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TMI Blog2023 (2) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... s an omission by the A.O. in following the mandatory procedure prescribed by the law, then the said omission cannot be considered as a mere procedural irregularity and the same cannot be cured. Aker Powergas P. Ltd. ( 2022 (6) TMI 1118 - ITAT MUMBAI] ), which has held that the issuing of draft assessment order along with the demand notice is said to be not following the mandatory provisions of the Act as per section 144C of the Act, wherein the assessment order was treated as void. The said decision by the Tribunal has considered various decisions of the Hon'ble Apex Court and the Hon'ble High Court decision in the case of Sun Engineering Works [ 1992 (9) TMI 1 - SUPREME COURT] and various other decisions. We would also place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that the draft assessment order dated 29.12.2016 passed by the Assessing Officer (A.O. for short) along with the notice of demand u/s. 156 of the Act is in violation of section 144C of the Act and the same is bad in law. 3. The brief facts are that the assessee company is incorporated in and a tax resident of the Netherland. It is observed that the assessee has entered into License and Royalty Agreement (LRA) with various Indian hotels for granting license to use various brands such as Marriott, Courtyard and Renaissance brands ( Marriott brands ) which is given worldwide to any hotel as per the terms and conditions under LRA. The assessee filed its return of income declaring total income at Rs.Nil dated 30.09.2014 and revised i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or management of Indian hotels which were done only by Indian entity the Marriott Group based on the operating agreement entered between Marriott Indian entity and the Indian hotel owners. The assessee only sub licenses Marriott trade mark and renders sales and marketing services to Indian hotel owners. The A.O. held that IMPPA receipts received by the assessee is royalty as per the provisions of section 9(1)(vi) of the Act and Article 12(4) of the Indian Netherland Tax Treaty. The A.O. also held that the expenses incurred are in the nature of FTS u/s. 9(1)(vii) of the Act and Article 12(5) of the Indian Netherland Tax Treaty for the reason that the assessee has deputed persons for rendering services to Indian hotels, which according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sent along with the notice of demand u/s. 156 of the Act and notice u/s. 271(1)(c) dated 29.12.2016 and subsequently passed the assessment order dated 14.02.2017 u/s. 143(3) r.w.s. 144C(3) of the Act. The ld. AR further contended that the said draft assessment order was sent by the A.O. along with the demand notice and the penalty notice was also sent, which implies that the A.O. has not followed the mandatory procedures prescribed by the Act and cannot be considered as a mere procedural irregularity. The ld. AR relied on a catena of decisions to substantiate that the draft assessment order passed by the A.O. accompanied by notice of demand u/s. 156 is in violation of section 144C and the same is to be considered as bad in law. 9. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Ltd. vs. DCIT ITA No. 7211/Mum/2017 3 Perfetti Van Melle (India) Pvt. Ltd. vs. ACIT ITA No. 9116/Del/2019 4 DCIT vs. Atlas Copco (India) Limited ITA No. 649/Mum/2013 1726/Pun/2014 11. The assessee has relied on the decision of the Hon ble Madras High Court in the case of Vijay Television (P.) Ltd. (supra), which has held that when there is an omission by the A.O. in following the mandatory procedure prescribed by the law, then the said omission cannot be considered as a mere procedural irregularity and the same cannot be cured. The ld. AR also placed reliance on the decision of the co-ordinate bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
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