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TMI Blog2025 (3) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdictional Assessing officer thus the department itself has deviated from the faceless assessment system.
In the instant case the directions were given by Ld. DRP on 03/06/2022 which were received by AO/TPO on 07.06.2022 as is evident from the effect order passed by TPO dt. 14.07.2022. Further, the TPO's effect order was also passed on 14.07.2022 and uploaded on ITBA portal. Thus for the AO for passing the final order, the limitation expired on 31.07.2022. It is also relevant to state here that when DRP issued directions, TPO has no power to resume jurisdiction and the TPO could only pass the effect order which in no case extended the time limit for passing the Final Assessment Order available to Assessing Officer in terms of section 144C(13) of the Act. Accordingly, in the present case, the limitation for passing final order by AO expired on 31.07.2022, thus the final assessment order passed on 28.02.2023 is barred by limitations and is void and invalid order. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... nternational Transaction" in terms of the Section 928 of the Act, thereby violating the principles laid down by the jurisdictional High Court. 2.2. On the facts and circumstances of the case and in law, the Ld. DRP/AO/TPO erred in making an adjustment in respect of AMP expenses incurred by the Appellant on the ground that the intensity of the AMP function performed by the Appellant resulted in the creation of marketing intangible in respect of the brands owned by the Associated Enterprises ("AES"). 2.3. On the facts and circumstances of the case and in law, the Ld. TPO/Ld. AO grossly erred in proposing adjustment basis an incorrect understanding of the functional profile of the Appellant, thereby characterizing it as a distributor instead of a manufacturer. 3. On the facts and circumstances of the case and in law, the Ld. DRP/AO/TPO erred in disregarding the judicial pronouncement/ findings of the Hon'ble Income-tax Appellate Tribunal ("ITAT") passed in Appellant's own case for Assessment Year(s) 2006-07 (ITA no. 3727/Del/ 2014), 2007-08 (ITA No. 2770/Del/12 and C.O.85/Del/2013), 2008-09 (ITA 29/Del/14), AY 2010-11 (ITA No.1431/Del/2015), AY 2011-12 (ITA No.953/Del/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puting the protective and substantive adjustment: 6.4. considering the selling & distribution and sales commission expenses paid to third parties by Appellant as alleged excessive AMP expenses; and TP adjustment with respect to payment of royalty 7. On the facts and circumstances of the case, & in law, the Ld. AO/Ld. TPO (in pursuance to the directions of the Ld. DRP) erred in enhancing the income of the Appellant by INR 30,22,65,369/-while holding that the international transaction pertaining to payment of royalty does not satisfy the arm's length principle envisaged under the Act, and in doing so have grossly erred in: 7.1. rejecting/not commenting on the comparable agreements accepted by the Appellant to benchmark royalty transaction using Comparable Uncontrolled Price ('CUP') method; 7.2. determining the arm's length royalty rate by considering royalty/sales ratio of companies basis information available in the Profit & Loss account of certain identified companies without having regard to the comparability conditions laid down under Rule 10B read with Section 92C for application of CUP method: 7.3. Without prejudice to Ground 7.2 above, the Ld. TPO/L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same to fall within the definition of Fees for technical services ("FTS") under Section 9(1)(vii) of the Act and Article 12 (5) of the India-Netherlands Double Taxation Avoidance Agreement ("DTAA"); 10.2. On the facts and circumstances of the case & in law, the Ld. DRP/AO erred in ignoring the fact that the issue of disallowance of buying commission is squarely covered in Appellant's own case for AY 2010-11 to 2012-13 by Hon'ble Income-tax Appellate Tribunal. 10.3. On the facts and in the circumstances of the case & in law, the Ld. DRP/AO erred in applying the meaning of FTS contained in Section 9(1)(vii) of the Act while interpreting the definition of FTS provided under Article 12(5) of the India-Netherlands DTAA; 10.4. Without prejudice to the above, the Ld. DRP/AO grossly erred in categorizing the services rendered by alBV into the scope of 'make available' as provided in Article 12(5) of the India-Netherlands DTAA, 10.5. Without prejudice to the above, the Ld. DRP/AO grossly erred in categorizing the services rendered by alTBV into the scope of 'make available' as provided in Article 12(5) of the India-Netherlands DTAA. 10.6. On the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Jurisdictional assessing officer only on 16.02.2023 thus the final order passed by the Jurisdictional Assessing officer on 28.02.2023 is well within the period of limitations as provided in section 144C (13) of the Act. With regard to the other issue that draft assessment order passed by faceless assessment center and final order was passed by jurisdictional Assessing Officer, he submit that both the Faceless Assessing Officer and Jurisdictional Assessing Officer has concurrent jurisdiction. Thus, there is no error in final order passed in the instant case by jurisdictional Assessing Officer. He thus prayed that this ground of appeal of the assessee is devoid of any merits and be not allowed. 