Schlumberger Solutions Pvt. Ltd. as agent of Logined BV, Gurgaon V. DDIT, Dehradun

ITA 2875/DEL/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3920 (ITAT-DEHRADUN)
• Duration Of Justice: 5 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: THAKUR SINGH MAPWAL
• Assessee Lawyers: SANJAY SHUKLA
• Keywords: Business income; Transfer pricing; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Permanent establishment; Initiation of penalty proceedings; Set aside
• Section: 271(1)(c); 143(3); 250; 201; 144C; 274; 113; 44DA; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL DEHRADUN CIRCUIT BENCH: DEHRADUN BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.2875/DEL/2016 (ASSESSMENT YEAR 2008-09) SCHLUMBERGER SOLUTIONS PRIVATE LIMITED AS AGENT OF LOGINED BV 14 TH FLOOR, TOWER C, BUILDING NO.10 DLF CYBER CITY, PHASE-II, GURGAON-122002 PAN AAICS 0296H VS. DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) DEHRADUN. (APPELLANT) (RESPONDENT) APPELLANT BY SH. SANJAY SHUKLA, CA RESPONDENT BY SH. THAKUR SINGH MAPWAL, JCIT DATE OF HEARING 05.03.2021 DATE OF PRONOUNCEMENT 31.05.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10/03/2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX 2 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT (APPEALS) 2, NOIDA {CIT (A)} RAISING THE FOLLOWING GROUNDS OF APPEALS: BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, SCHLUMBERGER SOLUTIONS PRIVATE LIMITED AS AGENT OF LOGINED BV (HEREINAFTER REFERRED TO AS THE ' APPELLANT') CRAVES LEAVE TO PREFER AN APPEAL AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)- 2, NOIDA [HER EINAFTER REFERRED TO AS THE 'LEARNED CIT (A)'] , UNDER SECTION 250 OF THE INCOME-TAX ACT , 1961 [HEREINAFTER REFERRED TO AS THE 'ACT'] ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN UPHOLDING THE IMPUGNED ASSESSMENT ORDER PASSED BY THE DEPUTY DIRECTOR OF INCOME-TAX, INTERNATIONAL TAXATION, DEHRADUN (HE REINAFTER REFERRED TO AS THE LEARNED 'AO ' ) WHICH IS ARBITRARY AND WITHOUT ANY BASIS AND THUS, IS BAD IN LAW . CONSTITUTION OF PERMANENT ESTABLISHMENT ('PE') IN I NDIA:- 2 . THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UP HOLDING THAT LOGINED BV CONSTITUTED A PE IN INDIA. 3. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING THE LEARNED AO ' S FINDING THAT SCHLUMBERGER SOLUTIONS PRIVATE LIMITED (HEREINAFTER REFERRED TO AS 'SSPL') CONSTIT UTED A DEPENDENT AGENT PE OF LOGINED BV UNDER ARTICLE 5 OF THE 3 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION (HEREINA FTER REFERRED TO AS THE 'AADT') BETWEEN INDIA AND THE NE THERLANDS . WHILE DOING SO, THE CIT (A) HAS , INTER-ALIA, ERRED IN 3.1. OBSERVING THAT SSPL HAS LEGAL AND ECONOMIC DEP ENDENCE ON LOGINED BV . 