NOMURA SERVICES INDIA P.LTD ( FORMERLY KNOWN AS M.S, LEHMAN BROTHERS SERVICES INDIA P.LTD), MUMBAI V. ITO 10(3)(2), MUMBAI

ITA 5401/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8264 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 08-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 28-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJEET KUMAR JAIN
• Keywords: Transfer pricing; International transaction; Additional evidence; Non compliance; Right to appeal
• Section: 143(3); 139

Judgement Text

ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL 'K' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NOS.5401/MUM/2012 & 7230/MUM/2011 (ASSESSMENT YEAR: 2007-08) NOMURA SERVICES INDIA (P) LTD., (FORMERLY KNOWN AS M/S LEHMAN BROTHERS SERVICES INDIA PVT. LTD) 10 TH FLOOR, NOMURA, OFF HIGH STREET, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI 400076 PAN: AABCL 0053 C VS. INCOME TAX OFFICER, 10(3)-2, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI PERCY PARDIWALA & SHRI NISHANT THAKKAR DEPARTMENT BY: SHRI AJEET KUMAR JAIN, DR DATE OF HEARING: 08/11/2012 DATE OF PRONOUNCEMENT: 16/11/2012 O R D E R PER BENCH: THESE TWO APPEALS ARE BY ASSESSEE FOR THE ASSESSME NT YEAR 2007-08. THE APPEAL IN ITA NO.7230/MUM/2011 IS IN F ORM 36B AGAINST THE ORDERS OF THE DRP AND AO PASSED UNDER S ECTION 143(3) R.W.S. 144C IN PURSUANCE OF THE DIRECTIONS OF THE D RP. APPEAL IN ITA NO.5401/MUM/2012 IS IN FORM 36 AGAINST THE ORDER OF THE CIT (A) DISMISSING THE APPEAL PREFERRED BY ASSESSEE AGAINST THE ORDER UNDER SECTION 143(3) DATED 19.08.2011 (R.W.S. 144C) AS NOT MAINTAINABLE. 2. BRIEFLY STATED, ASSESSEE FILED RETURN OF INCOME ON 31.10.2007 DECLARING AN INCOME AT ` .3,27,225/-. ASSESSEE FORMERLY KNOWN AS LEHMAN BROTHERS SERVICES INDIA PVT. LTD IS A COMPAN Y INCORPORATED IN INDIA AND IS ENGAGED IN BUSINESS OF SOFTWARE DEV ELOPMENT & ITES ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 2 OF 10 AND HAS CLAIMED DEDUCTION UNDER SECTION 10A. DURING THE YEAR THE INTERNATIONAL TRANSACTIONS ENTERED INTO BY ASSESSEE WITH ITS ASSOCIATE ENTERPRISES (AE) WERE MORE THAN ` .15.00 CRORES. A REFERENCE WAS MADE UNDER SECTION 92CA(1) TO THE TRA NSFER PRICING OFFICER (TPO) AND ORDER UNDER SECTION 92CA(3) DATED 20.09.2010 HAS BEEN RECEIVED BY AO FROM THE ADDITIONAL CIT, TR ANSFER PRICING II (3). THEREAFTER THE DRAFT ORDER WAS PASSED UNDER SE CTION 144C(1) R.W.S. 143(3) WITH AN INTIMATION TO ASSESSEE TO FIL E NECESSARY OBJECTIONS, IF ANY BEFORE THE DRP. ASSESSEE FILED I TS APPLICATION ON 23.12.2010 IN FORM 35A WHICH WAS REJECTED BY THE DR P VIDE ITS ORDER DATED 04.07.2011. THEREAFTER AO COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 