6. We have heard the parties and perused the material available on record. For the sake of ready reference, the Provisions of section 144C are reproduced as under:" "144C. Reference to dispute resolution panel. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153, the assessment without providing any further opportunity of being heard to the assessee, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aceless Assessment Centre; or (b) file his objections, if any, to such variations, with- (I) the Dispute Resolution Panel, and (II) the National Faceless Assessment Centre, within the period specified in sub-section (2) of section 144C; (xxv) ...(xxvi) (xxvii) where the eligible assessee files objections with the Dispute Resolution Panel, under sub-clause (b) of clause (xxiv), the National Faceless Assessment Centre shall send such intimation along with a copy of objections filed to the assessment unit; (xxviii) the National Faceless Assessment Centre shall, in a case referred to in clause (xxvii), upon receipt of the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, forward such directions to the assessment unit; (xxix) the assessment unit shall, in conformity with the directions issued by the Dispute Resolution Panel under sub-section (5) of section 144C, complete the assessment within the time allowed in sub-section (13) of section 144C and initiate penalty proceedings, if any, and send a copy of the assessment order to the National Faceless Assessment Centre; (xxx) the National Faceless Assessment Centre shall, upon recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and conveyed it to the undersigned, jurisdictional Assessing Office, vide E-mail on 16.02.2023 which is reproduced as under: ......." 9. From the above and also from the perusal of the effect order passed by TPO on 14.07.2022, it is evident that in the present case, effect order of TPO was having DIN and was digitally signed on the same day i.e. on 14/07/2022 and uploaded on IT portal, however, the copy of the said order was sent to the Jurisdictional assessing officer i.e. DCIT, Circle 1(1), New Delhi and not to the faceless assessing Centre. Further the effect order alongwith the Revenue audit objection was sent to the Jurisdictional assessing officer through email on 16.02.2023, in compliance to which the Jurisdictional assessing officer had passed the final order on 28.02.2023. It appears that no final order was passed by Jurisdictional assessing officer or by the Faceless Assessment Centre after the directions given by Ld. DRP on 03.06.2022 within a period of one month from the end of the month when such directions as per section 144C(13) of the Act were received by the Assessing Officer and it appears that when this lapse was noticed by the authorities, the TPO vide mail d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Section 144C of the Act, the AO is mandated to complete the assessment "in conformity with the directions" as framed by the DRP. That very provision commands the AO to complete the assessment within one month from the end of the month in which such a direction is received. 16. This is evident from Section 144C of the Act which is extracted herein below:- ........ 17. As is manifest from a reading of sub-section (13) of Section 144C of the Act, the AO is not accorded any discretion in the framing of an order of assessment once directions have come to be framed by the DRP. In fact, the provision requires the AO to frame an order of assessment in conformity with those directions and without providing any further opportunity of hearing to the assessee. This principle of law has been affirmed by the Bombay High Court in the aforenoted paragraphs of Vodafone Idea and in Shell India Markets Private Limited v. Additional Commissioner of Income Tax Officer, National Faceless Assessment Centre & Ors. The relevant paragraph of the decision in Shell India are extracted hereinbelow: "10. Sub-section (13) of Section 144C, therefore, is very clear inasmuch as the Assessing Officer sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al would thus constitute valid and sufficient service and the period of limitation as prescribed in Section 144C(13) of the Act would be liable to be computed bearing that crucial date in mind. Once the aforesaid position becomes clear, it is evident that the order of assessment, if at all could have been framed lastly by 31 July 2022. There has thus been an abject failure on the part of the first respondent to comply with the mandatory timelines as incorporated in the aforenoted provisions. Accordingly, the writ petition is liable to be allowed and the impugned order of assessment and the consequential penalty proceedings are thus liable to be set aside on this short score alone." 