TMI Blog2017 (9) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Rahul Chaudhary, Ms. Rhea Verma and Ms. Rajul Jain, Advocates O R D E R Dr. S. Muralidhar, J. 1. These are three writ petitions by JCB India Ltd. seeking quashing of an order dated 30th March 2016 passed by the Transfer Pricing Officer ( TPO ) and the Final Assessment Order dated 31st March 2016 passed by the Assessing Officer ( AO) under Section 254 read with Section 143(3) of the Income Tax Act, 1961 ('Act) for three Assessment Years ( AYs ), 2006-07, 2007-08 and 2008-09 respectively. 2. The Petitioner is a wholly owned subsidiary of JC Bamford Excavators Ltd., U. K. ( JCB, U.K. ). It is engaged in the business of manufacture of earth-moving/construction equipments. It commenced its operations in India in the year 1979. AY 2006-07 3. For AY 2006-07, the Petitioner filed its return of income on 19th November 2006, declaring an income of ₹ 214,44,73,701/-. After making a reference to the TPO, since there were international transactions involving the Petitioner-Assessee and its Associated Enterprise ( AE ), the AO passed the final assessment order on 25th October 2010 under Section 143 (3) read with Section 144C of the Act. The returned incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITAT, matter was set aside to the file of the DRP for fresh determination. 10.After the DRP's order a final assessment order was issued on 18th October 2012 by the AO determining the total income at ₹ 731,93,88,090/-. Allowing the Assessee s appeal by order dated 18th September 2013, the ITAT set aside the decision on the issue concerning the arms length price and remanded the same issue to the AO for a fresh adjudication in accordance with law. Like in AYs 2006-07 and 200708, the ITAT permitted the Assessee as well as the Revenue to file their fresh T.P. study and fresh comparables so as to arrive at the arm's length price in accordance with law. The appeal of the Assessee was allowed for statistical purposes. 11. For all the three AYs, by the letter dated 14th February 2014, the AO sought the comments of the TPO on the issue of transfer pricing adjustment. It is stated that there was complete inaction on the part of the TPO from 14th February 2014 to 10th March 2016. By the letter dated 4th March 2016, the AO called upon the TPO to quantify the transfer pricing adjustment in pursuance to the remand made by the ITAT for fresh adjudication. It was reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to a decision of the Gujarat High Court dated 31st July 2017 in Tax Appeal No. 542 of 2017 (Commissioner of Income Tax, Vadodara-2 v. C-Sam (India) Pvt. Ltd.) 16. In response, Mr. Sanjay Jain, learned Additional Solicitor General of India appearing for the Revenue, submitted that there was an efficacious alternative remedy available to the Petitioner to file appeals against the impugned final assessment orders passed by the AO. It is denied that it was mandatory on the part of the AO to pass a draft assessment order since this was a second round before the TPO pursuant to remand by the ITAT. Moreover, it was not as if the ITAT had set aside the entire assessment order of the AO. The setting aside was only in respect of the transfer pricing adjustment and that too with a specific direction to the AO for determining the arms length price after considering fresh comparables. Since the assessment itself was not cancelled by the ITAT or completely set aside, it is the provisions of Section 153 (3) (ii) of the Act which would apply. Mr Jain submitted that the requirement of passing a draft assessment order under Section 144C was only in the first instance and not after the rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Section 144C(1) of the Act is no longer res intregra. There is a long series of decisions to which reference would be made presently. 12. In Zuari Cement Ltd. v. ACIT (decision dated 21st February, 2013 in WP(C) No.5557/2012), the Division Bench (DB) of the Andhra Pradesh High Court categorically held that the failure to pass a draft assessment order under Section 144C (1) of the Act would result in rendering the final assessment order without jurisdiction, null and void and unenforceable. In that case, the consequent demand notice was also set aside. The decision of the Andhra Pradesh High Court was affirmed by the Supreme Court by the dismissal of the Revenue's SLP (C) [CC No. 16694/2013] on 27th September, 2013. 13. In Vijay Television (P) Ltd. v. Dispute Resolution Panel [2014] 369 ITR 113 (Mad.), a similar question arose. There, the Revenue sought to rectify a mistake by issuing a corrigendum after the final assessment order was passed. Consequently, not only the final assessment order but also the corrigendum issued thereafter was challenged. Following the decision of the Andhra Pradesh High Court in Zuari Cement Ltd. v. ACIT (supra) and a numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide a copy thereof to the assessee and only thereupon the assessee could exercise his valuable right to raise objections before the DRP on any of the proposed variations. In addition to giving such opportunity to an assessee, decision of the DRP is made binding on the Assessing Officer. It is therefore not possible to uphold the Revenue's contention that such requirement is merely a procedural. The requirement is mandatory and gives substantive rights to the assessee to object to any additions before they are made and such objections have to be considered not by the Assessing Officer but by the DRP. Interestingly, once the DRP gives directions under sub-section (5) of Section 144C, the Assessing Officer is expected to pass the order of assessment in terms of such directions without giving any further hearing to the assessee. Thus, at the level of the Assessing Officer, the directions of the DRP under sub-section (5) of Section 144C would bind even the assessee. He may of course challenge the order of the Assessing Officer before the Tribunal and take up all contentions. Nevertheless at the stage of assessment, he has no remedy against the directions issued by the DRP under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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