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

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ITA 796/DEL/2021Status: DisposedITAT Delhi31 January 2024AY 2017-18Bench: SHRI G.S. PANNU (Vice President), SHRI SAKTIJIT DEY (Vice President)20 pages
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What did the Tribunal hold?

The Tribunal held that the Assessing Officer's failure to implement the DRP's directions renders the final assessment orders void ab initio and without jurisdiction. The assessment orders were quashed on this basis.

What were the facts?

The assessees, Bechtel Limited (UK) and Bechtel Power Corporation (USA), provided engineering and procurement services to Reliance Industries Limited. The Assessing Officer treated the receipts as Fee for Technical Services (FTS)/Fee for Included Services (FIS), but the Dispute Resolution Panel (DRP) directed that they be taxed as business income due to a Permanent Establishment (PE) in India. However, the Assessing Officer passed final assessment orders that did not implement the DRP's directions.

What were the issues?

Whether the final assessment orders are valid when the Assessing Officer fails to implement the binding directions of the Dispute Resolution Panel (DRP) as mandated by Section 144C of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 144C

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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DELHI

Before: SHRI G.S. PANNU, VICE- & SHRI SAKTIJIT DEY, VICE-

For Appellant: Ms. Priya Tandon, Adv. &
For Respondent: DR &
Hearing: 05.01.2024Pronounced: 31.01.2024

Heard together (2 matters)

ITA Nos. 8904/Del/2019
ITA Nos. 8905/Del/2019

Read from the judgment's own cause title. This page is filed under one of them.

per statutory mandate, the Assessing Officers are bound to follow the directions of DRP. Non-implementation of the directions issued by DRP, either consciously or due to non- application of mind by the Assessing Officers often put the department in an embarrassing situation as the learned counsels appearing for the Revenue find it difficult to defend the action of the Assessing Officers. Such repeated instances of non-implementation of directions of learned DRP by the Assessing Officers expose lack of proper orientation and training. We hope and expect that the authorities concerned would look into this aspect and address the issue with the seriousness it deserves. We leave the issue at that.

16.

In the result, all the four appeals are allowed on this limited issue.

Order pronounced in the open court on 31.01.2024.

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