The Central Board of Direct Taxes (CBDT) on Tuesday notified rules to regulate the procedure of the dispute resolution panels (DRPs) being constituted in eight cities — Delhi, Mumbai, Ahmedabad, Kolkata, Chennai, Hyderabad, Bengaluru and Pune. Set up under Sec. 144C of the Income-tax Act, 1961, (as inserted by the Finance Act, 2009), the rules came into effect from November 20. As per the rules, according to an official statement here, any foreign company, or any domestic company with transfer pricing issues, in whose case the income-tax assessing officer proposes to make any variation in the income or loss returned, may apply within a month of receiving the draft assessment order before the DRP for appropriate remedy by way of direction to the assessing officer.
The direction will be binding on the assessing officer but the taxpayer will be at liberty to appeal against the assessment order incorporating directions of DRP before the Income Tax Appellate Tribunal (ITAT).
Each of the DRPs will be a collegium comprising three Commissioners of Income- tax.
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“The mechanism is investor-friendly and is also expected to reduce taxpayer grievance and litigation,” the statement said.