| 2017-TII-INSTANT-ALL-474 | 31 July 2017 |
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NOTIFICATION India notifies C-B-C convention in tax matters signed last year TII BRIEF CASE LAW CONTROL RISKS INDIA PVT LTD Vs DCIT: DELHI HIGH COURT (Dated: July 27, 2017) Income tax - Sections 92CA(3), 143(3) & 144C Keywords - draft assessment - directions of DRP - final assessment order The Assessee is engaged in the business of providing specialist risk consultancy services. Consequent upon the return filed by the Assessee for the AY in question, a draft assessment order was passed by the AO making (i) Transfer pricing adjustment: Rs.2,29,27,042/- and (ii) Disallowance of interest on late deposit of TDS Rs.5,35,894/-. On appeal, the DRP passed an order confirming the above variations. In compliance with the directions of the DRP, the TPO recomputed the value of the transfer pricing adjustment. This resulted in the final assessment order being passed by the AO u/s 143(3) r/w/s 144C. Thereafter, the matter was taken in appeal to the ITAT, who remitted the matter to the TPO to consider the additional details filed by Assessee and upon such consideration to pass a speaking order. The TPO then undertook a fresh benchmarking analysis and passed an order proposing an adjustment of Rs. 1,19,49,680/- to the ALP determined by the Assessee. Thereafter, instead of passing a draft assessment order, the AO passed a final assessment order. On appeal, the HC held that, Whether it is incumbent upon the AO to pass a draft assessment order u/s 144C, before passing a final assessment u/s 143(3) - YES: HC + it is noted that consequent upon an order of the TPO u/s 92CA(3), it is incumbent upon the AO to pass a draft assessment order u/s 144C of the Act, is the settled legal position as explained by the Court in its decision in Turner International India Pvt. Ltd. Vs. DCIT - 2017-TII-37-HC-DEL-TP. In the present case, clearly the AO overlooked the above legal position and proceeded to pass a final assessment order, thereby depriving the Assessee of an opportunity of questioning the draft assessment order u/s 144C before the DRP. Consequently, the Court has no hesitation in hereby setting aside the impugned assessment order passed by the AO. The consequential notice of demand of the same date u/s 156 issued to the Assessee is also hereby quashed. Assessee's petition allowed |
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