TMI Blog2019 (5) TMI 1994X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessment order u/s 144C(13) without passing a draft assessment order as mandatorily required u/s 144C(1) makes the impugned final order passed by AO nul and void - Decided in favour of assessee. - HON BLE SH. G. S. PANNU, V.P. AND HON BLE SH. SANDEEP GOSAIN, JM For the Appellant : Shri Paras S. Savla Sh. Pratik Poddar, ARs For the Respondent : Shri Nishant Samaiya, DR ORDER SANDEEP GOSAIN, JUDICIAL MEMBER: The present three (3) Appeals have been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-57, Mumbai, dated 30.11.16 for AY 2003-04, 2004-05 2007-08 respectively. 2. Since the issues raised in these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed of by this consolidated order. I.T.A. No. 2479/Mum/2017 (AY 2003-04) 3. First of all we take up assessee s appeal in I.T.A. No. 2479/Mum/2017 (AY 2003-04) on the grounds mentioned herein below:- GROUNDS OF APPEAL Based on the facts and circumstances of the case, the Marriott International Licensing Company BV ('the Appellant') respectfully submits that the learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 10th Oct 2018 filed by the assessee for seeking admission of additional ground, which are reproduced below:- 5. On the facts and circumstances of the case and in law, the assessment order dated March 30, 2015 passed by the Assessing Officer OAO') without passing draft assessment order, is bad in law and void ab initio as the same has been passed in violation of section 144C of the Income-Tax Act, 1961 ('the Act'). 6. On the facts and circumstances of the case and in law, the assessment proceedings have been abated, since the AO has failed to pass the order giving effect to the direction in Commissioner of Income-Tax (Appeals) order within the period of limitation as provided by the Act. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above ground of appeal, at any time before or at, the time of appeal, so as to enable the Honourable Income-tax Appellate Tribunal to decide the appeal accordingly. Ld. AR submitted that the additional grounds are purely question of law and no new facts are required to be investigated or brought on record. Therefore, applicant be allowed to raise additional grounds as the same goes to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the AO without passing draft assessment order, is bad in law and void ab initio as the same has been passed in violation of section 144C of the Income-Tax Act, 1961. It was submitted that pursuant to the order of ITAT in the first round of proceedings, the matter was set aside to the file of AO to determine afresh the taxability of income of the assessee. However, AO without passing a draft assessment order had straight way passed the final assessment order dated 30.03.15, which is against the provision of section 144C(1) of the Act. Thus all the proceedings initiated by the AO are liable to be quashed. In this respect Ld. AR relied upon the judgment in the case of Dimension Data Asia Pacific PTE Ltd. Vrs. DCIT (2018) 96 taxman.com 182 (Mum), Turner International India Pvt. Ltd. Vrs. DCIT (2017) 82 taxman.com 125(Delhi HC) and other judgments, which are mentioned in the submissions filed by the assessee. 10. On the other hand, Ld. DR relied upon the orders passed by revenue authorities. It was submitted that the Hon ble Tribunal had restored the matter to the file of AO for a limited purpose only i.e. receipts were in the nature of revenue receipts and were held as bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A in consonance with our directions contained in the order for the AY.2004-05. 3. In the result, the appeal is allowed for statistical purposes. 12. In AY 2003-04, the Tribunal had followed its own order in assessee s own case for AY 2004-05 and had set aside the matter to the file of AO for determining the taxability of the receipts afresh as business profit in terms of Article 7 of DTAA. However, AO made variation to the relevant income and passed the final order on 30.03.15 without passing the draft assessment order. Since the assessee being a foreign company is an eligible assessee, therefore on or after 01.10.09, it was mandatory for the AO to forward the draft assessment order to the assessee, if he proposes to make any variation to the income or loss, which is prejudicial to the interest of eligible assessee. Since in the present case, the original assessment order merged with the order of Tribunal and hence once the matter is remanded back to the AO, then in that circumstances, it goes back to the stage of assessment. Therefore, in our view, order dated 30.03.15 passed by AO was not merely an order giving effect to the Tribunal order, but it was an assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in International Air Transport Association v. Dy. CIT [2016] 68 taxmann.com 246/241 Taxman 249. and of Delhi High Court in JCB India Ltd. v. Dy. CIT [2017] 85 taxmann.com 155/251 Taxman 143/398 ITR 189. 6. As against the above, it is the respondent's contention that the order dated 5th May, 2017 of the Tribunal does not set aside the original assessment order dated llth January, 2016 and merely restores it to the Assessing Officer to give effect to its order dated 5th May, 2017. This restoration to the Assessing Officer is only to determine the profits attributable to the RE in India. In above circumstances, it is contended by the Revenue that the requirement of passing a draft assessment order in terms of Section 144C of the Act is not called for, as the order dated 31st January, 2018 is only an order giving effect to the order dated 5th May, 2017 of the Tribunal. The remedy, if any, of the petitioners according to the Revenue is filing an Appeal from the impugned order dated 31st January, 2018 to the Income Tax Appellate Tribunal and/or \i the Commissioner of Income-Tax (Appeals). 7. We note that, it is an undisputed position before us, that the petitioner is a For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (India) Ltd. (supra) held that, even in partial remand proceedings from the Tribunal, the Assessing Officer is obliged to pass a draft assessment order under Section 144C(1) of the Act. According to us, the Assessing Officer, is obliged to, in terms of Section 144C of the Act to pass a Draft Assessment Order in all cases where he proposes to assess the Foreign Company under the Act by making a variation in the returned income. In this case, the impugned order dated 31st January, 2018 has been passed in terms of Section 143(3) read with Section 144C read with Section 254 of the Act and it certainly makes a variation to the returned income filed by the petitioner. This even if, one proceeds on the basis that the returned income stands varied by the order of the Tribunal in the first round, to the extent the petitioner accepts it. Therefore, the Assessing Officer correctly invokes Section 144C of the Act in the impugned order. Once having invoked Section 144C of the Act, the Assessing Officer is obliged to comply with it in full and not partly. This impugned order was passed consequent to the order of the Tribunal dated 5th May, 2017 restoring some of the issues before it to the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the petitioner also from contesting the action of the Revenue in accordance with law, if it so desires. 13. In the case of Turner International India Pvt. Ltd. Vrs. DCIT (2017) 82 taxmann.com 155(Delhi HC), wherein it was held that the legal position is unambiguous as the failure on the part of AO to adhere to the mandatory requirement of section 144C of the Act and passing final order without firstly passing a draft assessment order results in invalidation of the final assessment order and the consequent demand notices and penalty proceedings. 14. After having gone through the facts of the present case as well as keeping in view of the judicial pronouncement as mentioned above, we find that AO had passed final assessment order u/s 144C(13) of the Act without passing a draft assessment order as mandatorily required u/s 144C(1) of the Act, thus in these circumstances, the impugned final order passed by AO is in contravention of the provisions of section 144C(1) of the Act, which is applicable to a foreign company such as appellant, therefore keeping in view the judicial decision as mentioned above, the impugned order dated 30.03.15 is quashed and set aside. Needless to stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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