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2018 (5) TMI 737 - AT - Income TaxEligible assessee within the meaning of section 144C(15)(b) - whether AO erred in passing invalid draft order and thereafter issuing an order which was barred by limitation? - Held that:- The forwarding of a draft order as stipulated in subsection (1) of section 144C(1) of the Act is required only in the case of an ‘eligible assessee’. Going by the definition of the eligible assessee it is clear that such assessee must either be a foreign company or any person in whose case variation is made in the income or loss returned as a consequence of the order passed by the TPO u/s 92CA(3) of the Act. As referring to present case we find that the Assessing Officer has himself recorded that the assessee is a Non-resident (Foreign partnership firm). Since the assessee is a non-resident partnership firm, it cannot be characterized as an Indian company and, hence, sheds the character of a ‘domestic company’ and, consequently, a ‘foreign company’ as well. Thus, it is clear that the second condition to qualify for ‘eligible assessee’ in terms of section 144C (15)(b) is not fulfilled. Referring to the first condition, being, ‘any person’ though the assessee is ‘any person’, but admittedly, the TPO has not proposed any variation in the income arising from the international transactions. Thus, it becomes manifest that the assessee has not fulfilled any of the conditions to become ‘eligible assessee’ in terms of section 144C(15)(b). Assessing Officer passed draft assessment order u/s 144C(1) on receipt of the order from the TPO. 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). 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 [2016 (4) TMI 45 - DELHI HIGH COURT]. Respectfully following the binding precedent, we set aside the final assessment order. The additional ground is, therefore, allowed to this extent.
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