Does SC ruling in Global Vantedge have precedence value?

Recently, Supreme Court dismissed the special leave petition filed by the Revenue against Delhi HC ruling in Global Vantedge case [TS-1-SC-2014-TP].  Earlier Delhi HC confirmed the ITAT ruling which had in turned confirmed the findings of CIT(A). Ruling in favour of the assessee, the CIT(A) deleted TP addition in assessee's case. The CIT(A) held that arm's length price of a transaction cannot exceed the final price charged to third party for the services rendered by the entire Group. The CIT(A) also held that though the least complex party is to be selected as tested party, a foreign entity could not be chosen since it would be difficult to compare entities in different jurisdictions owing to difference in the geographical locations. It would also be difficult to obtain all relevant facts that could lead to a proper FAR analysis. While confirming the CIT(A) conclusion, ITAT  upheld the order of the CIT(A) on the ground that the neither assessee nor Revenue had been able to provide any basis or material to rebut the findings and conclusions of the CIT(A) [TS-12-ITAT-2009(DEL)]. 

 

On appeal by Revenue, Delhi HC held that ITAT didn't act illegally or irregularly in confirming CIT(A)'s order absent any cogent reasons [[TS-55-HC-2013(DEL)-TP]. The Revenue had contended that it was incumbent upon the Tribunal to record its own findings rather than merely confirming the findings of the CIT(A).  However, HC observed that Revenue had not controverted CIT(A)'s findings or pointed out any new evidence and it was not necessary for ITAT to repeat findings similar to that of CIT(A). 

 

This is the first transfer pricing case on merits which had been disposed of by the Supreme Court.  But, it is one word order ("dismissed") and there is no discussion in the Supreme Court order. Justice Dattu, while dismissing the case, is believed to have told the Revenue counsels that they had not been able to bring material on record to controvert CIT (A)'s findings and that seems to be the main ground for dismissal. So, the question arises as to the precedence value of this SC ruling.  Does the ratio of HC or ITAT or CIT(A) in this case stand confirmed by the Apex Court?  

 

In this context, well known tax expert Mr. Gautam Doshi opines that "this is not a 'dismissal' post consideration of merits and does not constitute a precedent." He feels that it would be more correct to say that Supreme Court 'refused to admit the SLP' by the Department and the refusal to admit does not mean that the principle on the basis of which the ITAT or the High Court decided the matter, is approved by the SC.

 

We welcome views from our readers on the precedence value of SC ruling...

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