4. We, consequently, find no merit in the instant appeal and the same shall stand dismissed." In the case of Vodafone Idea Limited V. CPC, Benglauru, Writ Petition No.15398 of 2023 (Bombay High Court) vide order dated 8.11.2023 has held as under: "20. Section 144C of the Act is a self contained provision which carves out a separate class of assessee's, i.e.. 'eligible assessee Section 144C of the Act was inserted in the Finance Act of 2009 and came into effect from 1 October 2009. In the notes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s vitiated for failure to adhere to the mandatory requirements of Section 144C of the Act?", is no longer res integra and any order passed contrary to Section 144C of the Act cannot be sustained. 23. In a decision cited by Mr. Mistri in the matter of Shell India Markets (P) Ltd. (supra), this Court has also held as follows: "10. Sub-section (13) of Section 144C, therefore, is very clear inasmuch as the Assessing Officer shall, upon receipt of the directions issued under Sub-section (5), in conformity with the directions, complete the assessment within one month from the end of the month in which such direction is received. Sub-section (13) also provides that the Assessing Officer can complete the assessment without providing any further opportunity of being heard to the assessee. This means that the moment the Assessing Officer receives the directions under Sub-section (5), he has to straightaway complete the assessment and he does not even have to hear the assessee. The Assessing Officer shall simply comply with the directions received from the DRP within one month from the end of the month in which such directions is received." 24. In view of the aforesaid discussion, we ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete, notwithstanding anything to the contrary contained in section 153 [or section 153B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received." From the above provision, it is evident that the specified time limit is one month from the end of the month in which directions are received. It is also clear that the time limit should be computed from the date of receipt of directions issued under sub-section (5) thereof. Sub-section (5) of Section 144C deals with the issuance of directions by the DRP. The admitted position is that the DRP issued directions on 16.06.2022 and this fact is borne out by examining the proceedings of the DRP, which is contained at page Nos. 122 to 130 of the typed set of papers. The said proceedings also record that the copy of the directions of the DRP is being forwarded to the assessee, the assessing officer and the TPO. The assessing officer referred to therein is the National Faceless Assessment Centre, Delhi. The petitioner has placed on record a communication from the Secretary and ACIT to the DRP. The said communication states that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s Cognizant Technology Solutions India Private Limited (as successor-in-interest of M/s KBACE Technologies Private Limited) vs. ACIT in IT(TP)A 61/CHNY/2023 vide order dated 29/05/2024 has held has under: "10. We have heard rival submissions in the light of facts of the case, evidence placed on record and judicial citations relied upon. Ground of appeal no.1 is general in nature and hence bereft of any meritorious adjudication. Coming to grounds of appeal Nos. 2 to 6 whereby the assessee has challenged procedural irregularities in giving effect proceedings and thus arguing that the AO dated 18.05.2023 is barred by limitations, we find considerable force in the arguments put forth by the assessee. Facts on records indicate that the DRP Bangalore had given its directions on 01.12.2022. Within the meanings of section 144C(13) was incumbent on the AO to have passed his order on or before 31.01.2023. The DR could not controvert the said timeline by placing any evidence suggesting different service dates upon the AO. The Law prescribed u/s. 144C(13) unequivocally postulates that pursuant to the receipt of directions in a calendar month, the AO is mandated to pass his final or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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