3.2 . NOT APPRECIATING THAT SSPL IS A SEPARATE LEGAL ENTI TY INCORPORATED UNDER THE INDIAN COMPANIES ACT, 1956, CONDUCTING ITS OWN BUSINESS AND BEARING ALL RISKS A ND REWARDS OF INDIA BUSINESS AND THAT IT WAS NOT A DEPENDENT A GENT OF THE LOGINED BV. 3.3 . UPHOLDING THAT THE LOGINED BV WAS RENDERING SERVICE S THROUGH A PE SITUATED IN INDIA DESPITE THE FACT THA T NO SUCH ALLEGED SERVICES WERE RENDERED IN INDIA. INCOME CONSIDERED AS ROYALTY/ FEES FOR TECHNICAL SE RVICES:- 4 . THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UP HOLDING THAT THE INCOME OF THE APPELLANT WAS IN THE NATURE OF ROYALTY AS DEFINED IN ARTICLE 9(1 )(VI) OF THE ACT AS WELL AS UNDER ARTICLE 12 OF THE AADT BETWEEN INDIA AND THE NETHERLANDS. WHILE DOING SO, THE CIT (A) HAS ERRED IN UPHOLDING THE LEARNED AO'S FINDING THAT THE RETROSPECTIVE AMENDMENT TO THE SECTION 9(1 )(VI) OF THE ACT WOULD BE APPLICABLE IN THE CASE OF THE APPELLAN T. 5. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE INCOME OF THE APPELLANT WAS ALSO IN THE NATURE OF FEES FOR 4 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT TECHNICAL SERVICES AS DEFINED IN ARTICLE 9(1)(VII). WHILE DOING SO, THE CIT (A) HAS ERRED IN IGNORING THE DIRECTIONS OF DISPUTE RESOLUTION PANEL ('DRP') GIVEN VIDE ORDER DATED 30 SEPTEMBER 2011 WHEREIN IT WAS HELD THAT THE INCOME OF THE APP ELLANT IS NOT TO BE TAXED AS FEES FOR TECHNICAL SERVICES. APPLICABILITY OF SECTION 44DA OF THE ACT:- 6 . THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UP HOLDING THAT THE INCOME OF THE APPELLANT WAS TO BE DETERMIN ED UNDER SECTION 44DA OF THE ACT. FURTHER, THE LEARNED CIT ( A) ERRED IN NOT APPRECIATING THAT THE APPELLANT IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS TO DETERMINE PROFITS CHARGEABLE U NDER SECTION 44DA OF THE ACT AS THE LOGINED BV DOES NOT HAVE A P E IN INDIA . ATTRIBUTION OF INCOME IN INDIA:- 7. WITHOUT PREJUDICE TO THE GROUND THAT THE LOGINED BV DOES NOT HAVE A PE IN INDIA, THE LEARNED CIT (A) ERRED ON FA CTS AND IN LAW IN UPHOLDING THE ACTION OF THE AO- 7 .1. IN REJECTING THE CLAIM OF THE APPELLANT THAT IN THE EVENT THE INCOME OF APPELLANT WAS TO BE ATTRIBUTED TO AN ALLE GED PE IN INDIA, SUCH ATTRIBUTION COULD BE DONE ONLY ON THE B ASIS OF A MARGIN ANALYSIS OF COMPARABLE COMPANIES ENGAGED IN SIMILAR BUSINESS AND NOT ON AN ARBITRARY OR AD HOC MANNER; AND 5 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT 7.2. IN ADOPTING AN AD HOC PROFIT MARGIN OF 25 PER CENT FOR WHICH NO BASIS, REASONING OR JUSTIFICATION HAS BEEN GIVEN. WHILE ADJUDICATING THE GROUND, THE LEARNED CIT(A) O UGHT TO HAVE HELD THAT EVEN IF THE PROFITS OF THE APPELLANT ARE TO BE ESTIMATED, THE SAME MUST HAVE BEEN DONE WITH DUE CA RE CONSIDERING THE ISSUES INVOLVED. 8. WITHOUT PREJUDICE TO THE GROUND THAT THE APPELLA NT DOES NOT HAVE A PE IN INDIA, THE LEARNED CIT (A) ERRED ON FA CTS AND IN LAW IN NOT APPRECIATING THAT EVEN IF INCOME WAS TO BE ATTRIBUTED TO THE ALLEGED PE IN INDIA, THE PROFIT MARGIN FOR T HIS PURPOSE COULD NOT HAVE EXCEEDED 7.56 PERCENT. 