Strict conformity with DRP directions is mandatory under section 144C; a non-compliant final assessment order is unsustainable.

Section 144C requires the Assessing Officer to complete the assessment strictly in conformity with the Dispute Resolution Panel's directions. Where the final assessment order substantially reproduces the draft reasoning and departs from those binding directions, the order is legally unsustainable and liable to be quashed. The Tribunal therefore set aside the assessment for breach of section 144C(13) and did not examine the underlying royalty and fees for technical services dispute.

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Issues: Whether the final assessment order was liable to be quashed for not giving effect to the directions issued by the Dispute Resolution Panel under section 144C(13) of the Income-tax Act, 1961.

Analysis: The assessment proceedings arose from a transfer of the matter to the Dispute Resolution Panel, which had taken a view different from the draft assessment order. The final assessment order, however, substantially reproduced the draft assessment reasoning and did not follow the specific directions issued by the Panel. The Tribunal held that section 144C(13) requires the Assessing Officer to complete the assessment strictly in conformity with the Panel's directions, and a departure from those directions vitiates the assessment. Since the final order was passed in disregard of the binding directions, the Tribunal did not go into the merits of the royalty and fees for technical services controversy.

Conclusion: The final assessment order was invalid and was quashed for breach of section 144C(13), resulting in relief to the assessee.

Ratio Decidendi: An assessment framed under section 144C must strictly conform to the Dispute Resolution Panel's directions, and a final order passed in disregard of those directions is legally unsustainable.

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