AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 663
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....s no jurisdiction to set off the losses prior to computation of deduction 10A in the order passed under section 143(3) r/w.144C being the giving effect to order of the DRP proceedings on the ground that Assessing officer had not proposed such set off of losses in the draft assessment order without appreciatin(hereinafter referred to as ' Act ')g that the said order had dealt with computation of deduction under section 10A and had also taken note of the losses to be set off." 3. FACTS IN BRIEF: 1. The provisions of the Income tax Act 1961 (hereinafter referred to as 'Act') set out a special scheme for the assessment of an entity engaged in International transactions under Chapter X of the Act, in terms of s.144C(1) to s.144C(14) of the Act. Pursuant to a reference under section 92 C A(1) of the Act, an order of Transfer Pricing determining the Arms Length Price of International transactions was passed by the Transfer Pricing Officer culminating in an order of draft assessment under Section 143(3) r/w.Section 144C(1) of the Act on 31.3.2013. The order of draft assessment effected the following variation: (i) An adjustment to the arms length price in accordanc....
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....t of brought forward losses. It is against the aforesaid order that the Income tax Department has filed the present appeal. 5. The thrust of the submissions of Mr.Narayanasamy learned Senior Standing Counsel appearing for the Appellant was to the effect that the provisions of section 144C(13) have been duly complied with since the issue of relief u/s.10A formed part and parcel of the order of draft assessment. Our attention was drawn to the order of draft assessment to point out that an adjustment has indeed been effected to the computation of relief under s.10A even at the first instance though admittedly the issue dealt with was different and did not concern priority in the set off of losses. 6. Per contra, Sri N.V.Balaji, learned counsel appearing for the Assessee/Respondent would contend that the issues dealt with in the draft order of assessment vis-`-vis those which arose in the final order of assessment were entirely different and as such the mandate of section 144 C(13) stood violated. He drew a comparison between the provisions of section 144C and the provisions of section 144B (since omitted w.e.f. 1.4.1989) stating that the two were in paramateria with each other. ....
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.... directions. 144C(13) - Upon receipt of the directions of the DRP, the Assessing Officer shall pass an order of final assessment in conformity with the directions of the DRP within one month from the end of the month in which the direction is received. The provision specifies that there shall be no requirement for affording an opportunity of being heard to the Assessee prior to passing of an order of final assessment. 8. The question posed relates essentially to whether the impugned order of Final Assessment dated 20.2.014 is an excess of jurisdiction by the Assessing Officer or within the powers granted to him in terms of s.144C of the Act. The answer reveals itself on an analysis of the Scheme itself. The tone is set in sub-section (1) thereof wherein the role of an Assessing Officer and the limits of his jurisdiction are demarcated, in that, the order of draft assessment is to set out the proposed variations and forward the same to the Assessee for response. Then again, sub-section (3) of 144C requires the Assessing Officer to complete the assessment on the basis of the draft order. In setting out the scope of the DRP to issue directions, sub-section (6) restricts the DRP ....
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....eme of Section 144B is as follows; 144B(1) Where the Assessing Officer proposed a variation in the income or losses returned which would have the effect of being prejudicial to the assessee and where the variation exceeded the amount fixed by the Central Board of Direct Taxes, a draft of the proposed order of the assessment is to be forwarded to the Assessee for response. 144B(2) - Objections to the variations contained in the draft order may be forwarded by the Assessee within 15 days from the receipt thereof or an extended period of time if granted by the Assessing Officer. 144B(3) - Where no objections were received by the Assessing Officer or where the Assessee accepted the variations, the Assessing Officer was bound to complete the assessment on the basis of the draft order. 144B(4) - If objections were filed, the same shall be forwarded along with the draft order to the Inspecting Assistant Commissioner (hereinafter referred to as 'IAC') who, after consideration of the same, would issue directions in respect of the matters covered by the objections to the Assessing Officer to enable him to complete the assessment. The sub-section mandated that no direction....
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....e Tax Vs. Hade Navigation (P) Ltd) reiterates the aforesaid position as follows; "It is clear from the expression the income-tax Officer shall complete the assessment on the basis of the draft order contained in sub-section (3) of section 144B of the act that even where objections are received by the Income-tax Officer, the only function left for him is to forward the objections along with the draft order to the Inspecting Assistant Commissioner and to finalise the assessment in terms of the directions of the Inspecting Assistant Commissioner which are binding on him. Once the draft assessment is prepared and the variation in the returned income being more than Rs. 1,00,000/- the draft order is forwarded to the assessee as required by section 144B, the quasi-judicial function of the Income-tax Officer comes to an end." Reliance was placed on the decision of the Division Bench of the Madhya Pradesh High Court in the matter of Banarsidas Bhanot and sons vs. Commissioner of Income Tax, Madhya Pradesh II, (1981) (129 ITR 488) (MP). The Learned Senior Standing Counsel however, stressed on the fact that the assessment, in this matter, was ultimately remanded to the file of the Asse....
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.... the interpretation of which is a subject matter of this appeal contains a substantive mandate cast upon the assessing officer in the following terms as extracted below. It is relevant to mention, at this stage that there is no equivalent in s.144B to sub-section (13) of s.144C. "(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 (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." 17. Sub-section (13) of s.144 C is specific and mandates that the Assessing Officer shall issue the order of final assessment in conformity with the directions of the DRP without provision of any further opportunity of being heard to the assessee, within one month from the end of the month, in which the directions are received. There is thus a vital distinction in the scheme of assessment as provided under s.144 B vis-a-vis that which is set out in s.144C. While the Assessing Officer in terms of s.144 B is bound ....