9 . THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN NOT QUASHING THE OBSERVATION OF THE AO THAT THE APPELLANT WAS RE QUIRED TO COMPLY WITH THE INDIAN TRANSFER PRICING REGULATIONS . THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE INCOME OF THE APPELLANT WAS NOT TAXABLE IN INDIA AN D AS SUCH, THERE EXISTED NO REQUIREMENT FOR THE APPELLANT TO C OMPLY WITH INDIAN TRANSFER PRICING REGULATIONS. INITIATION OF PENALTY PROCEEDINGS UNDER THE ACT:- 10. THE LEARNED CIT (A) ERRED IN NOT QUASHING THE P ENALTY PROCEEDINGS INITIATED AGAINST THE APPELLANT UNDER S ECTION 271 BA OF THE ACT. 6 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT 11. THE LEARNED CIT (A) ERRED IN NOT QUASHING THE P ENALTY PROCEEDINGS INITIATED AGAINST THE APPELLANT UNDER S ECTION 271 G OF THE ACT. 12. THE LEARNED CIT (A) ERRED IN NOT QUASHING THE P ENALTY PROCEEDINGS INITIATED AGAINST THE APPELLANT UNDER S ECTION 271 (1)(C) OF THE ACT. 13. THE LEARNED CIT (A) ERRED IN NOT QUASHING THE P ENALTY PROCEEDINGS INITIATED AGAINST THE APPELLANT UNDER S ECTION 271 B OF THE ACT. THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT AND WIT HOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD/ ALTER/ AMEND/ DE LETE/ WITHDRAW ANY OR ALL OF THE GROUNDS AT OR BEFORE OR DURING THE HEARING OF THE APPEAL, SO AS TO ENABLE THE BENCH TO DECIDE THIS APPEAL ACCORDING TO THE LAW AND AS PER THE FACTS SU BMITTED FOR THE AY 2008-09. 1.1 FURTHER, THE ASSESSEE VIDE ITS APPLI CATION DATED 21- 06-2019, HAS FILED ADDITIONAL GROUNDS OF APPEAL. TH E RELEVANT EXTRACT OF THE APPLICATION IS AS UNDER: IN THIS CONNECTION, WE WISH TO RAISE THE FOLLOWING SPECIFIC ADDITIONAL GROUNDS OF APPEAL, WHICH ARE PURELY LEGA L IN NATURE AND BASED ON THE FACTS WHICH ARE ALREADY ON RECORD. THEREFORE, 7 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT IN THE INTEREST OF OF NATURAL JUSTICE, THE ASSESSEE MAY KINDLY BE ALLOWED TO RAISE THE FOLLOWING ADDITIONAL GROUNDS O F APPEAL:- ADDITIONAL GROUNDS OF APPEAL GROUND 14: THAT THE AO ERRED IN NOT PASSING A DRAFT ASSESSMENT ORDER, WHICH IS MANDATORY REQUIREMENT AS PER SECTION 144C(1). HENCE, THE ORDER PASSED BY THE AO DATED 28 MARCH 2014 IS ILLEGAL, BAD IN LAW AND WITHOUT JURIS DICTION. GROUND 15: THAT NOT FOLLOWING THE MANDATORY PROCED URE VIOLATES THE ENTIRE PROCEEDINGS AND RENDERS THE ORD ER DATED 28 MARCH 2014 ILLEGAL AND VOID AB-INITIO. THE RELEVANT FACTS ARE ALREADY ON RECORD AND NO NEW FACT IS REQUIRED TO BE INVESTIGATED. THE ABOVE NOTED GROUND GOES TO THE ROOT OF THE MATTER. IT IS THEREFORE HUMBLY REQUESTE D THAT THE SAME MAY KINDLY BE ADMITTED AND ADJUDICATED. RELIAN CE IS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE NTPC 229 ITR 383 (SC). 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE I.E. M/S SCHLUMBERGER SOLUTIONS PVT. LTD. (IN SHORT SSPL) FILED ITS RETURN OF INCOME AS AGENT OF M/S LOGINED B.V., NETH ERLANDS (IN 8 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT SHORT LBV) DECLARING NIL INCOME. SSPL IS DERIVING INCOME FROM SALE OF SOFTWARE PURCHASED FROM LBV. ON THE PAYMENTS MADE BY SSPL TO LBV, WITHHOLDING TAX WAS DEDUCTED. THE INCOME TAX RET URN WAS FILED BY SSPL AS AN AGENT OF LBV ONLY FOR CLAIMING THE RE FUND OF TAX WITHHELD BY SSPL BECAUSE LBV DID NOT HAVE ANY TAXABL E INCOME IN INDIA. THE ASSESSING