AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 973
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the international transaction at higher Arm's Length Price by Rs.11,72,725/- and further disallowance of partial deduction under CH VI A u/s 80IC of the Act 02. Assessee has raised following grounds of appeal:- ""Based on the facts and circumstances of the case, Panasonic Life Solutions India Private Limited (hereinafter referred to as the 'Appellant) craves leave to prefer an appeal against the order passed by the Learned Assistant Commissioner of Income-Tax, Central Circle -7(2) (hereinafter referred to as the 'the learned AO] under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (hereinafter referred to as the 'Act) in pursuance of the directions issued by the Hon'ble Dispute Resolution Panel- 2, (hereinafter referred to as the "Hon'ble DRP) and the order passed by the Learned Additional Commissioner of Income-Tax. Transfer Pricing-1(1)(2), Mumbai (hereinafter referred to as the 'Learned TPO) on the following grounds, each of which are without prejudice to one another. On the facts and in the circumstances of the case and in law the learned AO based on directions of DRP and the Hon'ble DRP: Ge....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent order as against the draft assessment order 9. without prejudice, erred in upholding the validity of the draft order dated 30 November 2018 issued alongwith the notice of demand under section 156 of the Act and notice initiating penalty proceedings under section 271(1)(c) which makes the same as final order which is in contravention of the provisions of section 144C of the Act and hence it is prayed that the order passed by the AO is bad in law and merits to be quashed; Transfer Pricing Grounds: Adjustment on account of payment of royalty for use of trademarks (Disallowance INR 11.00,72,725-Tax effect INR 3,66,87,239) 10. erred in making adjustment of INR 11,00,72,725 on international transaction of payment of royalty for use of trade marks to AES, 11. erred in not considering/ accepting the comparability analysis as documented by the appellant in the Transfer Pricing Study Report for benchmarking the international transaction of payment of royalty to AEs; 12. erred in rejecting the Transactional Net Margin Method (TNMM') adopted by the Appellant for benchmarking the international transaction of payment of royalty to AES....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assed the assessment order which was based on the draft assessment order passed on 30th November, 2018, issued along with notice of demand under Section 156 of the Act and also followed with notice initiating penalty proceedings under Section 271(1)(c) of the Act which makes the draft assessment order as final assessment order which is in contravention of provision of Section 144C of the Act, so the final assessment order passed by the learned Assessing Officer is based on such bad draft assessment order is also invalid. Plethoras of judicial precedents were relied up on. 04. Brief facts of the case shows that assessee is a company engaged in manufacturing of electrical components, filed its return of income on 29th November, 2012 at a total income of Rs.119,22,45,100/-. This return of income was not scrutinized. 05. Subsequently, a notice under Section 148 of the Act was issued on 29 March 2017. In response to that as per letter dated 3rd April, 2017, assessee reiterated its return of income. Subsequently, the assessee challenged the reopening proceedings before the Hon'ble High Court, certain directions were given. 06. As the assessee has entered into an internationa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....demand status as on 20th February, 2019, of outstanding tax Demand of Rs.41,62,76,780/-, arising out of the demand order dated 30th November, 2018 (draft assessment order ). With respect to the penalty proceedings, following draft assessment order, show cause notice under Section 274 of the Act read with section 271(1)(c) of the Act was also issued on 11th June, 2019. The assessee objected to such penalty notice vide letter dated 19th June, 2019, wherein it has been stated that the penalty notice has been issued on the basis of the draft assessment order and despite the fact intimated to the learned Assessing Officer that assessee has already filed objections before the learned Dispute Resolution Panel. Coming to know about this, the learned Assessing Officer on 24th June, 2019, addressed a letter to the assessee in response to the communication of the assessee dated 19th June, 2019, that the notice issued under Section 271(1)(c) of the Act has wrongly been issued. He further stated that as the order passed under Section 143(3) read with section 147 of the Act dated 30th November, 2018, is a draft order under Section 144C(1) of the Act, no penalty under Section 271(1)(c) of the Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns and thereafter, the final assessment order is passed. This final assessment order is challenged before the co-ordinate bench. Therefore, now the validity of draft assessment order cannot be challenged. 012. We have also found that in the original appeal memo filed by the assessee, there were four grounds with respect to transfer pricing. The assessee wrote a letter dated 13th December, 2022, stating that with respect to the ground nos. 10 to 13, the transfer pricing adjustments are contested. Further, pursuant to Mutual Agreement Procedure [MAP] application filed by its Associated Enterprises, the Indo Japanese Competent authorities have entered into a MAP Resolution. The same was accepted by the assessee and therefore, by this letter it withdrew the grounds of appeal no.10 to 13 on the transfer pricing adjustment. Therefore, now these transfer pricing adjustments are not part of appeal before us. 013. Further, the assessee has submitted vide letter dated 7th December, 2023 that as assessee has accepted the MAP Resolution and therefore, it undertakes to discharge its tax liability arising on account of Map Resolution irrespective of the outcome of the appeal filed before u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... even prior to that on 20th February, 2019, the assessee was directed to pay the tax. Similarly, penalty notice under Section 271(1)(c) read with section 274 of the Act was issued to the assessee on 11th June 2019. Vide letter dated 19th June, 2019, when the assessee informed the learned Assessing Officer that he intends to levy the penalty on the basis of draft assessment order, he immediately wrote a letter dated 24th June, 2019, intimating to the assessee that notice under Section 274 read with section 271(1)(c) of the Act is wrongly issued, he withdrew it. In these circumstances, we do not have any hesitation to hold that where the draft assessment order is passed by the learned Assessing Officer on 30th November, 2018, along with the notice of demand of even date and subsequent show cause for penalty vitiates the final assessment order passed by the learned Assessing Officer. It is not here only that notice of demand has been issued inadvertently but the learned Assessing Officer admitted the same but once again thereafter Central Processing Centre asking the assessee to pay the tax. Similarly, penalty notice is issued and further asking the assessee to furnish the explanation....