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TMI Blog2024 (1) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... of DRP in terms of section 144C renders the final assessment order wholly without jurisdiction and void-abinitio. The plethora of decisions cited by learned counsel appearing for the assessee express similar view. Therefore, we do not intend to deal in detail with them. Thus, keeping in view the ratio laid down by Hon ble Jurisdiction High Court in M/s. ESPN Star Sports Mauritius S.N.C. ET Compagnie [ 2016 (4) TMI 45 - DELHI HIGH COURT] we hold that the impugned assessment orders are wholly without jurisdiction or in excess of jurisdiction, hence, void-ab-initio. Therefore, assessment orders under challenge in these appeals deserve to be quashed. Accordingly, we do so. Before parting, we must observe, this is not a stray instance coming to our notice, wherein, the Assessing Officer has not implemented the directions of DRP. We have come across several cases of such non-implementation of directions of learned DRP by the AO while passing final assessment orders. There is no gainsaying that in the hierarchy of tax administration, the DRP holds higher position than the AO. Therefore, for that reason and as per statutory mandate, the AO are bound to follow the directions of DRP. Non-imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and support services in relation to procurement of machinery and equipment for construction of the plant at RIL s refinery. Whereas, the second named assessee is a tax resident of USA. The said assessee entered into an engineering and procurement support services agreement for the captive power plant in RIL plant in Jamnagar, SEZ. As per the terms of contract, the assessee was responsible for providing certain engineering information, engineering services and support services in relation to procurement of machinery and equipment for construction of the power plant. 5. For execution of the contracts, the assessees received certain amount from RIL in the assessment years under dispute. It was the claim of the assessee that since the amount received by them for services rendered under the contract would not qualify as fee for included services (FIS) under Article 12 of India-UK and India-USA DTAAs, they are not taxable in India. The Assessing Officer, however, was not convinced with the submissions of the assessee and proceeded to frame draft assessment orders in respect of both the assessees for the assessment years under dispute holding that the amounts received by the assessees ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the draft assessment order without following the specific directions of learned DRP. Thus, he submitted, the final assessment orders are wholly without jurisdiction, hence, unsustainable. In support of such contention, learned counsel relied upon the following decisions: 1. M/s ESPN Star Sports Mauritius S.N.C. ET Compagnie [Now known as ESS Advertising (Mauritius) S.N.C. ET Compagnie)], Writ Petition bearing W.P.(C) 2384/2015, decision dated 23.03.2016 (Delhi High Court). 2. PCIT vs. Flextronics Technologies (India) (P.) Ltd., [2023] 148 taxmann.com 123 (Karnataka High Court). 3. Oxbow Energy Solutions LLC, USA vs. DCIT, appeal bearing ITA No. 574/Del/2021, decision dated 31.01.2023 (Delhi Trib.). 4. M/s Olympus Medical Systems Pvt. Ltd. vs. ACIT, appeal bearing ITA No. 873/Del/2021, decision dated 13.01.2022 (Delhi Trib.). 5. Global One India Pvt. Ltd. vs. DCIT, [2019] SCC OnLine ITAT 24052 (Delhi Trib.). 6. Tata Power Solar Systems Ltd. vs. DCIT, appeal bearing IT(TP)A No. 709/Bang/2017, decision dated 06.02.2023 (Bang. Trib.). 7. Software Paradigms Infotech Pvt. Ltd. vs. ACIT, [2018] SCC OnLine ITAT 4761 (Bang. Trib.). 8. July Systems Technologies Pvt. Ltd. vs. DCIT, [2018] SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present appeals, it is observed, though, the Assessing Officer has reproduced the entire directions of learned DRP in the body of the final assessment orders, however, he has again added the receipts as FTS/FIS on substantive basis without implementing the specific directions of learned DRP to first treat the receipts as business income attributable to the PE and tax accordingly in terms with Articles 6 7 of the tax treaties and secondly treat the receipts as FTS/FIS to add it as business income on protective basis in terms of section 44DA of the Act. Neither of these directions have been carried out by the Assessing Office in the draft assessment orders. 