OFFICER (AO), IN THE DRAFT ASS ESSMENT ORDER DATED 30 TH DECEMBER 2010, TREATED THE ENTIRE RECEIPT FROM SALE OF SOFTWARE AMOUNTING TO RS. 13.80 CRORES AS FEES FOR T ECHNICAL SERVICES. ON APPEAL BY THE ASSESSEE, THE LD. DISPUT ES RESOLUTION PANEL (DRP) AGREED WITH THE ASSESSEE THAT IT IS NOT FEES FOR TECHNICAL SERVICES. HOWEVER, THE LD. DRP FURTHER AR RIVED AT THE CONCLUSION THAT SSPL IS A DEPENDENT AGENT AND, THER EFORE, THE ENTIRE RECEIPT IS TAXABLE IN INDIA NOT AS FEES FOR TECHNICAL SERVICES BUT AS BUSINESS INCOME. IN THE FINAL ASSESSMENT ORD ER, THE ASSESSING OFFICER TREATED THE ENTIRE RECEIPT FROM S ALE OF SOFTWARE AS BUSINESS INCOME OF LBV. 2.1 DURING THE FIRST ROUND BEFORE THE ITAT, IT WAS ARGUED BY THE ASSESSEE: 9 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT (I) THAT ISSUE BEFORE THE LD. DRP WAS WHETHER THE RECEIPT FROM SALE OF SOFTWARE CAN BE TREATED AS FEES FOR TEC HNICAL SERVICES OR NOT. HOWEVER, THE LD. DRP HAD TRAVELLED TO THE ISSUE WHICH WAS NOT BEFORE IT AND HELD SSPL TO BE DEPENDENT AGENT OF LBV. THAT WHILE DOING SO, THE ASSESSEE WAS NOT ALLOWED ANY OPPORTUNITY OF BEING HE ARD AND THAT THE ORDER OF THE LD. DRP WAS VERY CRYPTIC. (II) THAT THE LD. DRP HAD EXCEEDED ITS JURISDICTION BECA USE THE JURISDICTION OF THE LD. DRP UNDER SECTION 144C OF THE INCOME TAX ACT, 1961 IS LIMITED TO CONFIRM, REDUCE OR ENHANCE THE VARIATION PROPOSED IN THE DRAFT ORDER A ND THAT THE LD. DRP IS NOT ENTITLED TO MAKE OUT ENTIRE LY A NEW CASE WHICH WAS NOT THE CASE OF THE ASSESSING OFFI CER IN THE DRAFT ASSESSMENT ORDER. (III) THAT EVEN AS PER THE DIRECTION OF THE LD. DRP, THE RECEIPT WAS TO BE TREATED AS BUSINESS INCOME. 2.2 AFTER CONSIDERING THE ARGUMENTS OF BOTH THE PARTIES, THE ITAT VIDE ITS ORDER DATED 12-10-2012, REMANDED BACK THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICAT ION. RELEVANT EXTRACT OF THE PRONOUNCEMENT IS AS UNDER: 6. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SID ES AND THE FACTS OF THE CASE, IN OUR OPINION, IT WOULD MEET TH E ENDS OF 10 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT JUSTICE IF THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. WE ORDER ACCORDINGLY AND DIRECT THE ASSESSING OFFICER TO ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND, THEREAFTER, READJUDICATE THE ISSUE IN ACCORDANCE WI TH LAW AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AS WELL AS T HE JUDICIAL PRONOUNCEMENTS AS MAY BE PRODUCED BY THE ASSESSEE B EFORE HIM. 2.3 THE AO, FOLLOWING THE DIRECTIONS OF THE ITAT , PROVIDED REASONABLE OPPORTUNITIES TO THE ASSESSEE T O JUSTIFY ITS CLAIM. HOWEVER, THE ASSESSING OFFICER, IN THE SECON D ROUND, WITHOUT PASSING A DRAFT ASSESSMENT ORDER, PASSED AN ASSESSM ENT ORDER DATED 28.03.2014 UNDER SECTION 143(3) READ WITH SECT ION 144C(13) READ WITH SECTION 254 OF THE INCOME TAX ACT, 1961 (H EREINAFTER CALLED THE ACT), MAKING THE ADDITION OF RS. 3,05, 99,274/-. 