TIETO I.T. SERVICES INDIA P. LTD., .,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, PUNE

आदेश / ORDER

PER BENCH: These two cross appeals emanate from the final assessment

order dated 29-01-2016 passed by the Assessing Officer (AO) u/s.

143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 (hereinafter

called ‘the Act’) in relation to the assessment year 2011-12.

Revenue has filed an affidavit explaining the reasons which led to

the late filing of the appeal. We are satisfied with such reasons.

The delay is condoned and the appeal is admitted for hearing on

merits.

its return declaring total income of Rs.56,99,014/-, inter alia,

claiming deduction u/s.10B of the Act. Apart from the transfer

pricing addition amounting to Rs.5.61 crore, the AO disallowed the

claim of deduction u/s.10B amounting to Rs.7,91,16,965/-. The

assessee approached the Dispute Resolution Panel (DRP) against

the draft order. The DRP, vide its direction dated 15-12-2015,

accepted the case of the assessee qua the transfer pricing addition

and directed to delete the same. In so far as the denial of deduction

3 ITA Nos. 340 & 668/PUN/2016 Tieto India Private Limited

u/s 10B of the Act is concerned, the DRP found the action of the

AO justified and held that there was no merit in the assessee’s

contention. It further entertained the alternate claim of the

assessee for granting of deduction u/s.10A and vide para No.3.23

of its direction, required the AO to examine the alternate claim of

the assessee for eligibility of deduction us/.10A.

by the DRP for examining the claim of deduction u/s.10A. The

assessee is aggrieved by denial of claim u/s.10A of the Act

amounting to Rs.7,91,16,965/- by the AO in the final order passed

pursuant to the direction given by the DRP.

relevant material on record. It is seen that the DRP vide para 3.23

of its direction has observed: `We direct the AO to examine the

alternative claim of the assessee based on the material available on

record and grant the eligible deduction u/s 10A, if the assessee is

found to satisfy the conditions laid down under the said section’.

The claim of the Revenue is that the DRP could not have given any

such direction to the AO for examining the claim u/s.10A which is

beyond its ambit.

4 ITA Nos. 340 & 668/PUN/2016 Tieto India Private Limited

the Act which deal with “Reference to Dispute Resolution Panel”.

Sub-section (1) of section 144C states that: “The Assessing Officer

shall, notwithstanding anything to the contrary contained in this

Act, in the first instance, forward a draft of the proposed order of

assessment (hereafter in this section referred to as the draft order)

to the eligible assessee if he proposes to make, on or after the 1st

day of October, 2009, any variation in the income or loss returned

which is prejudicial to the interest of such assessee.’ Sub-section

(2) of section 144C states that the assessee shall either file his

acceptance to the AO on the variations proposed in the draft order

or file his objections, if any, with the DRP. In case, the assessee

accepts the variation in the draft order or no objections are received

within 30 days, then sub-section (3) states that: `The Assessing

Officer shall complete the assessment on the basis of the draft

order’. In case, the assessee does not agree with the draft order, it

can, inter alia, raise objections before the DRP, which shall issue

directions under sub-section (5) of section 144C. Upon receipt of

the directions from the DRP, the AO completes the assessment

under sub-section (13) in conformity with the directions given by

the DRP.

5 ITA Nos. 340 & 668/PUN/2016 Tieto India Private Limited

section (8) which states that the DRP “may confirm, reduce or

enhance the variations proposed in draft order so, however, that it

shall not set aside any proposed variation or issue any direction

under sub-section (5) for further enquiry and passing of the

assessment order.’ It is manifest from the prescription of sub-

section (8) that the DRP has been empowered to confirm, reduce or

enhance the variations proposed in draft order. There is specific

prohibition contained in the provision to the effect that the DRP

cannot set-aside any proposed variation or issue any direction for

further enquiry and passing of the assessment order.

DRP’s direction to the AO for carrying out a fresh examination of

the claim of the assessee u/s.10A of the Act is in violation of the

clear mandate of the provisions as discussed supra and hence

cannot be countenanced. On our vacating such a direction, the

position which would emerge is that the denial of the assessee’s

claim for deduction u/s 10B would attain finality but the alternate

claim for allowing deduction u/s.10A, despite the DRP finding

some merit in the same, would get jeopardised at the threshold

even without verification, thereby causing irreparable prejudice to

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the assessee. It is pertinent to note that the ld. DRP itself found

some merit in the contention of the assessee on the eligibility of

claim u/s.10A, for which the relevant discussion has been made in

Para Nos. 3.19 to 3.22. Albeit the DRP is not empowered to direct

the AO to entertain and examine such a claim, but there are no

fetters on its own powers to undertake such an exercise itself for

ascertaining if the claim of the assessee is legally tenable. Under

the given circumstances, we set-aside the impugned order and

remit the matter to the DRP for adjudicating the issue itself without

remitting the matter to the file of the AO.

purposes.

Order pronounced in the Open Court on 06th November, 2019.

Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 06th November, 2019 सतीश

7 ITA Nos. 340 & 668/PUN/2016 Tieto India Private Limited

आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत आदेश आदेश आदेश

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-13, Pune 4. The Pr.CIT-5, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “ए” / DR ‘A’, ITAT, Pune गाड� फाईल / Guard file 6. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

Date 1. Draft dictated on 05-11-2019 Sr.PS 2. Draft placed before author 05-11-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *