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TMI Blog2023 (1) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... n Healthcare India Private Limited (CHPL) on 28.11.2014. The case was selected for scrutiny and notice under Section 143(2) of the Act dated 03.09.2015 was issued to CHPL. During the assessment proceeding, reference was made to the Transfer Pricing Officer (TPO) on 30.12.2016. Before the Transfer Pricing Order could be passed, the amalgamation of CHPL with India Medtronic Private Limited (IMPL) was approved by NCLT vide order, dated 10.08.2017. On 31.10.2017 Transfer Pricing Order was passed under Section 92CA(3) of the Act in the name of CHPL. Thereafter, Draft Assessment Order was passed on 29.12.2017 in the name of CHPL. Objections were filed before DRP against the Draft Assessment Order by IMPL as successor to CHPL. Vide order dated 10.09.2018, the DRP issued directions under Section 144C(5) of the Act leading to the passing of Final Assessment Order, dated 31.10.2018 in the name of IMPL as successor to CHPL. The present appeal has been preferred by IMPL (as a successor to CHPL) against the Final Assessment Order dated 31.10.2018. 3. When the appeal was taken up for hearing, the Ld. Authorised Representative for the Appellant invited our attention to Ground No. 23 raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s null and void and therefore, liable to be quashed. In support of his contentions the Ld. Authorised Representative for the Appellant referred to the following sequence of events. S. No. Date Particulars 1. 17.07.2017 Submissions, dated 17.07.2017, filed before Assistant Commissioner of Income Tax (OSD), Corporate Range-1 [hereinafter referred to as the 'Assessing Officer'] in the name of CHPL 2. 08.08.2017 Submission, dated 08.08.2017, filed before Assessing Officer in the name of "Covidien Healthcare India Private Limited" 3. 10.08.2017 Amalgamation order passed by National Company Law Tribunal (NCLT) 4. 29.08.2017 Certified copy of the NCLT order received 5. 01.09.2017 Certified copy of the NCLT order filed with Ministry of Corporate Affairs along with Form INC 28 6. 07.09.2017 Submission, dated 07.09.2017, filed before The Deputy Commission of Income Tax, Transfer Pricing Officer (TPO) in the name of "Covidien Healthcare India Private Limited (now merged with India Medtronic Private Limited)" 7. 19.09.2017 Submission, dated 19.09.2017, filed before TPO in the name of "Covidien Healthcare India Private Limited (now merged with India Medtronic Priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order is liable to be quashed since the entire proceedings are based upon invalid Transfer Pricing Order and invalid Draft Assessment Order. In this regard, he placed reliance upon the decision of the Delhi Bench of the Tribunal in the case of Fedex Express Transportation and Supply Chain Services (India) Private Limited (2019) (108 taxmann.com 542(Mumbai), dated 11.07.2019 and in the case of BOEING India Private Limited (2020) (121 taxmann.com 276) (Delhi-Trib) dated 17.08.2020. 8. Per contra, the Ld. Departmental Representative submitted that the transfer pricing order was passed on 31.10.2017. No intimation regarding amalgamation of CHPL with IMPL was given to the TPO. The intimation letter, dated 26.12.2017 addressed to the Assistant Commissioner of Income Tax, Corporate Circle 1(2) was filed on 27.12.2017 in 'Tapal' at receipt and dispatch section. In a similar manner, intimation letter, dated 28.12.2017 was addressed to Assistant Commissioner of Income Tax (OSD)- Corporate Ragne-1 on 28.12.2017. He submitted that the Draft Assessment Order was passed on 29.12.2017 and therefore, intimation given by the Appellant could not be considered as a valid intimation. The certified c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, as noted above in the earlier paras, can be construed as a jurisdictional defect meaning thereby that the same is incurable thereby making the subsequent assessment proceedings null and void in the eyes of law. The phraseology of Sec. 144C(1) of the Act itself shows that the Assessing Officer is required to forward a draft of the proposed order of assessment if he proposes to make a variation in the returned income or loss which is prejudicial to the interests of the assessee. Undoubtedly, the draft assessment order has legal connotations as it lays the foundation of any prospective reduction in the income of the assessee or creates a tax liability over and above the returned income. Thus, in that sense, it is not merely a procedural step in the assessment proceedings. Further, if we go a little deeper into the scheme of Sec. 144C of the Act and consider sub-section (3) of Sec. 144C of the Act, which reads as under "(3) The Assessing Officer shall complete the assessment on the basis of the draft order, if ......", it envisages that an assessment has to be completed on the basis of a draft assessment order, thereby making it