2.4 THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A) AGAINST THE SAID ORDER DATED 28.03.2014. TH E LD. CIT (A), VIDE ITS ORDER DATED 10.03.2016, CONFIRMED THE ADDI TION MADE BY THE AO AND BEING AGGRIEVED BY THE ORDER OF LD. CIT (A), THE ASSESSEE HAS FILED THE PRESENT APPEAL. 11 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT 3.0 AT THE OUTSET, THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE ARGUED THAT THE ASSESSMENT O RDER PASSED BY THE ASSESSING OFFICER IN REMAND PROCEEDINGS IS BAD IN LAW AND IS LIABLE TO BE QUASHED. THE LD. AR SUBMITTED THAT THE ASSESSMENT ORDER DATED 28-03-2014 WAS PASSED BY THE ASSESSING O FFICER ALONG WITH NOTICES UNDER SECTION 156 AND 274 READ WITH SECT ION 271(1)(C) OF THE ACT. THE ASSESSMENT ORDER, THUS, WAS PASSED I N VIOLATION OF SECTION 144C OF THE ACT IN AS MUCH AS THE AO HAS PA SSED THE FINAL ASSESSMENT ORDER INSTEAD OF A DRAFT ASSESSMENT ORDE R. THIS IS AGAINST THE SCHEME ENVISAGED IN THE SAID SECTION 14 4C OF THE ACT AND IS, THEREFORE, BAD IN LAW AND VOID AB INITIO . THE LD. AR RELIED ON THE DECISION OF THE ITAT IN THE CASE OF NIKON INDIA PVT. LTD. VS. DCIT IN ITA NO. 8752/DEL/2019 (DATE OF PRONOUNCEMENT 27-05-2020) WHEREIN ON THE SIMILAR FACTS THE ITAT HAD QUASHED TH E ASSESSMENT ORDER PASSED BY THE AO. RELEVANT EXTRACT OF THE ORD ER OF ITAT ARE AS UNDER: 7. AS REGARDS TO GROUND NO. 1, THE LD. AR SUBMITTE D THAT THE SAME IS GENERAL IN NATURE. AS REGARDS TO GROUND NOS . 2 AND 2.1, THE LD. AR SUBMITTED THAT THE ASSESSMENT ORDER PASS ED BY THE 12 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT ASSESSING OFFICER IN REMAND PROCEEDINGS IS BAD IN L AW AND LIABLE TO BE QUASHED. THE LD. AR SUBMITTED THAT THE ASSESSMENT ORDER DATED 18.12.2018 WAS PASSED BY THE ASSESSING OFFICER ALONG WITH NOTICES UNDER SECTION 156 AND 274 READ W ITH SECTION 271(1)(C) OF THE ACT. THE ASSESSMENT ORDER, THUS WA S PASSED IN VIOLATION OF SECTION 144C OF THE ACT IN AS MUCH AS THE AO HAS PASSED THE FINAL ASSESSMENT ORDER INSTEAD OF A DRAF T ASSESSMENT ORDER. THIS IS AGAINST THE SCHEME ENVISA GED IN THE SAID SECTION 144C OF THE ACT AND IS, THEREFORE, BAD IN LAW AND VOID-AB-INITIO. THE LD. AR RELIED UPON THE HONBLE MADRAS HIGH COURT DECISION IN CASE OF VIJAY TELEVISION (2014) 3 69 ITR 113 (MADRAS) WHEREIN IT IS HELD THAT NON-PASSING OF DRA FT ASSESSMENT ORDER AFTER ADJUSTMENT MADE BY THE TPO R ENDERS PROCEEDINGS NULL AND VOID. THIS HAS BEEN FOLLOWED B Y VARIOUS COORDINATE BENCHES OF THE TRIBUNAL INCLUDING THE DE LHI BENCH IN THE CASE OF ACIT VS. ORACLE INDIA PVT. LTD ITA NO. 6288/ DEL / 2013, WHICH HAS CLEARLY HELD THAT PASSING OF DRAFT ASSESSMENT ORDER IS COMPULSORY AND ISSUING OF DEMAND AND PENAL TY NOTICE ALONG WITH THE DRAFT ORDER MAKES IT A FINAL ASSESSM ENT ORDER, IN CONTRAVENTION OF THE PROVISIONS OF SECTION 144C OF THE ACT. THE BENCHES OF THE TRIBUNAL & THE HONBLE MADRAS HIGH C OURT, IN ALL THE AFORESAID DECISIONS HAS HELD THAT THE ASSESSING OFFICER IN ISSUING DEMAND AND PENALTY NOTICES ALONG WITH THE A SSESSMENT ORDER, EVEN THOUGH IT WAS FRAMED AS THE DRAFT ASSES SMENT 13 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT ORDER, IN