The draft-order route for transfer-pricing and foreign-company cases, and why it is preferred
The Dispute Resolution Panel (DRP) is a special, faster route for eligible assessees, foreign companies, non-residents, and any taxpayer facing a transfer-pricing adjustment. Instead of a final assessment, the officer first issues a draft order proposing the variation, and you can file objections on Form 35A within 30 days to a three-member panel of Principal Commissioners or Commissioners. The panel's directions are binding on the officer and must be issued within nine months, after which the officer finalises accordingly, and you appeal straight to the Tribunal, skipping the first appeal to the Commissioner (Appeals). The DRP costs nothing to file and needs no pre-deposit, which is why transfer-pricing and foreign-company cases prefer it.
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What the DRP is, and who can use it
The DRP under Section 144C exists for eligible assessees: a foreign company, a non-resident, and any taxpayer where the officer proposes a transfer-pricing adjustment. In these cases the officer cannot pass a final order straight away, they must first issue a draft assessment order setting out the proposed variation. The taxpayer can then accept it, or object to the DRP. The panel is a collegium of three Principal Commissioners or Commissioners, which adds weight and independence compared with a single officer.
The process and timeline
You file objections on Form 35A within 30 days of receiving the draft order, with a copy to the assessing officer. The DRP considers them and issues directions, which are binding on the officer, within nine months from the end of the month in which the draft order was forwarded. The officer then passes the final order in line with those directions. From there, you appeal directly to the Income-tax Appellate Tribunal, the DRP route bypasses the Commissioner (Appeals) stage entirely, which is one of its main attractions for cross-border cases.
tipThe DRP costs nothing to file and needs no pre-deposit, and its directions bind the officer within a fixed nine-month window. For a transfer-pricing or foreign-company dispute, it is usually faster and cheaper than the ordinary first appeal.
DRP versus the ordinary first appeal
The DRP and the Commissioner (Appeals) are alternatives that suit different situations. The DRP is triggered by a draft order, uses a three-member panel, runs on Form 35A within 30 days, must dispose within nine months, and leads straight to the Tribunal. The Commissioner (Appeals) hears appeals against final orders, is a single authority, uses Form 35, and only then leads to the Tribunal. An eligible assessee usually prefers the DRP for its speed, panel review and absence of fees. A separate treaty route, the Mutual Agreement Procedure under the DTAA, can run alongside the DRP for international cases.
warningThe DRP window is short: objections must be filed within 30 days of the draft order. Miss it and the officer finalises the draft as the assessment, leaving you only the ordinary appeal. Diarise the draft-order date immediately.
Income-tax Act 1961 Chapter X (transfer pricing) for the eligible-assessee TP trigger
DTAA Article 25 (Mutual Agreement Procedure) as a parallel treaty route
Frequently asked questions
Who can use the Dispute Resolution Panel?+
Eligible assessees: foreign companies, non-residents, and any taxpayer where the assessing officer proposes a transfer-pricing adjustment. In these cases the officer must issue a draft order first, and you can object to the DRP (a three-member panel of Commissioners) instead of receiving a final order straight away. Ordinary domestic assessments without a TP adjustment do not use the DRP.
How is the DRP faster than a normal appeal?+
Its directions are binding on the officer and must be issued within nine months, and after the DRP you appeal directly to the Tribunal, skipping the Commissioner (Appeals) stage. It also costs nothing to file and needs no pre-deposit. For a transfer-pricing or foreign-company dispute, this combination of a fixed timeline, panel review and no fees usually makes it preferable to the ordinary first appeal.
What is the deadline to object to a draft order?+
30 days from receiving the draft assessment order. You file objections on Form 35A with the DRP and a copy to the assessing officer. If you miss the 30 days, the officer finalises the draft as the assessment and you lose the DRP route, leaving only the ordinary appeal to the Commissioner (Appeals). So act on a draft order immediately.
Can I use the DRP and a tax treaty's MAP together?+
Yes. The Mutual Agreement Procedure under the relevant DTAA is a treaty-level route where the competent authorities of the two countries resolve the dispute, and it can run alongside the domestic DRP process without displacing it. For a cross-border transfer-pricing dispute, taxpayers sometimes pursue both, the DRP domestically and MAP at treaty level.