BECHTEL POWER CORPORATION,UNITED STATES vs. ACIT CIRCLE-INTERNATIONA TAXATION 1(1)(2), NEW DELHI

Facts

Two assessees, a UK resident and a USA resident, provided engineering and procurement support services to RIL. The Assessing Officer (AO) treated receipts as FTS/FIS, but the Dispute Resolution Panel (DRP) directed taxing them primarily as business income attributable to a PE and protectively as FTS/FIS under Section 44DA. The AO, however, failed to implement these specific directions in the final assessment orders.

Held

The Tribunal held that the final assessment orders were without jurisdiction and void-ab-initio due to the Assessing Officer's failure to implement the specific and binding directions of the DRP, as mandated by Section 144C of the Income Tax Act. Citing various precedents, the Tribunal reaffirmed that DRP directions are binding on the AO, and non-compliance invalidates the assessment process.

Key Issues

Whether the final assessment orders passed by the Assessing Officer, failing to implement the specific and binding directions of the Dispute Resolution Panel (DRP) under Section 144C of the Income Tax Act, are without jurisdiction and void-ab-initio.