EFFECT, HAS PASSED THE FINAL ASSESSMENT O RDER. IT HAS BEEN FURTHER OBSERVED THAT NOT ONLY THE INCOME WAS ASSESSED BUT THE DEMAND PAYABLE WAS ALSO DETERMINED, WHICH W AS AGAINST THE SCHEME ENVISAGED BY SECTION 144C OF THE ACT AND THEREFORE, BAD IN LAW AND VOID-AB-INITIO. IN FACT, THE HONBLE HIGH COURTS HAVE ALSO HELD THAT EVEN IN REMAND PROC EEDING A DRAFT ASSESSMENT ORDER HAS TO BE FIRST PASSED BEFOR E PASSING THE FINAL ASSESSMENT ORDER IN LIGHT WITH THE PROVIS IONS UNDER SECTION 144C(1) OF THE ACT. THE LD. AR ALSO POINTED OUT THE DECISION IN THE CASE OF JCB INDIA LTD VS. DCIT [201 7] 398 ITR 189 (DELHI) AND ALSO RELIED UPON THE DECISION OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT VS. LIONBR IDGE TECHNOLOGIES P. LTD.: [2019] 260 TAXMAN 273 (BOMBAY ) THE LD. AR RELIED UPON THE FOLLOWING DECISIONS WHEREIN PASS ING OF THE DRAFT ASSESSMENT ORDER IN THE SECOND ROUND OF PROCE EDINGS HAS BEEN HELD TO BE MANDATORY AND IF THE SAME HAS NOT B EEN DONE, THE ASSESSMENT FRAMED IS LIABLE TO BE QUASHED: NOKIA INDIA (P.) LTD. VS ADIT: WP(C) NO. 3629 OF 20 17 (DELHI), AND AFFIRMED BY HONBLE SUPREME COURT (SC ) IN ACIT VS NOKIA INDIA (P) LTD. [2018] 259 TAXMAN 91 ( SC) ZUARI CEMENT LTD. V. ACIT: WP(C) NO.5557/2012 (AP), DATED 21-2-2013 AND AFFIRMED BY THE HONBLE SC IN N O. 16694/2013, VIDE ORDER DATED 27TH SEPTEMBER 27, 201 3 14 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT INTERNATIONAL AIR TRANSPORT ASSOCIATION VS DCIT: [2 016] 290 CTR 46 (BOMBAY) PCIT VS ANDREW TELECOMMUNICATIONS (P.) LTD: ITA NO. 144 OF 2017 (BOMBAY) TURNER INTERNATIONAL INDIA (P.) LTD. V. DY. CIT [20 17] 398 ITR 177 (DELHI) CIT V. C-SAM (INDIA) (P.) LTD: [2017] 398 ITR 182 ( GUJARAT) ACIT VS VIJAY TELEVISION (P) LTD.: [2018] 407 ITR 6 42 (MADRAS) IN VIEW OF THE ABOVE, THE LD. AR SUBMITS THAT THE O RDER DATED 18.12.2018, PASSED BY THE ASSESSING OFFICER IGNORIN G THE STATUTORY PROVISIONS OF SECTION 144C OF THE ACT, DE SERVES TO BE QUASHED. 8. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND SUBMITTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS J UST AND VALID AS PER SECTION 144C OF THE INCOME TAX ACT, 1961. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS TO GROUND NO. 1, TH E SAME IS GENERAL IN NATURE HENCE DOES NOT REQUIRE ANY ADJUDI CATION. AS REGARDS TO GROUND NOS. 2 AND 2.1, IT IS PERTINENT T O NOTE THAT THE TRIBUNAL VIDE ORDER DATED 31.03.2017 REMANDED THE M ATTER BACK TO THE TPO/AO FOR FRESH DETERMINATION. THUS, A S PER SECTION 144C OF THE ACT, IT IS MANDATORY FOR THE AS SESSING 15 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT OFFICER TO PASS DRAFT ASSESSMENT ORDER. BUT INSTEAD OF THAT, THE ASSESSING OFFICER VIDE ORDER DATED 18.10.2019 MEREL Y CAPTIONED THE FINAL ASSESSMENT ORDER AS DRAFT ASSES SMENT ORDER ALONG WITH ISSUANCE OF NOTICES UNDER SECTION 156 AND 274 READ WITH SECTION 271(1)(C) OF THE ACT WHICH MEANS A FINAL ASSESSMENT ORDER U/S 144C WAS PASSED WITHOUT FOLLOW ING THE MANDATORY PROVISIONS OF SECTION 144C OF THE ACT. TH E LD. AR HAS