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TMI Blog2025 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have issued a draft assessment order u/s.144C(1). Since there is no final order u/s.92CA(3), the entire proceedings are void ab-initio. 3. In the absence of specific provisions for computing time limit available for passing a direction on remand to the DRP by the ITAT, the time limitation has to be computed by excluding the time between the date of receipt of objections by the DRP from the appellant (15/03/2016) and the date of receipt of the order of the Hon'ble Tribunal by the Principal Commissioner of Income Tax would be excluded. In such case, assuming the time limit starts from 01/06/2017, the time available to the DRP to pass directions u/s.144C(5) would end by the month of Feb 2018. Since, the DRP has not passed any order till the end of Feb 2018, the time limit for passing an assessment order u/s.144C(13) would end by March 2018. Therefore, the assessment order passed on 31/12/2018 is barred by limitation. And in the alternative, 4. The Dispute Resolution Panel, having taken a view that there is no provision under the Act whereby the Hon'ble ITAT could set aside an assessment order directly to the file of the DRP, erred in disposing of the objections raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject matter before the transfer pricing officer. It was pertinent to note that the value of these imports was also assessed by the deputy commissioner of customs, special valuation branch, Chennai vide order in original No. 1073/2010 dated 19/01/2010. This order was operative up to 18/01/2013. 4. Before the transfer pricing officer, the appellant furnished the transfer pricing study wherein transaction net margin method was selected as the most appropriate method and two companies were selected as comparables. The transfer pricing officer did not dispute either the selection of most appropriate method or the selection of comparables. In the transfer pricing study, the profit level indicated was chosen as EBITDA + OR (Earnings before interest, tax, depreciation and amortisation + Operating revenue). The basis for excluding depreciation was that: a. the appellant had invested around Rs.1.2 crores in expansion of its operation by introduction of two products. b. the comparables follow straight line method whereas the appellant follows written down value method. c. The appellant is in 7th year of operations, whereas, the comparables are in their 20th & 26 year of operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustment was made on the proportion of association enterprise's cost to the total cost. Consequently, a downward adjustment of Rs.4,11,01,776/- to the cost of import purchases from appellant's associated enterprise was considered necessary by the transfer pricing officer. As per the ld. Authorized Representative, without waiting for the final order from the transfer pricing officer and based on the draft order passed by the transfer pricing officer, the assessing officer passed a draft assessment order dated 15/02/2016. In the order the assessing officer adopted the downward adjustment of Rs. 4,11,01,776/ to the cost of import purchases made from appellant's associated enterprise. Further, the assessing officer disallowed foreign fluctuation loss amounting to Rs. 55,13,210/- and added an amount of Rs. 34,62,069/-towards the difference in service income as reflected in form 26AS and as credited to profit and loss account. AR). The appellant filed its objection against the draft assessment order with Dispute Resolution Panel on 16/03/2016. The Dispute Resolution Panel vide its order dated 03/08/2016 directed the AO/TPO to do the following:- ''a) Include the Service Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its order. 8. The Dispute Resolution Panel rejected all the grounds sent back to its file by the Tribunal and directed the AO/TPO to make a downward adjustment to the cost to the tune of Rs.3,33,45,325/-. The transfer pricing officer passed an order dated 20/12/2018 giving effect to the order of the Dispute Resolution Panel, in which downward adjustment to the cost to the tune of Rs.3,33,45,325/- was considered necessary by the transfer pricing officer. Thereafter, the assessing officer passed an order u/s. 143(3) r.w.s. 144C(5) r.w.s. 254 dated 31/12/2018 making downward adjustment of Rs.3,33,45,325/- and disallowing unrealised forex fluctuation amounting Rs.4,12,270/-. The total income of the appellant was assessed at Rs.2,44,32,672/- after allowing set off of brought forward business loss and set off of MAT credit, a demand of Rs.57,90,590/- was raised on the appellant. Aggrieved by the order, the assessee is in appeal before us. 9. During the course of hearing the appeal, the appellant filed petition for admission of additional grounds. The petition for admission of additional grounds and additional grounds raised are as under: PETITION FOR ADMISSION OF ADDITIONAL GROUND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Dated: 20 December 2018 Sub: Order giving effect Company Pvt. Ltd. DRP in the case of M/s. Young Buhmwoo (India) AAACY2562N FY 2012-13- Reg. Ref: Order of DRP-2, Bangalore in F.No.47/Setaside/DRP- 2/BANG/2017-18, dated 30/11/2016 The order giving effect to the order of DRP's order in F.No. 47/Setaside/DRP- 2/BANG/2017-18 dated 30/11/2016 is as below: The revised computation of the adjustment as per the direction of the DRP is worked out as below Operating Revenue 32,67,14,250 Comparable margin as per order dated 14.01.2016 6.16% Arm's Length Cost (93.84% of Operating Revenue 30,65,88,652 Cost as per Books 33,99,33,977 Downward Adjustment 3,33,45,325 Therefore, a downward adjustment of Rs 3,33,45,325/- is considered necessary to the value of International transactions entered into by the assessee as per the directions of the DRP''. 10. In the light of the law laid down by the Hon'ble Supreme Court of India in the case of National Thermal Power Co. Ltd. Vs CIT [1998] 229 ITR 383 we admit the additional grounds raised by the assessee as these grounds goes root of the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjection' is required to issue "Directions" for the "guidance of the AO (iii) As per sub-section (13) of s. 144(C) of the Act the AO is mandated to complete the assessment in accordance with the DRP's directions. (iv) As per clause (d) of s. 253 of the Act only an assessment order passed by an assessing officer under sub-section (3) of s. 143 or 3.147 or s.153A or s. 153C in pursuance to the directions of the DRP (or an order passed u/s 154 in respect of such order) is appealable to the Appellate Tribunal. 1.2 Thus, the DRP is empowered by the Act to issue Directions only when an "Objection filed by the assessee against a draft assessment order passed by the AO, or a draft assessment order passed during fresh assessment proceedings, u/s 144C(1) of the Act. Further, while the Directions of the DRP are not appealable u/s 253 of the Act, as long as the 'assessment order is not set aside or cancelled and restored to the file of the AO by the Hon'ble ITAT and a 'fresh draft assessment order is not framed u/s 144C(1) of the Act, and consequent thereto an "objection is not filed u/s 144C(2)(b)(i) of the Act, the DRP does not have jurisdiction to issue any Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2). (4) The Assessing Officer shall, notwithstanding anything contained in section 15328[or section 153B], pass the assessment order under sub-section (3) within one month from the end of the month in which,- (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in subsection (5), after considering the following, namely:- (a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior approval of the 33[Principal Commissioner or] Commissioner as provided in sub-section (12) of section 144BA.] 34[(14B) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of issuance of directions by the dispute resolution panel, so as to impart greater efficiency, transparency and accountability by- (a) eliminating the interface between the dispute resolution panel and the eligible assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a mechanism with dynamic jurisdiction for issuance of directions by dispute resolution panel. (14C) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (14B), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 35[2025]. (14D) Every notification issued under sub-section (14B) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the words "twelve months" had been substituted. ** ** ** (5) Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer or the Transfer Pricing Officer, as the case may be, wholly or partly, otherwise than by making a fresh assessment or reassessment or fresh order under section 92CA, as the case may be, such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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