MARRIOTT INTERNATIONAL INC., MUMBAI V. DCIT (INTERNATIONALTAX) 3(2) (1), MUMBAI

MA 528/MUM/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 3539 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 14-12-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 29-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KUMAR AMBASTHA
• Section: 143(3); 13; 144C

Judgement Text

आयकर अपीलीय अिधकरण मुंबई पीठ “आई ”,मुंबई 炈ी िवकास अव瀡थी, 瀈याियक सद瀡य एवं 炈ी गगन गोयल, लेखाकार सद瀡यके सम楹 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “I”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI GAGAN GOYAL, ACCOUNTANT MEMBER MA. NO.528/MUM/2023 (Arising out of ITA NO.1830/MUM/2021(A.Y.2010-11) Marriott International Inc. C/o.Marriott Hotels India Pvt. Ltd. 303A, 304, Fulcrum, B-Wing, Hiranandani Business Park, Sahar Road, Andheri (E), Mumbai 400 099 PAN: AAECM-8040-K ........ 灹ाथ牸/Applicant बनाम Vs. Deputy Commissioner of Income Tax (International Tax)-3(2)(1) Mumbai, 16 TH Floor, Air India Building, Nariman Point, Mumbai 400 038 ...... 灹ितवादी/Respondent 灹ाथ牸 獧ारा/ Applicant by : Shri Paras Savla 灹ितवादी 獧ारा/Respondent by : Shri Ashok Kumar Ambastha सुनवाई क琉 ितिथ/ Date of hearing : 15/12/2024 घोषणा क琉 ितिथ/ Date of pronouncement : 11/03/2024 आदेश/ORDER PER VIKAS AWASTHY, JM: This Miscellaneous Application has been filed by the assessee u/s. 254(2) of the Income Tax Act, 1961 [ in short ‘the Act’], seeking rectification in the order of Tribunal dated 20/02/2023 vide which appeal of the assessee in ITA No.1830/Mum/2021, for Assessment Year 2010-11 was decided. 2. Shri Paras Savla appearing on behalf of the assessee submits that the Tribunal vide order dated 20/02/2023 has allowed the appeal of assessee on legal issue. However, while adjudicating the appeal, the Tribunal has 2 MA. NO.528/MUM/2023 (Arising out of ITA NO.1830/MUM/2021(A.Y.2010-11) inadvertently recorded that the assessment order dated 29/12/2016 was passed to give effect to the order of Tribunal. In fact the assessment order was passed to give effect to the order of CIT(A) dated 30/11/2015. He pointed that the mistake in mentioning “Tribunal” instead of “CIT(A)” is in para -8, para- 11 and para- 13 of the Tribunal order dated 20/02/2023. He further pointed that in para-13 of the said order, excerpts from the Tribunal order dated 09/03/2018 have been reproduced.. The said Tribunal order is subsequent to the assessment order dated 29/12/2016. 3. Shri Ashok Kumar Ambastha representing the Department fairly stated that there is mistake in the order of Tribunal dated 20/02/2023 in referring the order of ‘CIT(A)’ as order of “the Tribunal”. 4. Both sides heard. After examining facts we find that there were multiple round of litigations for the same as Assessment Year in assessee’s case. While adjudicating the appeal, inadvertently in para-8,para-11 and para-13 of the order dated 20/02/2023, a reference was made to the Tribunal order instead of order of CIT(A). The mistake is apparent on record, that needs to be rectified. The para-8, para-11 and para-13 of the said order after necessary correction reads as under: “8. Controverting the submissions made on behalf of the Department, the learned AR submits that even if the assessment order was passed to give effect to the order of CIT(A), the AO was required to pass the draft assessment order. In support of his submissions, the learned AR placed reliance on the following decisions: 1) Dimension Data Asia Pacific PTE Ltd. Vs. DCIT, 96 taxmann.com 182 (Bom); 2) Exxon Mobil Company (P.) Ltd. Vs. DCIT, 138 taxmann.com 539 (Bom); 3 MA. NO.528/MUM/2023 (Arising out of ITA NO.1830/MUM/2021(A.Y.2010-11) 3) Turner International India (P.) Ltd. Vs. DCIT, 398 ITR 177 (Delhi). 11. In the instant case, the Revenue has pointed that the assessment order dated 29/12/2016 was passed to give effect to the directions of the CIT(A), hence, there was no requirement to pass the draft assessment order. It is evident from Para-7 of the assessment order dated 29/12/2016 that the assessment order is passed consequent to the directions of the CIT(A). The learned AR of the assessee has placed reliance on the decision of Hon’ble Bombay High Court in the case of Dimension Data Asia Pacific PTE Ltd. Vs. DCIT (supra). In the said case, the petitioner a foreign company challenged the validity of the assessment order as the final assessment order was passed without passing the draft assessment order. The said assessment order was also passed consequent to the directions of the Tribunal. The Department had raised similar objections as was raised by the DR in the present case. The Hon’ble High Court rejected the contentions of the Revenue and held that the draft assessment order has mandatorily to be passed u/s 144C of the Act, even in remand proceedings. The relevant findings of the Hon’ble Court are extracted herein below: “8. The contention of the Revenue that the requirement of passing a draft Assessment Order under Section 144C of the Act would only extend to the orders passed in the first round of proceedings or in respect of an order passed by the Assessing Officer in remand proceedings by the Tribunal which has entirely set aside the original assessment order. This distinction which is sought to be drawn by the Revenue is not borne out by Section 144C of the Act. Infact, the Delhi