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2017 (1) TMI 1247 - AT - Income TaxTransfer pricing adjustments - obligation of the AO to follow the procedure u/s 144C - failure to pass the draft assessment order - ‘Eligible assessee’ u/s 144C(15) - Held that:- The use of the word ‘and’ instead of ‘or’ in s. 144C(15) must be regarded as the law prescribing two categories of persons in whose case sec. 144C shall apply. That is, persons falling under sub-clauses (i) and (ii) of clause (b) of section 144C(15). This is apparent from a plain reading of the provision; the identification of a ‘foreign company’ being preceded by the word “means”, and followed by the sub-clauses (a) and (b), and not, for example, by the words to the effect or signifying a person satisfying the conditions as set out in the said sub-clauses. As such, a foreign company is an eligible assessee, independent of the variation to its returned of income being by way of a transfer pricing adjustments - the other condition set out in s. 144C(15)(b)(i), or otherwise. Validity of assessment - Held that:- The order has been passed by the AO by, in effect, without allowing the assessee the opportunity of being heard by the DRP, i.e., prior to it being finalized. That there is no vested right against procedure is well-settled. Again, it is nobody’s case that the same was done to purchase time, or that in the event the said opportunity was allowed, the assessment would get barred by time. In fact, no such contention could in law be raised as s. 144C(13) itself excludes the operation of s. 153 (or s. 153B), stipulating time limit for passing orders order the Act, setting it at one month after the receipt by the AO of the directions by the DRP. There is no question of the assessment getting time barred or having crossed the bar of time by which it could have been passed. Once the Revenue itself admits the order passed to be a draft assessment order, it cannot in law proceed to collect the demand raised, so that the raising of demand would be without the sanction of law. The decision in Vijay Television (P.) Ltd. (2014 (6) TMI 540 - MADRAS HIGH COURT ) is judicially binding on us. The same is directly on the point, and is therefore squarely applicable. In fact, in the present case there is no attempt by the AO to rectify his mistake. We have set out our humble opinion in the matter only with a view of its consideration by the Hon’ble Court in a given case. Respectfully following the decision in Vijay Television (P.) Ltd. (supra), we hold the assessment in the present case as bad in law. In consequence, the assessee is only liable for tax on its’ returned income (refer: CIT v. Shelly Products [2003 (5) TMI 4 - SUPREME Court]. The assessment failing, we do not consider it relevant or necessary to address the issue arising in quantum assessment on merits.
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