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2023 (3) TMI 1349 - ITAT MUMBAIFixed Place PE - Taxability of offshore supply of goods - Attribution of profits - AO was of the view that the presence of the assessee in India for the purpose of securing the contract and the presence of its employees and equipment indicates a Permanent Establishment (PE) in India - whether DCIT erred in holding that the assessee has a fixed place PE in India and is not following the directions passed by the DRP, wherein the DRP held that the appellant does not have a fixed place PE in India? - HELD THAT:- In the instant case, the reasoning for making the addition in the final assessment order by the ld. AO is by treating the assessee as a Fixed Place PE, which has already been nullified by the ld. DRP. AO in the final assessment order is bound to complete the assessment in conformity with the directions of the ld. DRP as per the provisions of section 144C(13) of the Act. In the instant case, AO had not framed the final assessment order in complete conformity with the directions of the ld. DRP, thereby violating the provisions of section 144C(13) - only the determination of total income as directed by the ld. DRP had been complied with by the ld. AO in the final assessment order. This is a case of ld. AO completing the assessment by determining the total income as directed by the ld. DRP , but did not follow the basis and reasoning of determination of income as directed by the ld. DRP. Hence we are in agreement with the ld. AR that once the basis of determination of total income itself is illegal due to violation of provisions of section 144C(10) and 144C(13) of the Act, the ultimate determination of total income in the final assessment order also becomes bad in law. Moreover, the ld. AO had not even bothered to rectify his order u/s 154 of the Act by conforming to the directions of ld. DRP which forms the basis of determination of total income. We have no hesitation to hold that the final assessment order passed by the ld. AO , which is in appeal before us, is bad in law and accordingly the final assessment order framed is hereby quashed. Appeal of the assessee is allowed.
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