More Stories

Informist, Friday, Jan. 17, 2025

 

NEW DELHI – The Delhi High Court Friday nullified a transfer pricing officer's officer which rectified an error by changing the name of the company from Cairn India Ltd. to Vedanta Ltd. for calculation of arm's length price in 2018. Both the companies had already merged in 2017, with the merged entity being named named Vedanta. The court, while dismissing a plea by the income tax department, held that an inadvertent mistake committed by a transfer pricing officer in not mentioning the correct name can't be cured under the Income Tax Act, 1961. 

 

The case has its genesis in an order passed by the transfer pricing officer in 2018 against Cairn India relating to assessment year 2015-16. Metals and mining group Vedanta had merged with its oil and gas subsidiary Cairn India, with effect from 2017. Vedanta said the development was duly communicated to the transfer pricing officer in 2017 itself.

 

The order of the transfer pricing officer resulted in the framing of a draft assessment order by an assessing officer in 2018. However, that order was made in the name of "Vedanta Ltd. (formerly known as Cairn India Ltd.)". Before the draft assessment order was passed, the transfer pricing officer had passed an order seeking to rectify what it claimed was a "mistake" and a typographical error. The transfer pricing officer said the name and permanent account number of the assessee was typed wrong as Cairn India instead of Vedanta. Thereafter, a final assessment order was passed against Vedanta. 

 

"In the facts of the present case, however, we find that there was a valid disclosure made by the respondent-assessee and the AO (assessing officer) being duly apprised of the factum of merger," said the court. Despite that, the assessing officer chose to make the draft assessment order in the name of a party (Cairn India) which no longer existed on that date, it said.

 

"Bearing in mind the fundamental error which besets the order of the TPO (transfer pricing officer), the said decision would clearly not salvage the inherent and patent error which besets the order passed by the TPO," said the court. In the absence of any intent by the officer to assess the resultant entity (Vedanta), the court said the order could have neither been rectified nor could be saved by Section 292B of the 1961 Act

 

On Friday, shares of Vedanta ended 0.9% higher at INR 454.05 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.