apparent that the draft order is a core compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 22. Our above understanding stands fortified by the judgment of the Hon'ble Bombay High Court in the case of International Air Transport Association (supra) which has clearly held that a draft assessment order under Section 144C(1) of the Act is 'mandated' before the Assessing Officer passes a final order under Section 143(3) of the Act in case of an 'eligible assessee', and the relevant extract of the judgment reads as under :- "5. Therefore, in view of Section 144C(15) of the Act which defines eligible assessee to whom Section 144C(1) of the Act applies to inter alia mean any foreign company. Therefore, a draft assessment order under Section 144C(1) of the Act is mandated before the Assessing Officer passes a final order under Section 143(3) of the Act in case of eligible assessee. An draft assessment order passed under Section 144C(1) of the Act bestows certain rights upon an eligible assessee such as to approach the DRP with its objections to such a draft assessment order. This is for the reason that an eligible assessee's grievance can be addressed before a final assessment order is passed and appellate proceedings invoked by it. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 144C(1) of the Act, which entitles an eligible assessee such as a Foreign Company to approach the DRP with its objection to the Draft Assessment order. This is so provided, so that an eligible assessee can have his grievance addressed before the final assessment order is passed. In case, an assessee does not object to the draft assessment order, then a final assessment order is passed in terms of the draft assessment order by the Assessing Officer. It is only on passing of the final assessment order that the assessee, if aggrieved by it, would be able to approach the appellate authorities under the Act. These special rights are made available under Section 144C of the Act to an eligible assessee such as the petitioner. Therefore, it cannot be ignored by passing an final order under Section 144(13) of the Act without preceding it with a Draft Assessment order as required therein. 10. Moreover, so far as a Foreign Company is concerned, the Parliament has provided a special procedure for its assessment and appeal in cases where the Assessing Officer does not accept the returned income. In this case, in the working out of the order dated 5th May, 2017 of the Tribunal results in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. xx xx 28. In conclusion, to summarise, we hold that since the Transfer Pricing order under Section 92CA(3) of the Act was passed in the name of the amalgamating company, FEIPL, which was not an 'eligible assessee' as per Sec. 144C(15)(b)(i) of the Act, the Assessing Officer did not have any jurisdiction under Section 144C(1) of the Act to pass a draft assessment order. Furthermore, the draft assessment order was also passed in the name of the amalgamating company, FEIPL which was a non-existent entity in the eyes of law on the date of passing of such order; thus, the draft assessment order passed in the present case is illegal and bad in law. Accordingly, the entire assessment proceedings based on such a draft assessment order are illegal and the same are hereby quashed. 29. Before we conclude, we may also discuss the reference made by the appellant to the provisions of Sec. 170 of the Act in order to demonstrate that the actions of the income-tax authorities (in the context of the order passed by the TPO and draft assessment order passed by the Assessing Officer) were not as per law. In this context, we may peruse Sec. 170 of the Act, which reads as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the Hon'ble Privy Council in the case of CIT v. Khemchand Ramdas [1938] 6 ITR 414 (PC) has observed as under :- "One of the peculiarities of most Income-tax Acts is that the word "assessment" is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable, and sometimes the procedure laid down in the Act for imposing liability upon the tax-payer." 33. Thus, the expression 'assessment' can also mean the procedures laid down in the Act, if the context so requires; and, qua Sec. 170 of the Act, the word 'assessment' has to be understood as procedure laid down therein. Accordingly, under Section 170 of the Act, the Assessing Officer was required not only to complete, but also to conduct assessment (i.e. following the prescription of Sec. 144C of the Act in this case) in the hands of the successor in the like manner and to the same extent as it would have been done in the hands of the predecessor. Ostensibly, in the present case, the TPO as well as the Assessing Officer have failed to do so by passing the transfer pricing order under Section 92CA(3) of the Act and the draft assessment in the name of FEIPL, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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