TMI Blog2018 (8) TMI 2106X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is evident from the observation and the finding given by the AO in the impugned orders. In these years also, the AO has resorted to proposed draft assessment order u/s 144C (1) which is in absence of requisite condition that assessee was not the eligible assessee in terms of section 144C (15)(b). Hence, such a draft assessment order could not have been made, instead regular assessment order u/s 143 (3)/147 should have been passed. Thus, we hold that the impugned final assessment orders passed in the assessment years 2006-07 and 2007-08 are bad in law and are accordingly set aside. In these years also the appeal is allowed on the basis of additional ground raised. - ITA Nos. 5131, 5132/Del/2010, 5703/Del/2011 - - - Dated:- 20-8-2018 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER For the Assessee : Shri Porus Kaka, Sr. Advocate and Shri Dinesh Chawla, Advocate For the Department : Shri G.K. Dhall, CIT, DR ORDER PER AMIT SHUKLA, J.M The aforesaid appeals filed by the assessee against final assessment order dated 16.9.2010, passed in pursuance of directions given by the Dispute Resolution Panel, New Delhi, vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated under the laws of India which is engaged in the business of purchasing the ad time from the assessee and selling it to various Indian advertisers and advertising agencies in India. The sale of Ad time by the assessee is outside India and receives the sale consideration outside India only. The assessee neither has any office nor any operations in India. Drawing our attention to the impugned assessment order, he submitted that AO himself has noted that assessee had entered into international transaction with its AE for which reference was made to the TPO u/s 92 CA (1) on 18.9.2008, who vide his order dated 7.9.2009, did not draw any adverse inference and no TP adjustment has been made with regard to the international transaction. Once that is so, then forwarding of a draft assessment order as provided in sub section (2) of section 144C, which is required only in the case of eligible assessee wherein the order has been passed by the TPO u/s 92CA making any adjustment, would not be applicable in the case of the present assessee. Here in this case the Ld. AO has passed the draft assessment order vide order dated 28.1.2010 even when there was no transfer pricing issues involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383 (SC). 6. As stated above, the assessee is a non-resident entity which is a partnership firm incorporated under the laws of Mauritius and is also a tax resident of Mauritius. It had filed its return of income shown nil income on 31.10.2005 which was duly processed u/s 143(1) on 18.3.2006. Thereafter, assessee s case was reopened U/S 147 vide notice dated 10th June, 2008 issued u/s 148 and in pursuance thereof, draft assessment order was passed/ proposed u/s 144C (1). In the impugned draft assessment order, but has even noted the following facts:- As the assessee had entered into international transactions with its associated enterprise, a reference was made to Transfer Pricing Officer u/s 92CA(1) on 18.9.2008 who vide his order dated 7.9.2009 did not draw any adverse inference in respect of the international transactions. 7. After noting down such facts, passing of such a draft assessment order in absence of any order passed u/s 92CA(3) thereby making any kind of TP adjustment, then provision of section 144C could not have been resorted to, because the assessee cannot be reckoned as eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the final assessment order dated 28th January, 2015 is without jurisdiction and null and void. The draft assessment order dated 28th March, 2014, having been passed in respect of entities which were not eligible assessee s is also held to be invalid. 9. Again this issue had come up for consideration before the Tribunal in the case of assessee s sister concern, i.e., ESPN Star Sports Mauritius SNC ET Compagnie (supra) wherein on exactly similar facts this Tribunal following the judgment of Hon ble Delhi High Court had observed and held as under:- 12. We now espouse the first condition, being, any person in whose case variation is proposed in the income returned in the draft order consequent upon the passing of an order by the TPO. 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). A fortiori, no draft assessment could have been proposed u/s 144C(1) of the Act which has in fact been proposed by the Assessing Officer b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 144C(1) of the Act shows that the Assessing Officer in the first instance is to forward a draft of the proposed order of assessment to the eligible assessee , if he proposes to make any variation in the income or loss return which is prejudicial to the interest of such assessee. The draft assessment order is to be forwarded to an eligible assessee which means that for the section to apply a person has to be an eligible assessee . 9. Section 144C (15)(b) of the Act defines as eligible assessee to mean (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 section 92CA(3); and (ii) any foreign company. 10................................. 11. In Section 144C (15)(b) of the Act, the term eligible assessee is followed by an expression means only and there are two categories referred therein (i) any person in whose case the variation arises as a consequence of an order of the Transfer Pricing Officer and (ii) any foreign company. The use of the word means indicates that the definition eligible assessee for the purposes of Section 144(C)(15)(b) is a hard and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years, that is, in these years also no transfer pricing adjustment or order u/s 92CA varying the returned income has been passed which is evident from the observation and the finding given by the AO in the impugned orders. In these years also, the AO has resorted to proposed draft assessment order u/s 144C (1) which is in absence of requisite condition that assessee was not the eligible assessee in terms of section 144C (15)(b). Hence, such a draft assessment order could not have been made, instead regular assessment order u/s 143 (3)/147 should have been passed. Thus, in view of the aforesaid order wherein we have followed binding judicial precedents of Hon ble Delhi High Court, we hold that the impugned final assessment orders passed in the assessment years 2006-07 and 2007-08 are bad in law and are accordingly set aside. In these years also the appeal is allowed on the basis of additional ground raised before us and all the issues raised in the grounds are treated as academic. Accordingly all the three appeals of the assessee are allowed. 14. In the result, all the three appeals of the three appeals are allowed. Order pronounced in the Open Court on 20th August, 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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