TaxTMI 
TaxTMI 
2025 (9) TMI 1202
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....any variation arising as a consequence of the order of the TPO and since the assessee is an LLP, therefore, it cannot be termed as a foreign company, which means that provisions of section 144C of the Act with all its sub section do not apply to the assessee, which means that the impugned assessment order dated 21.06.2019 is void ab initio. 20. The co-ordinate bench at Mumbai in ITA No. 2572/Mum/2017 had the occasion to consider a similar issue and held as under: '9. We have considered rival submissions and perused material on record. The issue in dispute lies in a very narrow compass. It has to be examined whether the assessee can be termed as an 'eligible assessee' under section 144C(15)(b) of the Act to empower the Assessing Officer to pass the draft assessment order under section 144C(1) of the Act. Before we examine the facts relevant for deciding the issue, it is necessary to deal with the relevant statutory provisions which are applicable to the facts of the present issue. Undisputedly, the Assessing Officer has proceeded to pass the draft assessment order under section 144C(1) of the Act against the assessee for the impugned assessment year. A reading of s....
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....essee in the status of a partnership firm. The definition of firm under section 2(23) of the Act includes a limited liability partnership. Further, in the draft assessment order passed under section 144C of the Act for the assessment year 2016-17, the status of the assessee has been shown as firm. Thus, from these facts, it becomes clear that the assessee is not a foreign company but a limited liability partnership. The aforesaid factual position has not been controverted by the learned Departmental Representative by bringing before us any documentary evidence. Keeping in view the aforesaid factual position qua the relevant statutory provision, if we examine the judicial precedents it can be seen that in the case of ESS Advertising (Mauritius) S.N.C. (supra), the Tribunal while dealing with an identical issue has held as under:- '5. We have considered the rival submissions on the issue of additional ground raised by the assessee before us and also the material referred to and the judgments in support of the said ground. All the additional grounds in the impugned assessment years involve purely a legal issue which goes to the very root of the validity of the assessment pass....
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....n 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 sub-section (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 consequence of any order passed by the TPO as there is no adjustment made in the case of the assessee. We find that in the case of ESPN Star Sports Mauritius SNC ET Compagnie (supra) the Hon'ble Jurisdictional High Court on same issue had quashed such order passed u/s 144C (1) and consequently the final assessment order passed in pursuance of DRP's direction. The relevant observation and finding reads as under:-'It appears to the Court that it is plain tha....
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.... 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 considered and decided by the Hon'ble High Court in writ petition for the assessment year 2010-11. Respectfully following the binding precedent, we set aside the final assessment order. The additional ground is, therefore, allowed to this extent. 15. In view of our decision on the additional ground setting aside the assessment order, there is no need to deal with the grounds on merits.' 10. There are other judgment....
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............. 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 competent to pass a draft assessment order u/s 144C and the final assessment order consequently becomes time barred. Accordingly, following the aforesaid binding judicial precedents, we hold that the draft assessment order is invalid and consequently the impugned final assessment order is also unsustainable in law and is set aside. Consequently the add....
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....also, addition cannot survive as facts are not identical to the facts of earlier Assessment Years . 24. In the result, the appeal of the assessee in ITA No. 6503 / DEL / 2019 is allowed.' 4. At the outset, the learned counsel for the respondent would submit that the issue which arises for consideration is covered on merits by the judgments of this Court in two IT appeals which are relatable to the assessee herein. 5. Mr. Ruchir Bhatia, learned Senior Standing Counsel for the appellant/ Revenue would submit that the said judgment was in the context where the Court did not decide the issue raised by the appellant herein as the case of respondent was covered, in its favour, on merits. 6. He has placed before us the decision dated 07.12.2023 in ITA 708/2023 & ITA 709/2023. In this regard, we may reproduce the conclusion drawn by this Court from paragraph 8 onwards as under: '8. Mr Ruchir Bhatia, learned senior standing counsel, who appears on behalf of the appellant/revenue, fairly concedes that insofar as the merits of the case are concerned, the decision of the Supreme Court rendered concerning AY 2006-07, in the case of the respondent/assessee, holds the f....