144C WARRANTING TRANSFE R PRICING ADJUSTMENT OF ` .18,18,88,479/- AS PER THE ORDER OF THE TPO UNDER SECTION 92CA(3). SINCE THE DRP REJECTED THE APPLICA TION SUO MOTO AS NON-EST , AND NOT MAINTAINABLE AB INITIO , ASSESSEE PREFERRED APPEAL TO THE CIT (A) AS PER THE PROVISIONS. THE CIT (A) NOTI CING THAT THE DRP REJECTED AND DISMISSED THE OBJECTIONS AS INVALID, NON EST AND DISMISSED LIMINE HOWEVER, WAS OF THE VIEW THAT THE APPEAL IS NOT MAINTAINABLE AS THE ORDER WAS PASSED PURSUANCE TO T HE ORDER/DIRECTIONS OF THE DRP. AGAINST THESE TWO SETS OF ORDERS OF THE DRP AND THE CIT (A) ASSESSEE PREFERRED PRESENT TWO APPEALS. 3. WE HAVE HEARD THE LEARNED COUNSEL AND THE LEARNED D R IN DETAIL. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAMINING THE ORDERS ON RECORD, WE ARE OF THE OPINION THAT BOTH T HE AUTHORITIES HAVE REJECTED ASSESSEES CONTENTIONS WITHOUT ANY VA LID REASONS. FIRST OF ALL, WE WILL DEAL WITH THE REJECTION OF OB JECTIONS FILED BEFORE THE DRP. 4. DRP VIDE ORDER DATED 04.07.2011 HAS MENTIONED THAT VIDE PARA-2 THAT IT HAS SEEN DURING THE DRP PROCEEDINGS THAT FORM NO.35A OF THE ASSESSEE COMPANY WHICH IS RESIDENT IN DIAN PRIVATE LIMITED COMPANY WAS SIGNED BY ONE MR. BRIJESH AHUJA ON BEHALF OF ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 3 OF 10 ASSESSEE. ASSESSEE WAS ASKED TO EXPLAIN THE SAME AN D ESTABLISH THE STATUS OF SHRI BRIJESH AHUJA VIS--VIS THE ASSESSEE COMPANY IN TERMS OF THE PROVISIONS OF SECTION 140C WHICH SECTI ON PRESCRIBED AS WHO SHOULD SIGN THE RETURN OF INCOME ETC., THEREAFT ER VIDE PARA 2.2.1 THE DRP NOTES AS UNDER: 2.2.1. BY ITS REPLY RECEIVED ON 27.06.2011, AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE COMPANY HAVE FILED P HOTO COPIES OF CERTAIN DOCUMENTS WHICH ARE UNAUTHENTICAT ED. AS PER THESE COPIES, IT IS SEEN THAT THE DOCUMENT I S STATED TO BE A CERTIFIED TRUE COPY OF THE RESOLUTION PASSE D BY THE BOARD OF DIRECTORS OF NOMURA SERVICES INDIA PRIVATE LIMITED AT THE MEETING HELD ON APRIL 24, 2009 BY WH ICH THE BOARD OF DIRECTORS AUTHORIZED SHRI BRIJESH AHUJ A AMONG OTHERS TO PREPARE, SIGN, FURNISH AND FILE INC OME AND OTHER TAX RETURN. ETC. THE DOCUMENT HOWEVER, DOES NOT STATE THE SPECIFIC CIRCUMSTANCES UNDER WHICH THE BO ARD OF DIRECTORS IS COMPELLED TO AUTHORIZE SHRI BRIJESH AH UJA TO SIGN THE INCOME TAX RETURNS AMONG OTHER DOCUMENTS. IN VIEW OF THIS, THE ASSESSEE COMPANYS FORM NO.35A IS NOT IN COMPLIANCE WITH THE RELEVANT PROVISION OF SECTIO N 140(C) WHICH IS REPRODUCED AS UNDER: EXTRACT OF SECTION 140(C): IN THE CASE OF A COMPANY, BY MANAGING DIRECTOR THE REOF, OR WHERE FOR ANY UNAVOIDABLE REASON SUCH MANAGING DIRECTOR IS NOT ABLE TO SIGN AND