three or more Members.
FULL TEXT OF THE ITAT JUDGEMENT
1. In both of these appeals, the assessee-appellant has raised two separate, but materially identical, petitions seeking additional grounds of appeal which are materially similar, except for the variation is in respect of the quantum of amount involved. The additional ground so sought to be raised, so far as the assessment year 2012-13, is as follows:
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