11. At this stage, we may refer to certain provisions contained under section 144C of the Act. As per sub-section (5) of section 144C of the Act, the DRP after receiving objection shall issue such direction as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment. Sub-section (8) of section 144C empowers the DRP to confirm, reduce or enhance the variation proposed in the draft assessment order. Sub-section (10) of section 144C makes it clear that every direction issued by the DRP shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 order dated 28th March 2014, having been passed in respect of entities which were not 'eligible assessees', is also held to be invalid. 31. It is a matter of concern that the AO has in the present case has chosen to label the order of the DRP to be invalid and that is the justification for not complying with the said order. As already noticed, the DRP, in terms of Section 144C (15) (a) is a collegium of three Principal Commissioners or the Commissioner of Income Tax. The DRP admittedly is the superior authority in relation to an AO who in this case appears to be Additional CIT. Section 144C (10) read with Section 144C (13) makes it abundantly clear that there is no option with an AO but to be bound by orders and subject to review by the DRP. It is bound by the DRP. A reference may also be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is in the negative, the Court held that the draft assessment order of the AO is null and void and quashed on that basis. In para 15 of the said decision, it was observed as under: 15. Since we have quashed the draft assessment order, the question that the assessment has now become time barred as left open and it is open to the parties to take recourse of such remedy, as may be available to them in law. 37. As regards the conduct of the AO in the present case, the Court would only like to highlight the lead portion of the decision of the Supreme Court in Union of India v. Kamlakshi Finance Corporation Limited (supra). The facts in that case were that the according to the Assistant Collector ('AC'), the electrical insulation tapes manufactured by the Assessee, Kamlakshi Finance Corporation Limited ('KFCL') fell under the Tariff heading 39.19 of the Schedule to the Central Excise Tariff Act, 1985 whereas the Assessee was claiming they fell under Entry 85.47. The impugned order of the AO was set aside by the Collector (Appeals) who issued a direction to the AC to pass a fresh reasoned and speaking order. However, the AC declined to follow the order of the Colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the clear directions given by the CIT (Appeals), the delayed refunds were paid to the Petitioner without any element of interest. It was noted that the Assistant Commissioner was merely required to comply with the directions given by the CIT (A) in the appellate order. However, the Assistant Commissioner look it upon himself to examine the case, as per his own understanding and therefore, had gone to the extent of overreaching the orders of his superior authority, that is, the Commissioner (Appeals). 40. Relying on the decision in Union of India v. Kamlakshi Finance Corporation Limited (supra) the Court set aside the rejection of claim of interest by the Petitioner in that case and directed the Assistant Commissioner to comply with the orders passed by the Commissioner Appeals). 41. The language used in the present case by the AO while disagreeing with the binding order of the DRP is wholly unacceptable. In the final assessment order dated 28th January 2015, the AO while discussing the order of the DRP observed inter alia in para 4.2 that The DRP has not acted in accordance with the provisions of the Act while passing this order which is grossly illegal, against the intent of legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 147/148 of the Act. The rights and contentions of the parties in those proceedings are left open to be urged and decided by the appropriate authority in accordance with law. 14. As could be seen from the aforesaid observations of the Hon ble Jurisdictional High Court, non-implementation of directions of DRP in terms of section 144C renders the final assessment order wholly without jurisdiction and void-abinitio. The plethora of decisions cited by learned counsel appearing for the assessee express similar view. Therefore, we do not intend to deal in detail with them. Thus, keeping in view the ratio laid down by Hon ble Jurisdiction High Court, as discussed above, we hold that the impugned assessment orders are wholly without jurisdiction or in excess of jurisdiction, hence, void-ab-initio. Therefore, assessment orders under challenge in these appeals deserve to be quashed. Accordingly, we do so. 15. Before parting, we must observe, this is not a stray instance coming to our notice, wherein, the Assessing Officer has not implemented the directions of DRP. We have come across several cases of such non-implementation of directions of learned DRP by the Assessing Officer whil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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