VERIFY THE RETURN, OR WHERE THERE IS NO MANAGING DIRECTOR BY ANY DIRECTOR THERE OF: (PROVIDED THAT WHERE THE COMPANY IS NOT RESIDENT IN INDIA, THE RETURN MAY BE SIGNED AND VERIFIED BY A PERSON W HO HOLDS A VALID POWER OF ATTORNEY FROM SUCH COMPANY T O DO SO, WHICH SHALL BE ATTACHED TO THE RETURN) IT IS IN THIS BACKGROUND THAT THE VALIDITY OF ASSES SEES FORM NO.35A IS TO BE CONSIDERED 5. THEREAFTER IT RECORDS THAT THE PROCEEDINGS BEFORE T HE DRP ARE CONTINUATION PROCEEDINGS AND RECORDS THE FOLLOWING IN PARA 2.2.2: 2.2.2 IN THIS RESPECT, IN THE FIRST PLACE THE DRP FINDS THAT THE PROCEEDINGS BEFORE IT BEING ONLY AN EXTENSION O F THE PROCEEDINGS BEFORE AO, THE BINDING OBLIGATIONS WITH REGARD TO SIGNING OF RETURNS TO BE FILED WITH AO AR E EQUALLY BINDING ON THE FORMS AND PAPERS FILED BEFOR E THE DRP. SEEN ON THIS TEMPLATE, THE UNAVOIDABLE REASONS FOR THE AUTHORIZATION IN THE CASE HAVING BEEN NOT ARTIC ULATED ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 4 OF 10 EITHER IN THE ASSESSEE COMPANYS BOARDS RESOLUTION OR IN FORM NO.35A, THE AUTHORIZATION ISSUED BY ASSESSEE T O MR. BRIJESH AHUJA IS NOT IN CONFORMITY WITH THE PRO VISIONS AND REQUIREMENTS MANDATED BY SECTION 140(C) AS APPLYING TO VERIFICATION IN FORM NO.35A). 6. FURTHER IN THE LATER PARAS RUNNING FROM 2.2.2 TO 2. 2.10 THE DRP WENT ON DISCUSSING THE MODALITIES FOR SIGNING T HE RETURN, APPLICATION OF SECTION 277, APPLICATION OF SECTION 140 AND MAKES ELABORATE DISCUSSION INCLUDING EXPLANATION TO SECTI ON 139(9) AND CONCLUDES AS UNDER: 3. FOR REASONS DISCUSSED IN DETAIL SUPRA, THE IMPUG NED FORM NO.35A AND ITS ENCLOSURES CANNOT BE CONSIDERED VALID IN LAW. NON COMPLIANCE WITH THE STATUTORY PROVISIONS OF SECTION 140(C) AND VIOLATION OF THESE PROVISIONS CLEARLY RENDER THE DOCUMENTS FILED IN VIOLATION OF THE PROVISIONS AS INVALID AND ILLEGAL. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THA T SINCE THE DRP MEMO INFORM NO.35A, ITS ACCOMPANYING STATEMENT OF FACTS AND GROUNDS OF APPEAL HAVE NOT B EEN VERIFIED AS REQUIRED BY LAW, THE SAID DOCUMENT IN F ORM NO.35A IS AN INVALID DOCUMENT, DEVOID OF ANY SANCTI TY IN THE EYES OF LAW AND CANNOT BE PROCEEDED WITH. 4. AS DISCUSSED SUPRA, FORM NO.35A FILED BY THE ASSESSEE COMPANY IS NOT VALID. IN VIEW THEREOF, FOR M NO.35A FILED BY ASSESSEE IS HELD TO BE INVALID, NO N-EST AND DISMISSED IN LIMINE 7. BY CONCLUDING THE ABOVE THE DRP REJECTED THE OBJECT IONS FILED BY ASSESSEE AS NON-EST AND DISMISSED THE SAME IN LIMINE. 