Section 144C(1) of the Income Tax Act

Income-tax Act, 2025: s.275

Section 144C(1) falls under section 144C of the Income-tax Act, 1961, which corresponds to section 275 (Reference to Dispute Resolution Panel) of the Income-tax Act, 2025.

Read section 275 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 144C(1) is East India Pharmaceutical Works Ltd. v. CIT (224 ITR 627), cited in 146 of the 423 judgments on BharatTax that turn on this section.

Leading authorities on Section 144C(1)

East India Pharmaceutical Works Ltd. v. CIT
224 ITR 627 · 1997 · Supreme Court
146
citing judgments

Where an assessee has mixed funds (both interest-bearing and interest-free funds) and makes an interest-free advance or investment, it is presumed that the interest-free funds were utilized first if they are sufficient to cover such advances or investments. This prevents disallowance of interest on borrowed funds under Section 36(1)(iii).

Vijay Television (P.) Ltd. v. DRP
369 ITR 113 · 2014 · High Court
140
citing judgments

Passing a final assessment order under Section 143(3) directly, without first issuing a draft assessment order under Section 144C(1) for an eligible assessee, constitutes a fundamental jurisdictional defect. This defect cannot be cured by a subsequent corrigendum, especially if issued beyond the prescribed period of limitation.

MOHD. HANIF QUARESHI AND OTHERS v. STATE OF BIHAR AND OTHERS. 381 7
6 SCC 312 · 2012 · Reported
138
citing judgments

Where proceedings are initiated under Section 147, but the assessment is completed under Section 143(3), it is not a prerequisite that the assessee must have filed a return under Section 139.

DDIT v. Savvis Communication Corporation
69 Taxmann.com 106 · 2016 · ITAT
107
citing judgments

Payments for web hosting services, including data back-up, maintenance, security, and uninterrupted services, are not taxable as royalty under Section 9(1)(vi) of the Income Tax Act, as they do not constitute 'consideration for use of, or right to use, scientific equipment'.

CIT v. Citi Financial Consumer Finance Ltd.
335 ITR 29 · 2011 · High Court
78
citing judgments

Customer acquisition costs and advertisement expenditures are treated as revenue expenditures, not deferred expenditures, as there is no general concept of deferred expenditure for such items under Income Tax Law.

82 ITR 363 (SC); Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT
93 Taxmann 502 · 1997 · Supreme Court
72
citing judgments

Interest income earned by an assessee during the period when its business has not commenced, even from funds meant for capital expenditure, is revenue in nature and is assessable under the head 'income from other sources'. The nature of the income, rather than the source of the funds generating it, determines its taxability.

ESPN Star Sports Mauritius S.N.C. ET Compagnie v. Union of India
388 ITR 383 · 2016 · High Court
71
citing judgments

Failure to issue a draft assessment order under Section 144C(1) makes the final assessment order illegal and beyond jurisdiction. Non-compliance with Dispute Resolution Panel (DRP) directions renders the final assessment order bad in law.

Knorr-Bremse India (P) Ltd. v. ACIT
380 ITR 307 · 2016 · High Court
63
citing judgments

When transactions are part of a package deal with a composite price or are interdependent such that an assessee must accept all of them together, they must be aggregated and treated as a single international transaction for transfer pricing purposes.

Dell International Services (P) Ltd. v. CIT Manu/APJ2002/
305 ITR 37 · 2008 · High Court
50
citing judgments

Retrospective amendments to Section 9(1)(vi) of the Income-tax Act, introducing Explanations 5 and 6 regarding royalty income, do not automatically apply to Double Taxation Avoidance Agreements (DTAAs) if the DTAAs themselves have not been correspondingly amended.

JCB India Ltd. v. DCIT
398 ITR 189 · 2017 · High Court
49
citing judgments

The requirement to pass a draft assessment order under Section 144C of the Act is mandatory. A final assessment order issued without such a draft order is a nullity, constituting an incurable jurisdictional error that cannot be saved by Section 292B, even in set-aside proceedings following an ITAT remand.

Judgments on Section 144C(1)

Income Tax Officer, Mumbai vs. Bhagwandas Bherumal Adani, Mumbai

In the result, the appeal of the revenue is dismissed, and the cross-

ITA 5026/MUM/2024[2016-17]Status: DisposedITAT Mumbai13 May 2025AY 2016-17

Bench: Shri Sandeep Gosain & Smt. Renu Jauhriआयकर अपील सं./Ita No. 5026/Mum/2024 (निर्धारण वर्ष / Assessment Year :2016-17) Ito Room No. 522A, Kautilya Bhawan, Bkc, Bandra, Maharashtra-400051 V/S. बनाम Bhagwandas Bherumal Adani Flat No. 63, 6Th Floor, Seva View Bldg., Juhu Tara Road, Juhu, Maharashtra- 400054 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Akupa3831H Appellant/अपीलार्थी .. Respondent/प्रतिवादी प्रति आपत्ति सं./ Co No. 273/Mum/2024 (Arising Out Of Ita No. 5026/Mum/2024) (निर्धारण वर्ष / Assessment Year :2016-17) Bhagwandas Bherumal Adani B-302, Sabita Building, 16Th Road, Bandra West, Maharashtra-400050 V/S. बनाम Ito-1.1.1, Mumbai Room No. 522A, Kautilya Bhawan, Bkc, Bandra, Maharashtra-400051 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Akupa3831H Appellant/अपीलार्थी .. Respondent/प्रतिवादी निर्धारिती की ओर से / Assessee By: Shri Subhash Bains राजस्व की ओर से /Revenue By: Shri Leyaqat Ali Aafaqui सुनवाई की तारीख / Date Of Hearing 18.03.2025 घोषणा की तारीख/Date Of Pronouncement 13.05.2025 Page 2

