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TMI Blog2019 (1) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... .S. Sidhu, Judicial Member And Shri O.P. Kant, Accountant Member For the Assessee : Shri Porus Kaka, Sr. Advocate and Shri Dinesh Chawla, Advocate For the Department : Shri G.K. Dhall, CIT,DR ORDER PER H.S. SIDHU, J.M. The aforesaid appeal filed by the Revenue against the Ld. Dispute Resolution Panel-IV (DRP), New Delhi Directions dated 26.12.2014 passed u/s. 144C(5) of the Income Tax Act, 1961 (in short Act) on the following grounds:- 1. On the facts and circumstances of the case, the order passed by the Ld. DRP is bad in law and void abinitio. 2. On the facts and circumstances of the case, the Ld. DRP erred in misinterpreting the provision of Section 144C. 3. On the facts and circumstances of the case, the Ld. DRP erred in determination of the status of the assessee as defined in sub section 15(b) of Sec 144C. 4. On the facts and circumstance of the case, the Ld. DRP erred by ignoring the provision of sub section 8 of Section 144C read with explanation to it. 5. On the facts and circumstance of the case, the Ld. DRP erred by not providing opportunity to the Assessing officer as envisaged in provision of sub section 11 of Section 144C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 91,63,938/- (interest u/s 244A worked out by the AO in respect of the withholding tax of preceding year) in its ROI. The case was picked up for scrutiny. Since the assessee had undertaken international transactions with its Associated Enterprises (AE), the AO made a reference u/s 92CA(1) to the Transfer Pricing Officer (TPO), New Delhi. The TPO, vide his order dated 17.12.2013, proposed NIL variation in the returned income. However, the AO held the income of the assessee taxable u/s 9(1) consequent to his finding that the assessee has a PE in India. Accordingly, the AO, vide his draft assessment order, proposed to tax the income of the assessee at ₹ 94,93,95,777/-. Aggrieved with the aforesaid draft assessment order, the assessee came before the Ld. DRP, who vide its Directions dated 26.12.2014 held that the assessee is not an eligible assessee in accordance with section 144C(15)(b) as neither the TPO proposed any variation in the returned income nor the assessee is a foreign company. Thus, the Ld. DRP has no jurisdiction over the case and accordingly declined to issue any direction in this case and dismissed the proceedings in-limine. Thereafter, the AO vide his final as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership Firm. A perusal of section 144C which lays down the legal framework for the operation of the Dispute Resolution Panel (DRP) shows that only the 'eligible assessee' can come before the DRP. The sub section (1) of Sec 144C which opens with a non-obstante clause lays down that the AO, in the first instance, is required to forward a draft of the proposed assessment order to the assessee if he proposes to make any variation to the income or loss of the 'eligible assessee'. In other words, no draft assessment order is legally required to be sent to any assessee other than the 'eligible assessee1. The 'eligible assessee1 has been defined in sub section 15(b) of Sec 144C; which reads as under: eligible assessee means: Any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub section (3) of section 92CS; and Any foreign company 4.2 In view of the above, we are of.the considered opinion that the assessee is not. 0 . an eligible assessee in accordance with section 144C(15)(b) as neither the TPO proposed any variation in the returned income nor t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order in absence of any order passed u/s 92CA(3) thereby making any kind of TP adjustment, then provision of section 144C could not have been resorted to, because the assessee cannot be reckoned as eligible assessee in whose case the draft order of assessment is required to be passed. Section 144 C(1) reads as:- 144C. (1) The Assessing Officer shall notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. 8. The aforesaid provision which is a non obstante clause, provides that the AO has to forward a draft of the proposed order of assessment to the eligible assessee , if he proposes to make an order after the first day of October, 2009 making any variation in income and or loss returned which is prejudicial to the interest of such assessee. The eligible assessee has been defined in clause (b) of sub section 15 which reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t fulfilled any of the conditions to become eligible assessee in terms of section 144C(15)(b). A fortiori, no draft assessment could have been proposed u/s 144C(1) of the Act which has in fact been proposed by the Assessing Officer before passing the final impugned assessment order. 13. The Hon ble jurisdictional High Court in the assessee s own case for the assessment year 2010-11, since reported as ESPN Star Sports Mauritius S.N.C.ET Compagnie v. Union of India (2016) 388 ITR 383/241 Taxman.38/68 taxmann.com 377 (Delhi), has allowed the assessee s writ petition under similar circumstances by setting aside the draft assessment order and the final assessment order with the following observations made in para 30, which are as under:- It appears to the Court that it is plain that under Section 144C, the AO should have proceeded to pass an order under Section 143(3) of the Act. Instead the AO confirmed the draft assessment order passed under section 144C(1) of the Act. This, therefore, vitiated the entire exercise. The Court has no hesitation in holding that the final assessment order dated 28th January, 2015 is without jurisdiction and null and void. The draft assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in whose case the variation arises as a consequence of an order of the Transfer Pricing Officer and (ii) any foreign company. The use of the word means indicates that the definition eligible assessee for the purposes of Section 144(C)(15)(b) is a hard and fast definition and can only be applicable in the above two categories. 12. First of all, the petitioner is admittedly not a foreign Company. Secondly, the Transfer Pricing Officer has not proposed any variation to the return filed by the petitioner. The consequence of this is that the Assessing Officer cannot propose an order of assessment that is all variance in the income or loss return. The Transfer Pricing Officer has accepted the return filed by the petition. In view of the which, neither of the two conditions are satisfied in the case of the petitioner and thus the petitioner for the purposes of Section 144C(15)(b) is not an eligible assessee . Since the petitioner is not an eligible assessee in terms of Section 144C(15)(b), no draft order can be passed in the case of the petitioner under Section 144C(1). 13................................. 14. In view of the above, it is clear that the petitioner, not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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