Rules for income-tax dispute resolution panels notified
November, 24th 2009
Over four months after the Budget announcement and a month after its October 1 deadline, the finance ministry has finally notified the rules for setting up dispute resolution panels (DRPs) that are aimed at providing an easier and less time-consuming alternative to resolve transfer pricing cases.
The DRPs will be set up in eight cities including Delhi, Mumbai, Ahmedabad, Kolkata, Chennai, Hyderabad, Bangalore and Pune, each having three commissioner level officials as members, the Central Board of Direct Taxes (CBDT) has said.
All transfer pricing orders passed on or before October 1, 2009 will now be referred to the panel.
While the Delhi bench of the DRP will have jurisdiction over cases from Delhi, Punjab, Haryana, Chandigarh, J&K, UP, Uttaranchal, Rajasthan and Himachal Pradesh; the Mumbai bench will address dispute arising in Maharasthra (except Pune), Goa, MP and Chattisgarh.
Similarly taxpayers in Gujarat, Daman Diu and Dadra Nagar Haveli can seek redressal at the Ahmedabad bench, while those in West Bengal, North east States, Andaman and Nicobar, Bihar, Orissa and Jharkhand can appeal against the assessing officers decision at the Kolkata bench.
Announced in the Budget this year, DRPs would cut down lengthy litigation and the huge backlog of transfer pricing cases. In fact, even before they were notified, the Supreme Court had referred two transfer pricing cases to the DRP by September.
This included the transfer pricing case between the income tax department and software major HCL.
Now instead of appealing against the draft assessment order of the assessing officers in tribunals and courts, taxpayers would be expected to go to dispute resolution panels.
These can pass draft orders providing relief on the tax liability calculated and raised by an assessment officer within 30 days of the appeal and a final order within nine months.
The panels can not waive any penalty amount. The the DRP order would be binding on the assessment officer who can not go in for an appeal against it. However, taxpayers will still have the option to appeal against its orders.