TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 1994
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....missioner of Income Tax (Appeals) - 57, Mumbai, has in his order dated November 30, 2016 under section 250 of the Income-tax Act, 1961 erred in disposing the appeal of the Appellant on the following grounds (without prejudice to each other): 1. In holding that the Appellant has a permanent establishment in India as per the provisions of Article 5 of the Double Taxation Avoidance Agreement between India and the Netherlands; 2. In holding that the Indian hotels constitute 'dependent agents' of the Appellant in India, merely on the basis that the Appellant had supervision / control over the operations of the Indian hotels which were using the brand name 'Marriott', logo and symbol as per the terms and conditions of the agreements entered into by the Appellant with the Indian hotels; 3. In holding that the Appellant characterized the amounts received under the International Sales and Marketing Agreement from the Indian hotels as 'reimbursement of expenses' and not 'royalty' only to avoid the payment of taxes in India; disregarding the fact the that the Government of India has accorded its approval to the Marriott Group to enter into different agree....
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.... of the matter and in support of his arguments, Ld. AR relied upon the decision of Hon'ble Supreme Court in the case of Jute Corporation of India Ltd. Vrs. CIT 187 ITR 688 (SC). 5. On the other hand Ld. DR submitted that the application dated 10.10.18 is misconceived and is liable to be dismissed. 6. After having heard the counsels on this application, we are of the view that the additional ground raised by the assessee is purely legal in nature and all the necessary facts required for adjudication are already on the record and thus, no new evidence is required to be brought on record. Even otherwise, this ground goes to the roots of the case, therefore keeping in view the principle laid down by Hon'ble Supreme Court in the case of NTPC Vrs CIT 229 ITR 383, Jute Corporation of India Vrs. CIT 187 ITR 688 (SC) and Ahmedabad Electricity Ltd. Vrs. CIT 199 ITR 351 (Bom) (FB), we allow the application dated 10.10.18 and admit the additional grounds mentioned above for adjudicating on merits. 7. The brief facts of the case are that assessee is a company incorporated in and a tax resident of Netherlands. The return of income for the year under consideration was filed on 30/10/2003 decla....
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....e covered under article 7 of the DTAA, in the above circumstances, requirement of passing a draft order in terms of section 144C of the Act is not called for as the order in second round of the AO was in the nature of appeal effect order of the order of the Tribunal. 11. We have heard the counsels for both the parties at length and we have also perused the material placed on record, judgments cited by the parties as well as the orders passed by revenue authorities. We find that the assessee being a foreign company is an eligible assessee. Therefore, in this respect, the provision of section 144C of the Act are applicable which are unambiguous and sub-section 1 of section 144C of the Act, clearly provides for issuance of a draft order, which is a sine qua non before AO passes an assessment order u/s 143(3) of the Act. In the first round of proceedings, Tribunal had set aside the matter back to the file of AO for determining afresh the taxability of receipt in terms of 'Business Profits' under Article 7 of the DTAA. The operative portion of the order of Coordinate Bench of ITAT is reproduced below:- This appeal filed by the Revenue is directed against the order passed by the ld. C....
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.... of section 144C of the Act must be mandatorily complied with. In this respect, we rely upon the decision of Hon'ble Bombay High Court in the case of Dimension Data Asia Pacific PTE ltd. Vrs. DCIT (2018)96 taxman.Com 182 (Bom) has held as under:- 4. Briefly, the facts relevant to this petition are as under:- (a) The petitioner is Foreign Company and .entitled to the procedure provided under Section 144C of the Act as it is an eligible Assessee as defined therein. (b) On 30th November, 2011 the petitioner filed its return of income for the Assessment Year 2011 -12. In its return, it declared Nil income. (c) Thereafter, on 20th March, 2015 a draft assessment order as required under Section 144C(1) of the Act was passed for Assessment Year 2011-12. The petitioner filed its objections in terms of Section 144C(2)(b) of the Act to the Friday, 6.7.2018 Dispute Resolution Panel (DRP). (d) On 4th December, 2015 the DRP issued directions on the petitioner's objection to the draft assessment order dated 20th March, 2015. (e) Consequent to the directions of the DRP, an order of assessment dated 11th January, 2016 was passed under Section 143(3) read with Section 144(C)(13) of t....
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....ined in Section 144C(15)(b)(ii) of the Act. It has been held by this Court in International Air Transport Association (supra) that a Foreign Company is entitled to being assessed in accordance with Section 144C of the Act. It is the above Section 144C of the Act, which provides a separate scheme for the manner in which the Assessing Officer would pass assessment orders under the Act and a separate procedure to challenge an draft order i.e. before an assessment order which is subject to appeal under the Act is passed. The entire object is to ensure that the disputes of Foreign Companies are resolved expeditiously and final assessment orders are not passed without a re-look to the proposed order (draft order), if so desired by the Foreign Company. In essence, it obliges the Assessing Officer to first pass a draft of the proposed assessment order indicating the proposed variation in the income returned. This draft Assessment Order is to be passed under Section 144C(1) of the Act, which entitles an eligible assessee such as a Foreign Company to approach the DRP with its objection to the Draft Assessment order. This is so provided, so that an eligible assessee can have his grievance add....
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....is "fresh adjudication" itself would imply that it would be an order which would decide the lis between the parties, may not be entire lis, but the dispute which has been restored to the Assessing Officer. According to us, the order dated 31 st January, 2018 is not an order merely giving an effect to the order of the Tribunal, but it is an assessment order which has invoked Section 143(3) of the Act and also Section 144C of the Act. This invocation of Section 144C of the Act has taken place as the Assessing Officer is of the view that it applies, then the requirement of Section 144C(1) of the Act has to be complied with before he can pass the impugned order invoking Section 144C(13) of the Act. Infact, Section 144C(13) of the Act can only be invoked in cases where the assessee has approached the DRP in terms of sub-Section 144(C)(2)(b) of the Act and the DRP gives direction in terms of Section 144C(5) of the Act. In this case, the assessment order has invoked Section 144C(13) of the Act without having passed the necessary draft Assessment Order under Section 144C(1) of the Act, which alone would make an direction u/s 144C(5) of the Act by the DRP possible. Thus, the impugned order ....