ITAT remitted matter to DRP on issue of assessee's status

1. The assessee filed e-return of income declaring a loss of Rs.2,76,01,310/-. The assessee claimed exemption u/s 10A (of Income Tax Act, 1961) amounting to Rs.14,27,69,643/- and the book profit u/s 115JB (of Income Tax Act, 1961) was declared at Rs.59,60,254/-. The AO referred the matter to the TPO and after receipt of his order u/s 92CA(3) (of Income Tax Act, 1961), passed the draft assessment order u/s 143(3) (of Income Tax Act, 1961) r.w.s. 144C (of Income Tax Act, 1961) at an income of Rs.7,64,74,420/-. Against the said draft assessment order the assessee filed objections before the Dispute Resolution Panel, New Delhi (DRP) who issued directions u/s 144C (of Income Tax Act, 1961). The AO after receipt of direction from the DRP, framed the assessment at an income of Rs.7,64,74,420/- i.e. the same figure which was worked out in the draft assessment order. The assessed income included upward adjustment of Rs.10,40,75,727/-. ITAT set aside the assessment since the DRP had not considered the voluminous submissions furnished by the assessee. In compliance to the order of the ITAT, the DRP issued the directions u/s 144C(5) (of Income Tax Act, 1961). The TPO determined the adjustment on accounted arm's length price at Rs.9,17,28,060/-. Accordingly, the AO framed the assessment at an income of Rs.6,41,26,750/-.

2. On appeal, the ITAT held as under:

“In the present case, it is not clear as to whether, this fact that M/s Adobe Software India Pvt. Ltd. was not in existence was considered at the time of passing the order u/s 92CA(3) (of Income Tax Act, 1961) dated 26.10.2009 by the TPO or the draft assessment order dated 30.12.2009 u/s 144C (of Income Tax Act, 1961) by the AO. In the present case, it is true that this issue was not raised before the DRP, as such no findings have been given by the DRP. However, being a legal issue, it can be raised at any stage but the opportunity is required to be given to the department also. Since the facts need verification, we therefore, deem it appropriate to set aside this issue back to the file of the DRP to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee, the cases relied by the ld. Counsel for the assessee are also to be considered.”

Case Reference - Adobe Software India Pvt. Ltd. Vs Joint Commissioner of Income Tax.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'I-1', NEW DELHI

Before Smt. Diva Singh, JM And Sh. N. K. Saini, AM

ITA No. 2454/Del/2013

Asstt. Year : 2006-07