Dispute Resolution Panel (DRP) for Transfer Pricing in India | Expert CA

Transfer Pricing -- Dispute Resolution Panel (DRP) in India

Section 144C DRP Objections, Hearings and Directions for TP and International Tax Disputes

The Dispute Resolution Panel (DRP) is a collegium of three Principal Commissioners of Income Tax established under Section 144C to provide faster, expert dispute resolution for eligible assesses -- foreign companies, and Indian companies with international transactions -- who receive a draft assessment order with a proposed variation (TP adjustment or other addition). The DRP provides a significant advantage over the CIT(A) route for TP disputes: its commissioners have technical TP expertise, proceedings allow submission of additional comparables and economic analysis not presented to the TPO, and its statutory timeline (9 months) is considerably faster than the standard appeals process.

When a draft assessment order arrives, the taxpayer must choose within 30 days whether to file with the DRP or proceed to CIT(A) after the final assessment order. This is an irrevocable choice. Our team provides complete DRP representation from objection filing through the hearing, directions analysis, and subsequent ITAT appeal.

DRP Process Under Section 144C

Step	Action	Timeline
1. Draft Assessment Order	AO passes draft order with proposed TP additions and serves it on taxpayer	After TPO order
2. DRP Objection Filing	Taxpayer files objections (Form 35A) with DRP electronically	Within 30 days of draft order
3. DRP Proceedings	DRP issues notices, calls for information, conducts hearings with AO and taxpayer	After filing of objections
4. DRP Directions	DRP issues binding directions to AO specifying proper ALP and additions	Within 9 months of DRP application
5. Final Assessment Order	AO passes final assessment order per DRP directions; demand notice issued	Within 1 month of DRP directions
6. ITAT Appeal	Taxpayer or AO (with PCIT approval) may appeal to ITAT against final order	Within 60 days of final order

Our DRP Services

DRP Objection Drafting

Comprehensive DRP objection documents covering every ground of addition in the draft assessment order -- TP adjustments, PE attribution, treaty applicability, withholding tax issues -- with supporting analysis and judicial precedents.

Additional Comparables Submission

Refreshed benchmarking with updated comparables data and additional comparables not submitted to the TPO -- strengthening the arm's length case with more recent and functionally superior companies.

Economic Analysis for DRP

Preparation of economic analysis papers for DRP -- characterisation analysis, functional adjustments, working capital adjustments, extraordinary items analysis, and economic comparability assessment of the TPO's proposed comparables.

DRP Hearing Representation

Oral representation at DRP hearings -- presenting arguments on TP methodology, comparables selection, functional characterisation, and legal precedents to the three-member DRP bench.

DRP Directions Analysis

Detailed analysis of DRP directions to identify grounds for ITAT appeal, computation of tax and interest impact, and cash flow planning recommendations for the post-DRP assessment demand.

Joint DRP and MAP Strategy

Advisory on running DRP and Mutual Agreement Procedure (MAP) proceedings simultaneously for cross-border TP disputes involving double taxation risk in treaty partner countries.

Frequently Asked Questions

Who is eligible to file an objection with the DRP?

DRP objections can be filed by "eligible assesses" under Section 144C -- (a) a foreign company, or (b) any person in whose case a TP adjustment has been proposed, or (c) a person in whose case any variation is in connection with an international transaction or specified domestic transaction. Domestic companies without international transactions and no TP issues must appeal to CIT(A) instead. The choice between DRP and CIT(A) must be made within 30 days of receiving the draft assessment order and is irrevocable.

Can a taxpayer submit new evidence at the DRP stage?

Yes. The DRP can admit new evidence, additional comparables, and updated benchmarking data not submitted during TPO proceedings. This is one of the significant advantages of the DRP -- the taxpayer gets a second opportunity to present strengthened economic analysis and additional factual evidence before an expert forum. The DRP has the power to confirm, reduce, or enhance any proposed variation, and to consider any matter arising out of the assessment proceedings, even if not specifically raised in the taxpayer's objections.

Are DRP directions binding on the taxpayer?

DRP directions are binding on the Assessing Officer -- the AO must pass the final assessment order in conformity with the DRP directions. However, DRP directions are NOT binding on the taxpayer -- the taxpayer can still appeal the final assessment order to the ITAT. Similarly, the AO (with PCIT approval) can also challenge DRP directions at ITAT. This means a favourable DRP direction can still be challenged by the tax department, and an unfavourable one can still be challenged by the taxpayer, preserving both parties' appeal rights at ITAT.

Received a Draft Assessment Order? File Your DRP Objection Within 30 Days.

Our TP team drafts comprehensive DRP objections with updated comparables, economic analysis, and legal precedents -- and represents you at DRP hearings.