Section 144C — Reference to Dispute Resolution Panel

Section 144C of the Income-tax Act, 1961, provides a mechanism for resolving disputes related to transfer pricing adjustments and certain other international taxation issues. It applies when the Assessing Officer proposes variations in the income of an eligible assessee, which is typically a foreign company or an Indian company with international transactions. The section mandates that the Assessing Officer must forward a draft assessment order to the assessee, who can then accept the adjustments or approach the Dispute Resolution Panel (DRP). The DRP, consisting of a panel of three Commissioners of Income-tax, reviews the draft order and objections raised by the assessee. This section is significant as it offers an alternative to the traditional appellate process, aiming to expedite resolution and reduce litigation. The burden of proof lies with the assessee to demonstrate that the proposed adjustments are unwarranted.

Common Litigation Flashpoints

1. Disagreement over transfer pricing adjustments
2. Challenges to the composition of the Dispute Resolution Panel
3. Timeliness and procedural issues in filing objections
4. Interpretation of international transaction definitions

Judgments on Section 144C — Reference to Dispute Resolution Panel

• M/s. Goldman Sachs Services Pvt. Ltd. vs Joint Commissioner of Income Tax — ITAT, 2020
  Disallowance under section 14A is not applicable if no exempt income is earned during the assessment year.
• Arya Roadways Company Pvt. Ltd. vs I.T.O., Ward-12(1), Kolkata — ITAT,
  The case was remanded to ensure a fair opportunity for the assessee to substantiate its claims regarding the expenditure.
• Commissioner of Income Tax, Karnataka vs M/S Bedi & Company Private Limited — SC,
  The High Court rightly held that the circumstances did not justify the conclusion that the amount was not received as a loan.
• Pawan Sachdeva vs Income-Tax Officer, Ward 19(3), Delhi & Anr. — HC,
  Issuance of notice within the limitation period is sufficient for jurisdiction, even if the service occurs later or with errors.
• DCIT-7(1)(1) vs Goldman Sachs (India) Securities Pvt. Ltd. — ITAT,
  Discount on issue of employees stock options is allowable as deduction in computing the income under the head profits and gains of business.
• Hyatt International Southwest Asia Ltd. vs Additional Director of Income Tax — SC,
  A Permanent Establishment exists if the enterprise has a fixed place of business at its disposal through which it carries on its business activities.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.