Conformity with DRP directions under section 144C(13) is mandatory; a non-compliant final assessment order was quashed.

Section 144C(13) requires the final assessment order to conform to the Dispute Resolution Panel's directions. Here, the record showed that the Transfer Pricing Officer had already given effect to the Panel's directions by reducing the software development segment adjustment to nil, so the premise that all objections had been rejected was incorrect. Because the final assessment order did not reflect the actual effect of the directions, it was held to be contrary to the statutory mandate and was quashed in favour of the assessee, following binding jurisdictional High Court precedent.

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

Analysis: The assessment order was passed on the premise that the assessee's objections before the Dispute Resolution Panel had been rejected in full, but the record showed that the Transfer Pricing Officer had given effect to the directions of the Dispute Resolution Panel and reduced the software development segment adjustment to nil, thereby granting partial relief. The resulting final assessment order did not reflect the actual effect of the Dispute Resolution Panel's directions. The statutory mandate under section 144C(13) requires the Assessing Officer to pass the final assessment order in conformity with those directions. The jurisdictional High Court decisions relied upon were followed as binding precedent.

Conclusion: The final assessment order was in violation of section 144C(13) of the Income-tax Act, 1961 and was quashed in favour of the assessee.

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