2016 (2) TMI 527

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....aft assessment order under Section 144C(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act")? The question arises in view of the contention of the petitioner that the petitioner does not fall in the category of an "eligible assessee", as defined under Section 144C(15)(b) of the Act. 2. The contention of the petitioner is that firstly the petitioner is not an eligible assessee, as defined under Section 144C(15)(b) of the Act as the Transfer Pricing Officer (TPO) had not proposed any variation in the income or loss return which was to the prejudice of the petitioner. Secondly, while framing the draft assessment order, the Assessing Officer was also required to give effect to the Circular issued by the Central Board of Dire....

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....r:- "4. The Transfer pricing documentation, which contains the functional and economic analysis of comparables and the assessee, has been examined and placed on record. 5. In view of the functional and economic analysis of assessee, no adverse inference is drawn in respect of the international transactions undertaken by the assessee during the FY 2010-11." 5. On 31.03.2015, the Assessing Officer passed the impugned draft assessment order under Section 144C of the Act proposing the total income of the petitioner to be assessed at Rs. 1830,07,49,517/-. While making disallowance under Section 40(a)(i) of the Act in respect of payments made by the petitioner to non-resident associated enterprise, the Assessing Officer has p....

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....proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. xxxx xxxx xxxx xxxx (15) For the purposes of this section,- (b) "eligible assessee" means,- (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any foreign company. 8. A reading of Section 144C(1) of the Act shows that the Assessing Officer, in the first instance, is to forward a draft of the proposed order of assessment to the "eligible assessee", if he proposes to make any variation in the i....

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..... The consequence of this is that the Assessing Officer cannot propose an order of assessment that is at variance in the income or loss return. The Transfer Pricing Officer has accepted the return filed by the petitioner. In view of the which, neither of the two conditions are satisfied in the case of the petitioner and thus the petitioner for the purposes of Section 144C(15)(b) is not an "eligible assessee". Since the petitioner is not an eligible assessee in terms of Section 144C(15)(b), no draft order can be passed in the case of the petitioner under Section 144C(1). 13. Similar is the view taken by the High Court of Gujarat in Pankaj Extrusion Limited versus Assistant Commissioner of Income Tax : (2011) 198 Taxman 6 (Gujarat), which ....