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TMI Blog2018 (8) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... - Matter remanded back. - ITA No. 756/Rjt/2014, ITA No. 276/Rjt/2015 And ITA No. 91/Rjt/2016 - - - Dated:- 9-8-2018 - Mr. Pramod Kumar AM And Mr. Rajpal Yadav JM For The Appellant : Porus Kaka, Sr. Advocate, alongwith Manish Kanth For The Respondent : Jitender Kumar ORDER Per Pramod Kumar, AM: 1. One of the common grievances raised in all these appeals is that the Income Tax Officer (International Taxation), Rajkot has erred in passing a final order under section 172(4) of the Income-tax Act, 1961 without first issuing a draft of the assessment order as is required under section 144C of the Income-tax Act, and, therefore, the assessment made is bad in law and merits to be quashed . 2. Learned representatives fairly accept that this issue is covered in favour of the assessee, in the case of LR2 Management K/S Vs. Income Tax Officer [(2015) 63 taxmann.com 42 (Rajkot Trib.)], wherein we have observed as follows:- 5. The fundamental question that we have to first consider is whether an order under section 172(4) can be said to be an 'assessment order' because the requirement of serving a draft order on the assessee is only in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed qua an agent and qua an assessment year, rather than qua a vessel, it is de facto an assessment order under section 143(3). As we hold the impugned order to be an assessment order, it is also useful to take note of, as was taken by Hon'ble Delhi High Court in the case of Emirates Shipping Line FZE (supra), the decision of Hon'ble Supreme Court in the case of AS Glittre v. CIT [1997] 225 ITR 739/91 Taxman 286 wherein the following observations were made by Their Lordships of Hon'ble Supreme Court: 6. The scheme of s. 172 of the Act appears to be this : s. 172(1) of the Act gives a right to the ITO to levy and recover tax in the case of any ship belonging to a non-resident, in a summary manner (ad hoc assessment) notwithstanding anything contained in the other provisions of the Act. It is an absolute right conferred on the assessing authority. The assessee has no right to object to the same. Normally, this will be assessment of the assessee for the year. But, under s. 172(7) of the Act a right is given to the assessee to claim before the expiry of the assessment year relevant to the previous year in which the date of departure of the ship from the Indian po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to the Assessing Officer; or ( b) file his objections, if any, to such variation with,- ( i) the Dispute Resolution Panel; and ( ii) the Assessing Officer. ( 3) The Assessing Officer shall complete the assessment on the basis of the draft order, if- ( a) the assessee intimates to the Assessing Officer the acceptance of the variation; or ( b) no objections are received within the period specified in sub-section (2). ( 4) The Assessing Officer shall, notwithstanding anything contained in section 153 or section 153B, pass the assessment order under sub-section (3) within one month from the end of the month in which,- ( a) the acceptance is received; or ( b) the period of filing of objections under sub-section (2) expires. ( 5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. ( 6) The Dispute Resolution Panel shall issue the directions referred to in subsection (5), after considering the following, namely:- ( a) draft order; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, within one month from the end of the month in which such direction is received. ( 14) The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. ( 15) For the purposes of this section,- ( a) Dispute Resolution Panel means a collegium comprising of three [Principal Commissioners or] Commissioners of Income-tax constituted by the Board for this purpose; ( b) eligible assessee means,- ( i) any person in whose case the variation referred to in subsection (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and ( ii) any foreign company.' 8. If the above provisions of reference to the DRP are to be applied in the context of orders passed under section 172(4), in terms of the provisions of Section 144(1), it is incumbent upon the Assessing Officer to first forward a draft assessment order under section 172(4) to the assessee, and it is only when the assessee does not raise any objection under section 144C(2)(b) or when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer will have just one day to furnish the draft assessment order under section 172(4) to the assessee, and not even a day to implement the directions of the DRP as issued under section 144C(8). The reason is this. In respect of voyage vessel returns received in the month of March of an year, under section 172(4A), the Assessing Officer has to necessarily pass the order within December of that year and unless he forwards the draft assessment order to the assessee within March itself, the DRP cannot be under a statutory obligation to issue directions on or before the end of December that year. Similarly, when a VVR is received at the closing of the working hours of the last working day of March of an year, no assessment can at all be done in the case of an eligible assessee. These results are clearly incongruous and patently absurd. 9. That takes us to the question as to what should the judicial authorities like this Tribunal to do when faced with such a situation. We find guidance from Hon'ble Supreme Court's judgment in the case of CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449/126 Taxman 321, wherein it is observed that, a construction which reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Resolution Panel as an alternative dispute resolution mechanism. 10. There is thus no meeting ground between implementing the law laid down by Hon'be Courts above, which is also in harmony with the intent of the legislature as evident from the above extracts from 'Notes on Clauses', and the literal interpretation to the provision regarding relaxation to the time limits set out in Sections 153 and 153B. The choice that we now have is between interpreting the connotations of an assessment order as per the law laid down by Hon'ble Courts above, in furthering the scheme of the legislative amendment, in introducing section 144C, and thus reading the references to Section 153 and 153B, as appearing in Section 144C(4) and 144C(15), as illustrative rather than exhaustive, and between interpreting the connotations of an assessment order contrary to the law laid down by Hon'ble Courts above, in construing the scheme of Section 144C contrary to the scheme of the legislative amendment, in inserting section 144C, and, and in thus reading the references to Sections 153 and Section 153B, as appearing in Section 144C(4) and 144C(15), as exhaustive. In view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Delhi bench of this Tribunal, in the case of Capsugel Healthcare Ltd. v. Asstt.CIT [2014] 50 taxmann.com 324/152 ITD 142 (Delhi- Trib.) and vice versa also holds so. Learned Departmental Representative, on the other hand, submits that if, in the wisdom of the Tribunal, this matter is to be held to be covered by the scheme of Section 144C, the matter can best be remitted to the file of the Assessing Officer for following that path. 11. We have noted that in all the precedents cited by the learned counsel, the assessment orders in which arm's length price determination under section 92CA(3) was done, were subject matter of dispute. These are the cases in which there was no dispute with regard to the application to Section 144C and the only issue was as to what should be done in the cases in which the scheme of Section 144C, though admittedly applicable to the facts of the case, was not adhered to. The case before us, however, is qualitatively different inasmuch the very application of the scheme of Section 144C has been disputed on the facts of the case. Learned Departmental Representative's contention is that the provisions of Section 144C does not apply because an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the situations in which there is bona fide dispute about applicability of the provisions of Section 144 and, therefore, the AO has not forwarded the draft order, cannot be equated. We may add, at the cost of repetition, that the point of dispute being whether or not the course of action 144C was permissible, a decision in favour of the assessee is to be essentially followed with an opportunity being given to the assessee to be allowed to traverse that path. 3. Learned senior counsel for the assessee has, however, argued at length on merits of these cases as separate grounds of appeal on merits are also raised and submitted that the matter be decided on merits. Learned counsel for the assessee has raised certain fundamental legal and factual issues, particularly with respect to double non taxation and the scheme of the India Singapore DTAA, which have neither been examined at the stage of the authorities below nor learned Departmental Representative is in a position to offer much assistance on the same in the absence of discussions thereon by the authorities below. 4. In the light of the above discussions, bearing in mind entirety of the case and following the above obs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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