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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI
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.
The Revenue’s appeal is time-barred by 13 days. The
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.
Shorn off unnecessary details, it is seen that the assessee filed
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
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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.
The Revenue in its appeal is aggrieved by the direction given
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.
We have heard the rival submissions and gone through the
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.
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It is relevant to look into the provisions of section 144C of
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.
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Scope of directions by the DRP has been set out in sub-
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.
Adverting to the facts of the instant case, it is seen that the
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.
In the result, both the appeals are allowed for statistical
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
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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. *