8. WE ARE SURPRISED TO NOTE THAT THREE COMMISSIONERS O F INCOMETAX CONSTITUTING THE DRP DOES NOT FOLLOW THE RULES UNDER WHICH THE DRP IS FUNCTIONING. BY A NOTIFICATION NO. 84/2009 (S.O 2958(E)/F.NO.142 /22/2009-TPL) DATED 20.11.2009, IN EXERCISE OF THE POWERS CONFERRED BY SUB-SECTION 14 OF SECTION 1 44C, THE CBDT HAD ISSUED RULES TO REGULATE THE PROCEDURE OF DISPU TE RESOLUTION PANEL. RULE-4 FOR FILING OBJECTIONS IS AS UNDER: PROCEDU RE FOR FILING OBJECTIONS: ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 5 OF 10 4(1). THE OBJECTIONS IF ANY, OF THE ELIGIBLE ASSESS EE TO THE DRAFT ORDER MAY BE FILED IN PERSON OR THROUGH HIS A GENT WITHIN THE SPECIFIED PERIOD IN FORM NO.35A. (2) THE OBJECTIONS REFERRED TO IN SUB-RULE (1) SHAL L BE IN ENGLISH AND PRESENTED TO THE SECRETARIAT OF THE PAN EL. (3) THE OBJECTIONS SHALL BE FILED IN PAPER BOOK FOR M IN QUADRUPLICATE DULY ACCOMPANIED BY- (A) FOUR COPIES OF THE DRAFT ORDER DULY AUTHENTICAT ED BY THE ELIGIBLE ASSESSEE OR HIS AUTHORIZED REPRESENTAT IVE. PROVIDED THAT IN THE CASE OF DRAFT ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 READ WITH SECTION 14 4A, THE OBJECTIONS SHALL ALSO BE ACCOMPANIED BY FOUR CO PIES OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER UNDER SECTION 144A AND IN T HE CASE OF DRAFT ASSESSMENT UNDER SUB-SECTION (3) OF S ECTION 143 READ WITH SECTION 147, THE OBJECTIONS SHALL ALS O BE ACCOMPANIED BY FOUR COPIES OF THE ORIGINAL ASSESSME NT ORDER, IF ANY: PROVIDED FURTHER THAT THE PANEL MAY IN ITS DISCRETION EITHER ACCEPT THE OBJECTIONS WHICH ARE NOT ACCOMPAN IED BY ALL OR ANY OF THE DOCUMENTS REFERRED TO ABOVE OR REJECT IT. (B) THE EVIDENCE, IF ANY, THE ELIGIBLE ASSESSEE INT ENDS TO RELY UPON INCLUDING ANY DOCUMENT OR STATEMENT OR PA PER SUBMITTED TO ASSESSING OFFICER: PROVIDED THAT WHERE THE ELIGIBLE ASSESSEE INTENDS TO RELY UPON ANY ADDITIONAL EVIDENCE OTHER THAN THOSE SUBMITTED TO AO, SUCH ADDITIONAL EVIDENCE SHALL NOT FORM PART OF THE PAPER BOOK BUT MAY BE FILED ALONG WITH A SEPARATE APPLICATION STATING THE REASONS FOR FILING SUCH ADDITIONAL EVIDENCE SHALL NOT FORM PART OF THE PAPE R BOOK BUT MAY BE FILED ALONG WITH A SEPARATE APPLICATION STATING THE REASONS FOR FILING SUCH ADDITIONAL EVID ENCE . 9. AS CAN BE SEEN FROM THE ABOVE RULE, OBJECTIONS, IF ANY MAY BE FILED IN PERSON OR THROUGH HIS AGENT WITHIN THE SPE CIFIED PERIOD IN FORM 35A. THERE IS NO PRESCRIPTION THAT THE OBJECTI ON SHOULD BE FILED BY ASSESSEE IN PERSON. AN AGENT IS PERMITTED TO FILE THE OBJECTION, BUT IN THE CASE OF COMPANY WHETHER THE A GENT SHOULD BE A MANAGING DIRECTOR/ DIRECTOR, CHARTERED ACCOUNTANT O R ANY OTHER PERSON HAS NOT BEEN PRESCRIBED UNDER THE RULES. RUL E 3(A) EVEN ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 6 OF 10 SPECIFIES THAT DRAFT ORDER COPIES CAN BE DULY AUTHENTICATED BY THE ELIGIBLE ASSESSEE OR HIS AUTHORIZED REPRESENTATIVE. THE