2018 (9) TMI 222

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....ear 2012-2013 on 29.9.2012, declaring 'Nil' income. 3. The case of the appellant was selected for scrutiny and notice dated 8.8.2013 was issued to the appellant under Section 143(2) of the 1961 Act. In the course of scrutiny proceedings, it was found that the appellant had entered into an international transaction within the meaning of Section 92B of the 1961 Act for Compulsory Convertible Debentures (CCD) of the value of Rs. 4,60,32,949/- at book interest of 15% per annum in the assessment year in question, in that it had received loan/advance in US Dollars from IIROF 4 Artemis Ltd., Cyprus, an associated enterprise of the appellant abroad, within the meaning of Section 92A of the 1961 Act. 4. Section 92(1) of the 1961 Act provides that any income arising from an international transaction within the meaning of Section 92B is to be computed having regard to the arm's length price (ALP). 5. Section 92C of the 1961 Act provides that the ALP in relation to an international transaction is to be determined by one of the following methods, being the most appropriate method, having regard to the nature or class of transaction: (i) comparable uncontrolled price method; (....

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....the Indian Banks. Comparables from external database should have to be adopted for benchmarking. 10. Taking note of evidence of allotment of Compulsory Convertible Debentures in foreign currency, Transfer Pricing Officer adopted the relevant LIBOR rates with risk premium of 2% relevant to the year under consideration to benchmark interest transaction. 11. The Transfer Pricing Officer issued a draft order under Section 92C(1) and (2) of the 1961 Act and ordered adjustment in the income of the appellant amounting to Rs. 3,67,55,978/- towards excess interest paid on Compulsory Convertible Debentures (CCD). 12. Adopting the said draft order passed by the Transfer Pricing Officer, the second respondent issued a draft assessment order under Section 144C(1) of the 1961 Act on 29.3.2016. The draft assessment order was served on the authorized representative of the appellant on 29.3.2016. 13. Section 144C of the 1961 Act provides: "Section 144C. Reference to dispute resolution panel.- (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section re....

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.... and passing of the assessment order. Explanation.-For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing ....

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.... the period of thirty days. The Dispute Resolution Panel, by order dated 10.11.2016, refused to condone the delay of one day in filing the objections holding that the provisions of the 1961 Act did not empower the Dispute Resolution Panel to condone the delay in filing objections by an assessee. The objection was, thus, rejected. 17. Significantly, the Dispute Resolution Panel only rejected the objection on the ground of limitation. The Dispute Resolution Panel They did not issue any directions to the Assessing Officer as contemplated under Section 144C(5) of the 1961 Act. After the rejection of the objection by the order dated 10.11.2016, the Assessing Officer, namely the second respondent, passed a final assessment order making adjustments as proposed by the Transfer Pricing Officer and adding Rs. 3,67,55,978/- to the total income of the assessee. Since the income originally returned was 'Nil', the assessed income was Rs. 3,67,55,978/-, on which tax payable along with education cess and surcharge and interest was assessed at Rs. 1,76,13,094/-. After adding recoverable interest of Rs. 19,669/-, there was a tax demand of Rs. 1,76,32,760/- which has been challenged in this ....

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....ing Officer or any other authority; (v) records relating to the draft order; (vi) evidence collected by or caused to be collected by the Dispute Resolution Panel; (vii) result of any enquiry made by or caused to be made by the Dispute Resolution Panel. 24. The Dispute Resolution Panel may also make such further enquiry as it thinks fit or cause any further enquiry to be made by any Income Tax Authority and report the result of it to the Dispute Resolution Panel before issuing any directions, referred to in Section 144C(5) of the 1961 Act. 25. After considering the aforesaid materials, the Dispute Resolution Panel might confirm, reduce or enhance the variations proposed in the draft order. 26. Section 144C(10) of the 1961 Act mandates that every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. The direction is obviously a direction under Section 144C(5) which is given after taking into consideration of the materials stipulated in Section 144C(6) and going through the exercise contemplated, inter alia, under Section 144C(7) of the 1961 Act. 27. As found by the Dispute Resolution Panel, an objection is to be filed by an aggrieved assessee....