For Appellant: Shri Subhash BainsFor Respondent: Shri Leyaqat Ali Aafaqui
Section 250Section 69

Janardhan Kapur, Haryana vs. ITO, Ward 29(1), Delhi

The appeal of the assessee is allowed

ITA 4754/DEL/2024[2019-20]Status: DisposedITAT Delhi09 May 2025AY 2019-20

Bench: Shri S. Rifaur Rahman & Shri Anubhav Sharmaassessment Year: 2019-20 Janardhan Kapur, Vs Ito, C/O Sanjiv Sapra & Associates Llp, Ward-29(1), Chartered Accountants, Delhi. C-763, New Friends Colony, New Delhi – 110 025. Pan: Aojpk8128G (Appellant) (Respondent) Assessee By : Shri Sanjiv Sapra, Fca Revenue By : Shri Om Parkash, Sr. Dr Date Of Hearing : 28.04.2025 Date Of Pronouncement : 09.05.2025 Order Per Anubhav Sharma, Jm: This Appeal Is Preferred By The Assessee Against The Order Dated 13.09.2024 Of The Commissioner Of Income-Tax (Appeals), Nfac, Delhi (Hereinafter Referred To As The Ld. First Appellate Authority Or ‘The Ld. Faa’, For Short) In Appeal No.Nfac/2018-19/10092978 Arising Out Of The Appeal Before It Against The Order Dated 23.09.2021 Passed U/S 143(3) R.W.S. 144B Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) By The Assessment Unit, Income-Tax Department (Hereinafter Referred To As The Ld. Ao). 2. On Hearing Both The Sides, We Find That Amongst Other Grounds On Merits The Assessee Has Raised Ground No.2. This Ground Was Not Raised Before The Cit(A). However, Before Us, A Separate Application Is Moved Requesting To Raise This As An Additional Ground. Considering That The Ground No. 2 Questions The Assumption Of Jurisdiction To Pass Final Assessment Order & Can Be Decided On The Basis Of Admitted Facts, The Same Is Admitted. 3. The Ground No.2 As Raised Is Reproduced Below:- “That The Order Passed By The Assessing Officer (Ao) Under Section 143(3)/144B Of The Income-Tax Act, 1961 (Act) Was Without Jurisdiction, Null & Void Since No Prior Draft Assessment Order As Required Under Section 144C(1) Was Passed & Provided To The Appellant Being A Non- Resident & “Eligible Assessee” As Per Section 144C(15)(B)(Ii) Of The Act.”

For Appellant: Shri Sanjiv Sapra, FCAFor Respondent: Shri Om Parkash, Sr. DR
Section 143(3)Section 144CSection 144C(1)Section 144C(15)(b)

M/S. Philips Electronics Nederland B.V., Kolkata vs. A.C.I.T.(International Taxation), Circle - 2(1), Kolkata

In the result, appeal of the assessee is allowed

ITA 134/KOL/2023[2020-2021]Status: DisposedITAT Kolkata30 Apr 2025AY 2020-2021

Bench: Shri Rajesh Kumar & Shri Sonjoy Sarmaआयकर अपील सं/Ita No.134/Kol/2023 (नििाारण वर्ा / Assessment Year : 2020-2021) M/S Philips Electronics Vs Acit(International Taxation), Nederland B.V. Circle-2(1), Kolkata C/O Deloitte Haskins & Sells Llp Bengal Intelligent Park, Building Omega, 13Th& 14Th Floor, Block- Ep & Gp, Sector-V, Salt Lake Electronic Complex, Kolkata- 700091 Pan No. :Aafcp4361F (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररतीकीओरसे /Assessee By : Shri Ketan Ved, Ar राजस्वकीओरसे /Revenue By : Shri Guru Bhashyam, Cit-Dr सुनवाई की तारीख / Date Of Hearing : 06/02/2025 घोषणा की तारीख/Date Of Pronouncement : 30/04/2025 आदेश / O R D E R Per Rajesh Kumar, Am: This Is An Appeal Filed By The Assessee Against The Order Dated 31.12.2022, Passed By The Acit, Circle-2(1), It, Kolkata Giving Effect To The Direction Given By The Dispute Resolution Panel-2, New Delhi(In Short The ‘Drp’), Dated 04.11.2022, Thereby Finalizing The Assessment Order In Accordance With The Provisions Of Section 144C(13) R.W.S. 143(3) Of The Act. 2. At The Outset, Ld. Ar Drew Our Attention To The Additional Ground Filed By The Assessee & Submitted That The Appeal Of The Assessee May Be Decided On The Following Additional Grounds Taken By The Assessee :-

For Appellant: Shri Ketan Ved, ARFor Respondent: Shri Guru Bhashyam, CIT-DR
Section 142(1)Section 143(2)Section 143(3)Section 144CSection 144C(13)Section 156Section 90(2)
Section 144C(1) Income Tax Act (2025: s.275) — Case Laws | BharatTax