Delhi High Court Affirms ITAT’s Authority to Directly Remit Cases to TPO, Renders AO’s Second Reference Redundant

 Case Name: New Delhi Television Ltd. v. Dispute Resolution Panel 2 & Anr 

Case No.: W.P.(C) 2322/2021 

Dated: May20, 2024 

Quorum: Justice Yashwanth Varma and Justice Purushaindra Kumar Kaurav 



The writ petitioner challenges the Dispute Resolution panel’s ruling. Panel from January 29, 2021, which has refuted its concerns about the preliminary evaluation order formulated on March 31, 2013. That particular draft the evaluation order was created in response to a directive issued by the Officer of Transfer Pricing on October 29, 2019. It appears that the petitioner to have argued before the DRP that, in essence, the reference to the TPO on December 27, 2018, was a follow-up reference to allegedly implement the Income Tax Appellate Court’s ruling tribunal on July 14, 2017.  

Despite having framed an order on October 17, 2017, the record would show that no equivalent order as required by Income Tax Act, 1961 Section 92CA(4) was framed. In order to give effect to the original ITAT order dated July 14, 2017, the petitioner had urged the DRP to consider that the reference made on December 27, 2018, as well as the consequential order dated October 29, 2019, framed by the TPO, were manifestly barred by the statute of limitations as embodied in Section 153(3) of the Act. 

Nevertheless, the DRP declined to consider the restriction challenge, pointing out that Section 144C(8) limits its authority to verifying, modifying, or improving the changes suggested in the draft order. It seems to have essentially adopted the stance that it could not consider a jurisdictional challenge brought forth as an objection under Section 144C(2) of the Act. It is offended by the aforementioned action, which led to the current writ petition being filed.  

According to the Special Bench’s previously stated opinion, it seems that the appeal itself was instructed to be presented before the suitable ITAT Bench for resolution with regard to the findings as produced. It would be relevant to remember that on July 14, the ITAT when discussing the topic of corporate guarantees in 2017, returned the matter with the warning for the TPO’s consideration. That the aforementioned query will be held until the decision was made by the Particular Bench in the ongoing case.  


  • Section 92CA(4) of the Income Tax Act, 1961- After receiving the order under sub-section (3), the Assessing Officer will calculate the assessee’s total income under section 92C, sub-section (4), taking into account the arm’s length price that the Transfer Pricing Officer determined under sub-section (3). 
  • Section 153(3) of the Income Tax Act– An order under section 254 or section 263 or section 264, setting aside or cancelling an assessment or an order under section 92CA, as the case may be, may be made at any time before the end of the nine-month period following the end of the fiscal year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner. 


The learned counsel for the appellants fiercely and strongly argued that a reading of the ITAT’s order dated July 14, 2017, makes it clear that the parties’ permission was obtained before the TPO was mentioned. Mr Jolly emphasised that the respondents had not contested the order dated July 14, 2017, insofar as it related to the referral to the TPO. As a result, they were ineligible to criticise or raise doubts about the propriety of the process used by the ITAT to make that referral. 

It was also emphasised that while the respondents filed appeals on January 02, 2018, against the ITAT’s order dated July 14, 2017, those appeals are limited to the merits of the several issues that were ultimately decided. Even in those appeals, which The learned counsel filed, the respondents do not criticise or cast doubt on the propriety of the ITAT’s decision to forward the case to the TPO.  

The learned counsel went on to say that a simple reading of the TPO’s first ruling, dated October 17, 2017, would prove beyond a reasonable doubt that the aforementioned authority had acted in accordance with the ITAT’s instructions and to give effect to and carry out the order dated July 14, 2017.  

The TPO’s reference and assumption of jurisdiction were subsequently challenged on the basis of limitation as outlined in Section 153 of the Act. The learned counsel contended that the time frame within which the AO or the TPO could have concluded that exercise would be governed by Section 153(3) of the Act, unquestionably in terms of the order of July 14, 2017, and which would clearly be liable to be read as requiring a fresh assessment to be undertaken.  

When considering this, skilled counsel argued that the deadline for creating a draft appeal effect order would have ended on December 31, 2018. The learned counsel stated that this would logically follow from the Act’s Section 153(3)’s straightforward language.   


The arguments put forward by the learned counsel for the appellants were sharply and passionately rejected by the learned counsel for originally filed a preliminary objection, arguing that the writ petition should not be granted in defiance of the DRP’s directives. According to The learned counsel’s submission, Section 144C of the Act establishes a unique method to address situations in which alterations in transfer pricing may lead to variances. According to The learned counsel’s submission, qualified assessees are provided with a draft assessment order in all circumstances whereby they are entitled to file objections with the DRP under the Act. It was mentioned that after the DRP rejects those objections, the issue is brought before the AO, who would then decide whether to issue an assessment order.  

As per the advice of knowledgeable legal counsel, an assessee’s entitlement to challenge the respondents’ actions or pursue legal remedies will only be acknowledged upon the drafting of a final assessment decision that follows the DRP’s directives. The learned counsel argued that the DRP’s resolution of objections does not create a liability and is merely a step towards assessment in the event that the assessee is eligible. According to knowledgeable counsel, a tax liability wouldn’t materialise until after a final assessment decision was approved and was subject to an ITAT appeal.  

Subsequently, it was argued that the challenge to the DRP’s recommendations is misguided because it is evident that the aforementioned authority lacks the authority to consider any potential jurisdictional issues, including objections to limitations. It was argued that the DRP’s authority is limited to “confirming, reducing or enhancing the variations proposed,” as would be clear from Section 144C(8) of the Act. The learned counsel argues that this authority cannot be seen as equivalent to or similar to the authority to set aside.  


First, the court noted that the provisions included in the Finance Act, 2016 were the first to introduce and structure the “nine” and “twelve” month window governing assessments to be made post remit by the ITAT and in cases where a reference under Section 92CA(1) of the Act may be made during an ongoing assessment. Section 153 of the Finance Act, 2014 fully acknowledged and established provisions regarding assessments that may need to be made in compliance with the method outlined under Section 92CA of the Act. This is the second aspect of some relevance.  

After outlining the main points of contention, we believe it is fair to take a closer look at Mr. Hossain’s preliminary objection. Recall that Mr. Hossain had argued that the petitioner was only contesting a DRP order, which in any event carries no legal consequences. The main argument of the submission was that this Court would not be able to use the Article 226 of the Constitution’s jurisdiction if no corresponding order of assessment had been framed. For the following reasons, we are unable to support that objection.  

The court also noted that the Act’s Section 92CA(1) specifies that the concerned AO alone may refer to the TPO. Nonetheless, we see no reason to question the ITAT’s authority to make such a reference while reviewing an appeal that might be brought before it, given the stature and position that have been bestowed upon it. This is because, according to Section 253 of the Act, an assessee has the right to contest a directive that the DRP issued and that may have been converted into a real assessment order.  

The court also discovered that the ITAT’s order referring the case to the “Assessing Officer/Transfer Pricing Officer/Dispute Resolution Panel” was at issue in the ruling made by a knowledgeable single judge of the Karnataka High Court in the TE Connectivity case.  

In any event, the High Court finally ruled in favour of the assessee in that particular case. We are unable to find any observation or conclusion in that decision that might be interpreted as supporting the arguments made by the respondents in this particular process.  

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Judgment reviewed by Riddhi S Bhora. 

Click to view judgment. 

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