Should DRP condone technical errors?

Byline: MANOJ PUROHIT

To regain the confidence of the foreign companies/investors, the Government has initiated several measures including enhancing the limits of FDI investments.

The formation of a Dispute Resolution Panel (DRP) is an off- shoot of such a tax initiative by the Government. Initially, by virtue of the Finance Act, 1993, Advance Ruling mechanism was brought in the statute. The said mechanism resulted in a reasonable amount of certainty for the taxpayer and as a result, the number of cases which were referred to the Authority for Advance Ruling kept on increasing with the passage of time.

Post the introduction of the advance ruling mechanism, a new section was added in the Income-tax act, 1961(Act) relating to transfer pricing provisions. The advance ruling mechanism legislation did not provide any effective remedy for …