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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’, NEW DELHI
Before: SH. H.S. SIDHU & SH. O.P. KANT
PER O.P. KANT, A.M.: This appeal by the Revenue is directed against the order dated 28.01.2015 passed by the learned Additional Commissioner of Income-tax, Range-1(2)(2), International Taxation, New Delhi (in short ‘the Assessing Officer’) in compliance to the Direction dated 26.12.2014 of the Ld. Dispute Resolution Panel-IV, New Delhi, (in short ‘the DRP’). The grounds of appeal
are reproduced as under:
1. On the facts and circumstances of the case, the order passed by the Ld. DRP is bad in law and void ab initio.
2. On the facts and circumstances of the case, the Ld. DRP erred in misinterpreting the provision of section 144C.
3. On the facts and circumstances of the case, the Ld. DRP erred in determination of the status of the assessee as defined in sub section 15(b) of Sec 144C. 4. On the facts and circumstance of the case, the Ld. DRP erred by ignoring the provision of sub section 8 of section 144C read with explanation to it. 5. On the facts and circumstance of the case, the Ld. DRP erred by not providing opportunity to the Assessing officer as envisaged in provision of sub section 11 of Section 144C. 6. Ld. DRP has erred in not considering that the definition of''firm” u/s 2(23)(i) of the income-tax Act, includes "Limited Liability Partnership” as defined in the LLP Act, 2008 whereas as per section 2(d) of the LLP Act, the LLP is a "body corporate" which means "a company" as defined in section 3 of the companies Act, 1956 and includes "A LLP incorporated outside India". Thus, a LLP incorporated outside India is considered a "Body Corporate” i.e. a company under the domestic laws. Therefore, the assessee is an "eligible assessee". 7. Without prejudice, similar draft order and final assessment order passed earlier in the case of the assessee for AY 2007- 08 was accepted by the assessee and this issue has never been agitated by the assessee either before Hon'ble DRP or Hon'ble 1TAT. 8. Hon'ble DRP has failed to appreciate that u/s 292B of the IT Act, 1961 no assessment made in pursuance of any provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such assessment, if such assessment in substance and effect is in conformity with and according to the intent and the purpose of this Act. 9. The appellant craves to add, amend, modify or alter any grounds of appeal at the time or before the hearing of the appeal.
At the outset, we may like to mention that none appeared on behalf of the assessee despite notifying from time to time and on last occasion, the Ld. Departmental Representative was directed to serve the notice on the assessee. Despite sending notice Departmental Representative, none attended on behalf of the assessee, nor any request of adjournment was filed and, thus, the case is heard ex parte qua the assessee.
Brief facts of the case have been summarized by the Ld. DRP which are reproduced as under: “2. Briefly facts of the case emerged from the Form-35A, relevant for deciding this case, are that the assessee is a partnership firm established under the laws of Mauritius by ESPN (Mauritius) Ltd. having 99.9% share and ESS Asia Ltd. having 0.1% share in profits. The assessee is engaged in the business of distribution of sports and sports related television programmes broadcast by ESPN star sports Singapore. The assessee entered into an agreement with ESPN Software India (P) Ltd ('ESPN India') (now known as Star Sports India Private-Limited) for distribution of star sports and ESPN channel services in India. M/s ESPN India has deducted tax of Rs.20,44,90,932/- while making payment to the assessee. This withholding tax was claimed as refund in its Return of Income (ROI) by the assessee. The assessee, by assuming that it had not had any Permanent Establishment (PE) in India, showed NIL business income in its ROI filed on 01.10.2010. However, the assessee has shown interest income of Rs.97,07,350/- (interest u/s 244A worked out by the AO in respect of the withholding tax of preceding year) in its ROI. The case was picked up for scrutiny. Since the assessee had undertaken international transactions with its Associated Enterprises (AE), the AO made a reference u/s 92CA(1) to the Transfer Pricing Officer (TPO), New Delhi. The -TPO, vide his order dated 17.12.2013, proposed NIL variation in the returned income. However, the AO held the income of the assessee taxable u/s 9(1) consequent to his finding that the assessee has a PE in India. Accordingly, the AO; vide his draft assessment order, proposed to tax the income of the assessee at Rs.406,95,60,867/-.