PROVISO FURTHER EMPOWERS DRP TO ACCEPT OBJECTIONS WITHOUT A CCOMPANYING DOCUMENTS OR REJECT. THEREFORE, THE OBSERVATIONS O F THE DRP THAT FORM 35A HAS NOT BEEN SIGNED BY ASSESSEE MANAGING D IRECTOR OR DIRECTOR IS NOT CORRECT, IN VIEW OF THE SPECIFIC RU LE WHICH PERMITS AN AGENT TO FILE THE OBJECTIONS. FURTHER IT IS TO BE N OTED THAT THESE RULES ARE SUBORDINATE RULES PRESCRIBED FOR REGULATING THE PROCEDURE AND ISSUED BY THE CBDT. ONCE THE CBDT DECIDES THAT AN A GENT ALSO IS PERMITTED TO FILE OBJECTIONS, WE ARE UNABLE TO UNDE RSTAND WHY THE DRP HAS TAKEN RECOURSE TO SECTION 140 TO STATE THAT FORM NO.35A (WHICH IS A NON STATUTORY FORM) SHOULD ALSO FOLLOW THE PROVISIONS AS PRESCRIBED AS THAT OF A RETURN OF INCOME. 10. WITH REGARD TO THE PROVISIONS OF SECTION 140, SECTI ON 140 OF THE INCOME TAX ACT PRESCRIBES WHO SHOULD SIGN THE R ETURN AND THE SAID PROVISION IS AS UNDER: 140. THE RETURN UNDER SECTION 115WD OR SECTION 139 SHALL BE SIGNED AND VERIFIED [(A) IN THE CASE OF AN INDIVIDUAL, (I) BY THE INDIVIDUAL HIMSELF; (II) WHERE HE IS ABSENT FROM INDIA, BY THE INDIVID UAL HIMSELF OR BY SOME PERSON DULY AUTHORIZED BY HIM IN THIS BEHALF; (III) WHERE HE IS MENTALLY INCAPACITATED FROM ATTEN DING TO HIS AFFAIRS, BY HIS GUARDIAN OR ANY OTHER PERSON COMPETENT TO ACT ON HIS BEHALF; AND (IV) WHERE, FOR ANY OTHER REASON, IT IS NOT POSSIBL E FOR THE INDIVIDUAL TO SIGN THE RETURN, BY ANY PERSON DULY AUTHORIZED BY HIM IN THIS BEHALF: PROVIDED THAT IN A CASE REFERRED TO IN SUB-CLAUSE ( II) OR SUB-CLAUSE (IV), THE PERSON SIGNING THE RETURN HOLD S A ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 7 OF 10 VALID POWER OF ATTORNEY FROM THE INDIVIDUAL TO DO S O, WHICH SHALL BE ATTACHED TO THE RETURN;] (B) IN THE CASE OF A HINDU UNDIVIDED FAMILY, BY TH E KARTA, AND, WHERE THE KARTA IS ABSENT FROM INDIA OR IS MEN TALLY INCAPACITATED FROM ATTENDING TO HIS AFFAIRS, BY ANY OTHER ADULT MEMBER OF SUCH FAMILY; (C) IN THE CASE OF A COMPANY, BY THE MANAGING DIRECTOR THEREOF, OR WHERE FOR ANY UNAVOIDABLE REASON SUCH MANAGING DIRECTOR IS NOT ABLE TO SIGN AND VERIFY THE RETURN, OR WHERE THERE IS NO MANAGING DIRECTOR, BY ANY DIRECTOR THEREOF : [PROVIDED THAT WHERE THE COMPANY IS NOT RESIDENT IN INDIA, THE RETURN MAY BE SIGNED AND VERIFIED BY A PERSON WHO HOLDS A VALID POWER OF ATTORNEY FROM SUCH COMPANY TO DO SO, WHICH SHALL BE ATTACHED TO THE RETURN 7 : PROVIDED FURTHER THAT, (A) WHERE THE COMPANY IS BEING WOUND UP, WHETHER UNDER THE ORDERS OF A COURT OR OTHERWISE, OR WHERE ANY PERSON HAS BEEN APPOINTED AS THE RECEIVER OF ANY ASSETS OF THE COMPANY, THE RETURN SHALL BE SIGNED AND VERIFIED BY THE LIQUIDATOR REFERRED TO IN SUB- SECTION (1) OF SECTION 