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TMI Blog2020 (1) TMI 1632X X X X Extracts X X X X X X X X Extracts X X X X ..... der. As rightly submitted by Assessing Officer has to pass an order within 33 months from the end of the relevant assessment order. Admittedly 33 months from the end of the assessment order falls on 31.12.2016. In this case, admittedly the assessment order was passed on 28.09.2017, which is beyond the period of limitation. When the DRP was clear in their mind that the objection of the assessee could not be adjudicated, then there cannot be any question of making further observation with regard to beneficial ownership of the royalty. Therefore this Tribunal is of the considered opinion that the DRP has exceeded its jurisdiction in making such an observation with regard to beneficial ownership of the royalty. Therefore the observation with regard to beneficial ownership of the royalty cannot be a binding precedent in the subsequent years to come. Accordingly the finding / observation of the DRP that the assessee is not a beneficial owner of the royalty and the assessee is not eligible for the benefit of Indo Cyprus DTAA are set aside. However the issue whether the assessee is eligible for benefits of Indo Cyprus DTAA and whether the assessee is a beneficial owner of royalty or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically found that they have no power to adjudicate the issue when there was no variation made by the DRP / Assessing Officer, they cannot proceed further to make observation that the assessee is not the beneficial owner of the royalty. Observation of the DRP that the assessee is not a beneficial owner is beyond the power of the DRP. Moreover this issue does not arise for consideration during the year under consideration since there was no variation with regard to international transactions. On a query from the Bench, when there was no variation how the assessee was aggrieved by the order of the DRP and the assessment order, the Ld.AR submitted that the observation of the Assessing Officer / DRP that the assessee is not the beneficial owner of the royalty would affect the right of the assessee in the subsequent years. Whether the assessee is a beneficial owner of the royalty or not needs to be determined when there was a variation in the international transactions. Since admittedly there was no variation in the international transactions, there was no question of deciding whether the assessee is a beneficial owner of the royalties or not. According to the Ld.AR, when the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete the assessment on the basis of the draft order, if- (a) the assessee intimates to the Assessing Officer the acceptance of the varia-tion ; 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, 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 sub-section (5), after considering the following, namely :- (a) draft order ; (b) objections filed by the assessee ; (c) evidence furnished by the assessee ; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority ; (e) records relating to the draft order ; (f) evidence collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) 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 92CA ; and (ii) any foreign company. The Assessing Officer has to pass the draft assessment order, if he proposes to make any variations in the income or loss returned, which is prejudicial to the interests of the assessee. In this case, admittedly there was no variation made to the returned income. In other words, the Assessing Officer accepted the returned income without any variation. The Assessing Officer observed in the assessment order, the assessment is prejudice to the interest of the assessee. Therefore, the draft assessment was made. In fact the Assessing Officer made a note in the draft assessment order which reads as follows: Note: Since the assessment is prejudicial to the interest of the assessee, a foreign company, a draft assessment order is passed as per section 144C(1) of IT Act 1961. On receipt of the draft order assessee has option either to file his acceptance of the variation to the AO or file its objections with DRP and the AO. If no objections are received within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute Resolution Panel is as per sub-section 2 of section 144C of the Act i.e. the assessee can file his objections only in relation to such variation as is referred to in sub section 1 of section 144C. Sub-section 1 of section 144C refers to any variation in the income or loss returned as made by the Assessing Officer as is prejudicial to the interest of the assessee. The above objection do not relate to any such variation made by the AO in income or loss as returned by the assessee in its return for AY 2012-13. So, the above objection cannot be adjudicated by this Panel, being beyond its scope of powers. Accordingly, the objection is not accepted. Without prejudice to the above and notwithstanding the rejection of the objection as above the Panel agrees with the AO in his findings that the assessee is NOT the beneficial owner of the Royalties. The AO has elaborately discussed the issue with reference to the facts of the case and with reference to Indo Cyprus DTAA Article 12. Considering the abov4e even on merits of the case the assessee has no case. Grounds dismissed. When the DRP found that the objection did not relate to any variation by the Assessing Officer in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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