TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 2106
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....gs given therein will apply mutatis mutandis in the appeals for A.Y.s 2006-07 and 2007-08 as identical facts and circumstances are permeating. In the grounds of appeal assessee has challenged following issues:- Firstly, validity of reopening of assessment u/s 147; Secondly, directions of the DRP that the assessee was having business connection in India in terms of section 9(1); Thirdly, directions of the DRP that assessee has dependent against Permanent Establishment (PE) in the form of ESPN Software India (P) Ltd. under the India Mauritius Double Taxation Avoidance Agreement (DTAA/Treaty); Fourthly, direction of the profits of the assessee from Indian operations @ 30% at the gross revenue and; Lastly, charging of interest u/s 234A and 234B and 234C. Apart from that, assessee has also raised additional grounds in all the above assessment years impugned before us, whereby the assessee has challenged the validity of the draft assessment order on the ground that assessee is not an "eligible assessee" within the meaning of section 144C (15)(b). The relevant additional ground reads as under:- "In the circumstances of the case and in law, the appellant not being an 'eligible....
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....inal assessment order and the matter was decided in favour of the assessee. He further pointed out that now this issue also stands covered by the judgment of Hon'ble Delhi High Court in the case of ESPN Star Sports Mauritius S.N.C. ET Compagnie v. Union of India (2016) 388 ITR 383. Not only that, now there is another decision of Hon'ble Delhi High Court again in the case of sister concern only, in Ess Distribution (Mauritius) S.N.C.E.T. Compagnie vs ACIT, since reported in (2017) reported in 399 ITR 362 (Delhi High Court). In all these cases it has been categorically held that AO has erred in law in passing the draft assessment order u/s 144C(1) not withstanding that assessee was not an "eligible assessee" because, no transfer pricing adjustment was made in terms of 92CA(3). He also drew our attention to these judgments placed in the paper book before us. Thus, he submitted that now this issue stands squarely covered, whence there is no transfer pricing order / adjustment u/s 92CA(3), then no order could have been passed in terms of section 144C(1) read with section 144C 15(b) and hence the impugned order deserves to be quashed. 4. On the other hand Ld. CIT (DR) submitted this iss....
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....the income or loss returned which is prejudicial to the interest of such assessee." 8. The aforesaid provision which is a non obstante clause, provides that the AO has to forward a draft of the proposed order of assessment to the 'eligible assessee', if he proposes to make an order after the first day of October, 2009 making any variation in income and or loss returned which is prejudicial to the interest of such assessee. The "eligible assessee" has been defined in clause (b) of sub section 15 which reads as under:- 144C(15)(b) "eligible assessee" means - (i) any person in whose case the variation referred to in subsection (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." From the conjoint reading of the aforesaid provisions it is quite clear that assessee must be a foreign company in whose case the variation which has been referred and if there is any variation arising out of consequence of order passed by the TPO in terms of section 92CA (3), then only provision of section 144C can be triggered. Here in this case as noted by AO himself, there is no variation as a conseq....
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....tions made in para 30, which are as under:- "It appears to the Court that it is plain that under Section 144C, the AO should have proceeded to pass an order under Section 143(3) of the Act. Instead the AO confirmed the draft assessment order passed under section 144C(1) of the Act. This, therefore, vitiated the entire exercise. The Court has no hesitation in holding that the final assessment order dated 28th January, 2015 is without jurisdiction and null and void. The draft assessment order dated 28th March, 2014 having been passed in respect of entities which were not 'eligible assessees', is also held to be invalid." 14. Reverting to the assessment year under consideration, we find that the Assessing Officer passed draft assessment order u/s 144C(1) of the Act on receipt of the order from the TPO. Thereafter, the final assessment order was passed after routing the matter through the DRP. As the assessee is not an 'eligible assessee', the assessment should have been completed u/s 143(3) instead of adopting the path of passing the draft assessment order u/s 144C(1). We find that the facts and circumstances for the assessment year under consideration are identical to those consi....
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....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................................. 14. In view of the above, it is clear that the petitioner, not being an "eligible assessee" in terms of Section 144C(15)(b) of the Act, the Assessing Officer was not competent to pass the draft assessment order under section 144C (1) of the Act. The draft assessment order dated 31.3.2015 is accordingly quashed. 15. Since we have quashed the draft assessment order, the question that the assessment has now become time barred is left open and it is open to the parties to take recourse of such remedy, as may be available to them in law." 11. Following these judgments, now there are numerous judgments not only passed by the various High Courts but also by this Tribunal, wherein it has been categorically held that, if assessee is not an "eligible assessee" in terms of section 144C(15)(b), then AO is not c....