178 ; (B) WHERE THE MANAGEMENT OF THE COMPANY HAS BEEN TAKEN OVER BY THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT UNDER ANY LAW, THE RETURN OF THE COMPANY SHALL BE SIGNED AND VERIFIED BY THE PRINCIPAL OFFICER THEREOF;] (CC) IN THE CASE OF A FIRM, BY THE MANAGING PARTNER THEREOF, OR WHERE FOR ANY UNAVOIDABLE REASON SUCH MANAGING PARTNER IS NOT ABLE TO SIGN AND VERIFY THE RETURN, OR WHERE THERE IS NO MANAGING PARTNER AS SUCH, BY ANY PARTNER THEREOF, NOT BEING A MINOR; (CD) IN THE CASE OF A LIMITED LIABILITY PARTNERSHI P, BY THE DESIGNATED PARTNER THEREOF, OR WHERE FOR ANY UNAVOIDABLE REASON SUCH DESIGNATED PARTNER IS NOT A BLE TO SIGN AND VERIFY THE RETURN, OR WHERE THERE IS NO DESIGNATED PARTNER AS SUCH, BY ANY PARTNER THEREOF; ] ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 8 OF 10 (D) IN THE CASE OF A LOCAL AUTHORITY, BY THE PRINC IPAL OFFICER THEREOF;] [(DD) IN THE CASE OF A POLITICAL PARTY REFERRED TO IN SUB- SECTION (4B) OF SECTION 139 , BY THE CHIEF EXECUTIVE OFFICER OF SUCH PARTY (WHETHER SUCH CHIEF EXECUTIVE OFFICER IS KNOWN AS SECRETARY OR BY ANY OTHER DESIGNATION);] (E) IN THE CASE OF ANY OTHER ASSOCIATION, BY ANY M EMBER OF THE ASSOCIATION OR THE PRINCIPAL OFFICER THEREOF; A ND (F) IN THE CASE OF ANY OTHER PERSON, BY THAT PERSO N OR BY SOME PERSON COMPETENT TO ACT ON HIS BEHALF. ( EMPHASIS SUPPLIED.) 11. AS CAN BE SEEN THE PROVISIONS OF SECTION 140 IS APP LICABLE ONLY FOR THE RETURN UNDER SECTION 115WD OR SECTION 139. IT DOES NOT APPLY TO ANY OTHER FORMS OR RETURNS PRESCRIBED UNDE R OTHER PROVISIONS OF THE STATUTE UNLESS MADE APPLICABLE SP ECIFICALLY. THEREFORE, RELIANCE ON THE DRP ON PROVISIONS OF SEC TION 140 WHICH DOES NOT APPLY TO FORM NO.35A PRESCRIBED UNDER THE RULES IS ITSELF WRONG AND IN OUR VIEW IS ONLY INVOKED BY THE DRP WI THOUT REALIZING ITS LIMITATIONS AND JURISDICTION, FOR THE SAKE OF R EJECTING THE APPLICATION. 12. UNLIKE FORM NO.36B WHICH HAS VARIOUS NOTES PRESCRIB ED ALONG WITH FORM, FORM NO.35A DOES NOT HAVE ANY NOTE S. IT ONLY REFERS TO THE RULE 4(1) WHICH ENABLE THE OBJECTIONS TO BE FILED EVEN THROUGH AN AGENT. THE ORDER PASSED BY THE DRP, IN O UR VIEW IS BEYOND THE JURISDICTION PROVIDED TO THAT. 13. EVEN UNDER THE DRP RULES OR UNDER THE PROVISIONS OF THE ACT, THE MANDATE TO THE DRP IS TO CONSIDER THE OBJECTION S ON MERIT AND GIVE DIRECTIONS TO AO WITH REFERENCE TO THE DRAFT A SSESSMENT ORDER. EVEN THIS BASIC DUTY HAS NOT BEEN PERFORMED BY THE DRP. IT SIMPLY REJECTED FORM NO.35A FILED BY ASSESSEE AS INVALID, NON EST AND DISMISSED IN LIMINI . ON THIS COUNT ALSO THE ACTION OF THE DRP CANNOT BE UPHELD AND THEREFORE, WE ARE OF THE FIRM OPINION THAT THE ORDER ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 9 OF 10 PASSED ON 04.07.2011 BY THE DRP PANEL-II IS TO BE S ET ASIDE WITH A DIRECTION TO CONSIDER OBJECTIONS AFRESH AND GIVE NE CESSARY DIRECTION TO AO AS PER THE PROVISIONS OF THE ACT AND RULES TH EREON. FOR THIS PURPOSE, THE MATTER IS RESTORED TO THE FILE OF THE DRP FOR CONSIDERATION OF THE OBJECTIONS FILED WITH IT, AFRE SH. AS THE MATTER IS RESTORED TO DRP FOR CONSIDERING OBJECTIONS ON MERIT , WE DO NOT INTEND TO DECIDE THE MERITS OF THE TRANSFER PRICING ADDITIONS SO PROPOSED. 14. WITH THESE DIRECTIONS, APPEAL IN ITA NO.7230/MUM/2 011 IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. ITA NO . 5401/MUM/2012 15. AS BRIEFLY STATED ABOVE THE CIT (A) REJECTED THE AP PEAL PREFERRED BY ASSESSEE BY HOLDING THAT THE ORDER WAS PASSED IN PURSUANCE TO THE ORDER/DIRECTIONS OF THE HON'BLE DR P. EVEN THIS ORDER OF THE CIT (A) IS NOT FACTUALLY CORRECT. AS DISCUSSED ABOVE IN THE ABOVE APPEAL, THE DRP HAS NOT GIVEN ANY DIRECTI ON TO AO ON THE PROPOSED DRAFT ASSESSMENT ORDER. IT SIMPLY REJECTED THE FORM 35A WITHOUT GIVING ANY DIRECTION TO AO. THEREFORE, THE ORDER OF AO TECHNICALLY SPEAKING IS NOT COVERED BY THE DIRECTIO NS OF THE DRP. THEREFORE, ASSESSEE HAD A RIGHT TO APPEAL TO THE CI T (A) AS PER THE BOARD CIRCULAR THEN ISSUED. THE CIT (A) ERRED IN RE JECTING THE APPEAL AS NOT MAINTAINABLE. THE ORDER OF THE CIT (A) CANNO T BE SUSTAINED AND THEREFORE, HAS TO BE SET ASIDE. 16. HOWEVER, SINCE THE MATTER WAS RESTORED TO THE FILE OF THE DRP TO THE DRAFT ORDER STAGE IN THE ABOVE APPEAL NO.723 0/MUM/2011, WE SET ASIDE THE ORDER OF THE CIT (A) ALONG WITH TH E ORDER OF AO DATED 19.8.2011 AND RESTORE THE PROCEEDINGS TO THE STAGE OF THE DRAFT ASSESSMENT ORDER PROPOSED BY AO. 17. ASSESSEE HAS A RIGHT TO PROCEED EITHER BEFORE THE D RP OR BEFORE THE CIT (A). IN THE COURSE OF THE ARGUMENTS, ASSESSEE ITA NOS.5401 OF 2012 & 7230 OF 2011 NOMURA SERVICE INDIA P LTD MUMBAI. PAGE 10 OF 10 PREFERRED TO GO TO THE DRP. THEREFORE, PROCEEDINGS ARE RESTORED TO THE FILE OF THE DRP TO CONSIDER THE OBJECTIONS ON M ERITS AND DECIDE ACCORDINGLY. CONSEQUENTLY, GROUNDS IN ITA NO.5401/M UM/2012 ARE ALSO CONSIDERED ALLOWED. 18. AS ASSESSEE DID NOT SEEK ANY COSTS, WE ARE NOT LEVY ING ANY COSTS ON DRP. WE HOPE THE DRP WILL FOLLOW THE RULES AND RENDER JUSTICE FOR WHICH IT WAS CONCEIVED AND CONSTITUTED. IN THE RESULT, BOTH THE APPEALS FILED BY ASSESSEE ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH NOVEMBER, 2012. SD/- SD/- (AMIT SHUKLA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 16 TH NOVEMBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, K BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI