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| The Tax Publishers2020 TaxPub(DT) 3822 (Mad-HC) : (2021) 432 ITR 0306 CONSTITUTION OF INDIA
Article 226
Since assessee had not made out any case for waiving of efficacious alternate remedy available under provisions of the Act and, therefore, writ petition could not be entertained on merits so as to adjudicate the issue involved in respect of fixing of average rate of royalty payment.
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Writ - Maintainability - Assessee made no case for waiving of efficacious alternate remedy available -
TPO noticed that royalty paid by assessee to its AE was higher than average royalty rates of four comparable companies thus concluding that ALP of royalty paid was in excess and Rs. 106 crores was proposed to be disallowed in draft assessment order. Assessee filed its objections in Form 35A before DRP which rejected the objections. A rectification petition was filed before DRP disputing inconsistency in arriving at royalty expenses. However, final assessment order was passed without considering objections of assessee. Assessee filed appeal with ITAT. DRP issued revised order stating that certain mistake had crept in while calculating adjustment and consequently disallowance was scaled down from Rs. 106 crores to Rs. 86 crores. ITAT upheld this revised adjustment order of the DRP. Subsequently, Miscellaneous Petition was filed by assessee before ITAT which prompted ITAT to correct and modify its earlier order and direct TPO to verify whether assessee's rate of royalty payment was lesser than the rate prevailing in industry. TPO having revisited royalty payment, opined that assessee relied on Wikipedia and not any authentic source to substantiate its contentions regarding average royalty rate in the Industry and therefore, reiterated the decision on disallowance of Rs. 86 crores, on account of royalty paid. Irked by this order of TPO, a writ petition was filed by assessee in which Single Judge of High Court dismissed the petition by stating that it was. Hence, sessee fileda appeal against the order of Single Judge. Held: Undoubtedly, assessee had not made out any case for the purpose of waiving of efficacious alternate remedy available under provisions of the Act and therefore, writ petition could not be entertained on merits so as to adjudicate the issue involved in respect of fixing of average rate of royalty payment.
Relied:Joint Commissioner of Income Tax, Media Range and others v. Kalanithi Maran and another 2014 (3) Law Weekly 846 : 2014 TaxPub(DT) 3512 (Mad-HC) Commissioner of Income Tax and others v. Chhabil Dass Agarwal, (2014) 1 SCC 603 : 2013 TaxPub(DT) 2200 (SC)
REFERRED :
FAVOUR : Against the assesse
A.Y. : 2008-09
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