High Court in JCB (India) Ltd. (supra) held that, even in partial remand proceedings from the Tribunal, the Assessing Officer is obliged to pass a draft assessment order under Section 144C(1) of the Act. According to us, the Assessing Officer, is obliged to, in terms of Section 144C of the Act to pass a Draft Assessment Order in all cases where he proposes to assess the Foreign Company under the Act by making a variation in the returned income. In this case, the impugned order dated 31st January, 2018 has been passed in terms of Section 143(3) read with Section 144C read with Section 254 of the Act and it certainly makes a variation to the returned income filed by the petitioner. This even if, one proceeds on the basis that the returned income stands varied by the order of the Tribunal in the first round, to the extent the petitioner accepts it. Therefore, the Assessing Officer correctly invokes Section 144C of the Act in the impugned order. Once having invoked Section 144C of the Act, the 4 MA. NO.528/MUM/2023 (Arising out of ITA NO.1830/MUM/2021(A.Y.2010-11) Assessing Officer is obliged to comply with it in full and not partly. This impugned order was passed consequent to the order of the Tribunal dated 5th May, 2017 restoring some of the issues before it to the Assessing Officer for fresh adjudication. 9. This "fresh adjudication" itself would imply that it would be an order which would decide the lis between the parties, may not be entire lis, but the dispute which has been restored to the Assessing Officer. According to us, the order dated 31st January, 2018 is not an order merely giving an effect to the order of the Tribunal, but it is an assessment order which has invoked Section 143(3) of the Act and also Section 144C of the Act. This invocation of Section 144C of the Act has taken place as the Assessing Officer is of the view that it applies, then the requirement of Section 144C(1) of the Act has to be complied with before he can pass the impugned order invoking Section 144C(13) of the Act. In fact, Section 144C(13) of the Act can only be invoked in cases where the assessee has approached the DRP in terms of sub-Section 144(C)(2)(b) of the Act and the DRP gives direction in terms of Section 144C(5) of the Act. In this case, the assessment order has invoked Section 144C(13) of the Act without having passed the necessary draft Assessment Order under Section 144C(1) of the Act, which alone would make an direction under Section 144C(5) of the Act by the DRP possible. Thus, the impugned order is completely without jurisdiction. 10. Moreover, so far as a Foreign Company is concerned, the Parliament has provided a special procedure for its assessment and appeal in cases where the Assessing Officer does not accept the returned income. In this case, in the working out of the order dated 5th May, 2017 of the Tribunal results in the returned income being varied, then the procedure of passing a draft assessment order under Section 144C(1) of the Act is mandatory and has to be complied with, which has not been done. 11. In the above view, the impugned order is without jurisdiction. Thus, the plea of alternate remedy advanced by the Revenue so as to not entertain this petition, does not merit acceptance in the present facts.” (Emphasized by us) 13. In the instant case, the CIT(A) vide order dated 30/11/2015 restored the issue back to AO with following directions: “5. I have considered the order of my predecessor for the earlier assessment years as well as the order of I.T.A.T. It is seen that issues viz. Royalty under International Sales and Marketing agreement (ISMA), Royalty under International Sales Marketing Fees or ISMF and FIS under reimbursement of expenses have been dealt by the Hon’ble ITAT elaborately in its order in assessee’s own case and restored the matter to the A.O to decide them afresh. In view of the above, the A.O is directed to 5 MA. NO.528/MUM/2023 (Arising out of ITA NO.1830/MUM/2021(A.Y.2010-11) follow the direction of the I.T.A.T on these issues. Accordingly, Ground Nos. A to G are partly allowed”. Thus, the AO was required to adjudicate the issue of amount received under International Sales and Marketing Agreement afresh in line with the directions of the CIT(A) It was incumbent upon the AO to follow the procedure laid down u/s 144C of the Act, i.e. to first pass the draft assessment order. In the facts of the case and the decisions referred above, we hold that assessment order dated 29/12/2016 passed by AO without passing draft assessment order is invalid and unsustainable, ergo, the same is liable to be quashed. We hold and direct accordingly.” 5. With aforesaid corrections in the order, there would be no change in the outcome of appeal. 6. In the result, Miscellaneous Application of the assessee is allowed. Order pronounced in the open court on Monday the 11 th day of March , 2024. Sd/- Sd/- (GAGAN GOYAL) (VIKAS AWASTHY) लेखाकार सद瀡य/ACCOUNTANT MEMBER 瀈याियक सद瀡य/JUDICIAL MEMBER मुंबई/ Mumbai, 琈दनांक/Dated 11/03/2024 Vm, Sr. PS(O/S) 灹ितिलिप 灹ितिलिप 灹ितिलिप 灹ितिलिप अ灡ेिषत अ灡ेिषतअ灡ेिषत अ灡ेिषतCopy of the Order forwarded to : 1. अपीलाथ牸/The Appellant , 2. 灹ितवादी/ The Respondent. 3. The PCIT 4. िवभागीय 灹ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 5. गाड榁 फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt.Registrar) ,Mumbai