2021 (10) TMI 679

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....Pithily stated, the factual matrix of the case is that the assessee is a non resident company based in Sweden. A return of income was filed with Nil income but with total receipts of Rs. 2,34,98,700/-, thereby claiming refund of the entire TDS amounting to Rs. 23,49,870/-. The AO made a reference to the Transfer Pricing Officer (TPO), who passed the order u/s.92CA(3) of the Income-tax Act, 1961 (hereinafter also called 'the Act'), not proposing any transfer pricing adjustment. The AO opined that the receipt of Rs. 2.34 crore towards I.T. Support services from Sandvik Asia Private Limited was chargeable to tax as Royalty/Fees for Technical services (FTS). In the 'draft order u/s.144C of the Income-tax Act, 1961' dt.18-12-2019, the AO include....

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....of section 144C, being, "any variation which is prejudicial to the interest of such assessee" is satisfied. Given the fact that the assessee is an eligible assessee and in whose case variation is proposed in its income, a draft order was required to be passed u/s.144C(1). In the instant case, the AO passed the "draft order" on 18-12-2019 u/s.144C(13) of the Income-tax Act proposing variation in the total income to the tune of Rs. 2.34 crore. Albeit on the first page of the draft order, the AO referred to the section under which the assessment is made as section 143(3), however, at the end of the order in para 11, he concluded that "The assessment is completed u/.s.144C(13) r.w.s. 143(3) of the Incometax Act, 1961". Completely unbeknownst th....

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....ugh wrongly described the same as having been passed u/s.144C(13) r.w.s. 143(3) of the Act. This order ought to have been passed u/s.144C(1). Sub section (2) of section 144C provides that: `On receipt of the draft order, the eligible assessee shall, within a period of thirty days of the receipt by him of the draft order', inter alia, ` file his objections, if any,... with the Dispute Resolution Panel'. Sub-section (3) mandates that the AO shall complete the assessment on the basis of the draft order, if the assessee either intimates to him of having accepted the variation or `no objections are received within the period specified in sub-section (2)'. Sub-section (4) sets out the time limit for passing of the order u/s.144C(3), being one mon....

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....sessment (hereafter in this section referred to as the draft order)'. An order u/s 144C(1) is only a draft of the proposed order of assessment and not an order of assessment itself. It does not finally determine the total income of the assessee and the amount payable or refundable on the basis of such assessment. On the other hand, section 144C(3) mandates that the : `The Assessing Officer shall complete the assessment on the basis of the draft order'. Similar is the position with the order passed u/s 144C(13), pursuant to the directions of the DRP given u/s 144C(5), which unambiguously provides that : ` ... the Assessing Officer shall, ... complete...the assessment'. Thus, it is ostensible that whereas an order u/s 144C(3) or 144C(13) is a....