Against the draft assessment order dated 28.03.2014 passed by the Assessing Officer, the assessee approached Ld. DRP and filed objections. The objections field included one of the objections challenging the validity of the draft assessment order passed. In the objections filed, the assessee submitted that the draft assessment order in the case of the assessee has been passed against the provisions of law as the assessee is not eligible under the provisions of Section 144C(15)(b) of the Income-tax Act, 1961 (for short “the Act”). The assessee submitted that no Transfer Pricing Adjustment has been made by the Transfer Pricing Officer and the assessee as also not foreign company. After considering the submissions of the assessee, the learned DRP dismissed the proceedings in limine, holding the assessee as not an “eligible assessee” in accordance with section 144C(15)(b) of the Act. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above.
We have heard the arguments of the learned DR on the issue in dispute and perused the relevant material on record. We note that the learned DRP on the issue in dispute has observed as under:
“4.1 We have carefully considered the facts of the case and the submission of the assessee. We have perused all the case laws referred above, impugned order and the TPO's order dated 17.12.2013. We have noticed that status of the assessee has been specifically mentioned as "partnership Firm1 not only in the format of the impugned order but also in para 1.2 of the impugned order. It is also noticed that the Form No. 35A is signed by Mr. Boopendradas Sungker and the narration the signature reads as: "Authorized Signatory/ Status of assessee: Foreign Partnership Firm. A perusal of section 144C which lays down the legal framework for the operation of the Dispute Resolution Panel (DRP) shows that only the 'eligible assessee' can come before the DRP. The sub section (1) of Sec 144C which opens with a non-obstarvte clause lays down that the AO, in the first instance, is required to forward a draft of the proposed assessment order to the assessee if he proposes to make any variation to the income or loss of the 'eligible assessee'. In other words, no draft assessment order is legally required to be sent to any assessee other than the 'eligible assessee1. The 'eligible assessee’ has been defined in sub section 15(b) of Sec 144C; which reads as under: "eligible assessee" means: 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 subsection (3) of section 92CS; and Any foreign company" 4.2 In view of the above, we are of the considered opinion that the assessee is not an "eligible assessee" in accordance with section 144C(15)(b) as neither the TPO proposed any variation in the returned income nor the assessee is a foreign company. Thus, we do not have the jurisdiction over the case. Consequentially, we decline to issue any direction in this case. The proceedings here are therefore, dismissed in- limine in view of the above.”
We find that neither transfer pricing adjusting has been made in the case of the assessee nor it is a foreign company. Conspicuously, the assessee is not an eligible assessee because the assessee is a partnership firm which is apparent even from the impugned assessment order passed by the Assessing Officer wherein he has mentioned the status of the assessee as foreign partnership firm. The draft assessment order under Section 144C(1) of the Act is passed in case of a assessee, who is an “eligible assessee”. The term ‘eligible assessee’ for the purposes of Section 144C has been defined as under:
Reference to dispute resolution panel. 144C. (15) For the purposes of this section,— (a) ………………………………….. (b) "eligible assessee" means,— (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 sub-section (3) of section 92CA; and (ii) any foreign company.
We find that neither the Transfer Pricing Adjustment has been made in the case of the assessee, nor assessee is a foreign company, therefore, any of the conditions of the two limbs are not satisfied in the case of the assessee, therefore, the action of the Assessing Officer in passing the draft assessment order is not in accordance with law, and the entire proceedings are invalid. In our opinion, the direction of the Ld. DRP is well reasoned and we do not find any infirmity in the same. Accordingly, we upheld the same and dismiss the appeal.
In the result, the appeal of the Revenue is dismissed. Order is pronounced in the open court on 6th December, 2018.