RIGHTLY RELIED UPON THE DECISIONS OF THE HONBL E DELHI HIGH COURT IN CASES OF CONTROL RISKS INDIA (P) LTD. (SUP RA) AND NOKIA INDIA PVT. LTD. (SUPRA) WHEREIN THE SLP HAVE BEEN D ISMISSED BY THE HONBLE SUPREME COURT AND CONFIRMING THE HONBL E HIGH COURTS VIEW. THE LD. AR ALSO RELIED UPON THE HONB LE DELHI HIGH COURT DECISIONS IN CASES OF TURNER INTERNATION AL INDIA (SUPRA) AND JCB INDIA LTD. (SUPRA). ALL THESE DECIS IONS HIGHLIGHTED THAT FINAL ASSESSMENT ORDER PASSED IN R EMAND PROCEEDINGS WITHOUT PASSING A DRAFT ASSESSMENT ORDE R IS IN VIOLATION OF SECTION 144C OF THE ACT AND IS THEREFO RE NULL AND VOID. THE LD. DR COULD NOT BRING ANY CASE LAW ON CO NTRARY TO THESE DECISIONS. IN FACT, THE STATUTE ITSELF GIVES A MANDATORY DIRECTION TO THE ASSESSING OFFICER UNDER SECTION 14 4C THAT IN THE FIRST INSTANCE THE ASSESSING OFFICER SHOULD FORWARD THE DRAFT OF THE PROPOSED ORDER OF ASSESSMENT. WHEN THE TRIBUNAL REMANDED BACK THE MATTER FOR FRESH DETERMINATION, IT HAS SET ASIDE THE EARLIER ASSESSMENT AND HENCE THE ASSESSING OFFICER HAS TO 16 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT CONDUCT A FRESH ASSESSMENT AS PER THE MANDATE OF SE CTION 144C. THUS, THE ASSESSMENT ORDER ITSELF IS BAD IN L AW AND VOID AB INITIO, HENCE QUASHED. THEREFORE GROUND NO. 2 AN D 2.1 OF THE ASSESSEES APPEAL ARE ALLOWED. AS REGARDS TO GROUND NO. 3 TO 15, THE SAME ARE ON MERITS. SINCE THE ASSESSMENT OR DER ITSELF BECOMES NULL AND VOID, THE OTHER ISSUES DOES NOT SU RVIVE. HENCE, APPEAL BEING ITA NO. 8752/DEL/2019 FILED BY THE ASSESSEE IS ALLOWED. 10. AS REGARDS TO APPEAL BEING ITA NO. 8753/DEL/2019 FILED BY THE ASSESSEE FOR A.Y. 2015-1 6, THE ISSUES ARE IDENTICAL, HENCE GROUND NOS. 2 AND 2.1 T HEREIN ARE ALLOWED. HENCE, APPEAL BEING ITA NO. 8753/DEL/2019 FILED BY THE ASSESSEE IS ALLOWED. 4.0 ALTHOUGH THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (A), HE COULD NOT NEGATE THE BINDING PR ECEDENTIAL VALUE OF THE ORDER OF THE ITAT IN NIKON INDIA PVT. LTD. VS. DCIT IN ITA NO. 8752/DEL/2019. 5.0 HAVING HEARD BOTH THE PARTIES, IN VIEW OF TH E ORDER OF THE ITAT IN NIKON INDIA PVT. LTD. VS. DCIT IN ITA NO. 8752/DEL/2019 AND RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE ORDER DATED 28-03-2014 PASSED BY THE AO IGNORIN G THE STATUTORY PROVISIONS OF SECTION 144C OF THE ACT IS LIABLE TO BE QUASHED AND 17 ITA NO.2875/DEL/2016 SCHLUMBERGER SOLUTIONS PVT. LTD. AS AGENT OF LOGINED BV VS. DCIT HENCE WE REVERSE THE ORDER OF LD. CIT (A) AND ALLOW GROUNDS OF APPEAL NO. 14 AND 15 OF THE APPEAL OF THE ASSESSEE. 5.1 AS GROUNDS OF APPEAL NOS. 1 TO 13 ARE ON MER ITS OF THE CASE, IN VIEW OF OUR DECISION ON GROUND NOS. 14 AND 15 QUASHING THE ORDER OF THE AO, GROUNDS NOS. 1 TO 13 BECOME ACADEMIC AND ARE NOT REQUIRED TO BE ADJUDICATED. 6.0 13. IN THE FINAL RESULT, THE APPEAL OF THE AS SESSEE IS ALLOWED. ORDER PRONOUNCED ON 31/05/2021. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/05/2021 *DRAGON* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI (DEHRADUN CIRCUIT BENCH, DEHRADUN)