YOUNG BUHMWOO INDIA CO. P. LTD.,KANCHEEPURAM V. DCIT CORPORATE CIRCLE 3(2), CHENNAI

ITTPA 28/CHNY/2019

AI Insights

The case involves M/s. Young Buhmwoo India Co. P. Ltd, which appealed against the orders of the Deputy Commissioner of Income Tax, Corporate Circle-3(2), Chennai, concerning the assessment year 2012-2013. The primary contention was the legality of the Transfer Pricing Officer's (TPO) order and the subsequent assessment order, both of which were challenged on grounds of lack of jurisdiction and procedural improprieties. The Tribunal examined the powers of the DRP and the procedural adherence in passing the orders, ultimately finding that the DRP overstepped its jurisdiction by issuing directions post-assessment order, leading to the quashing of the orders.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472433 (ITAT-CHENNAI)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 24-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Other Referred Cases: National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383, Undercarriage and Tractor Parts (P.) Ltd. Vs. Dispute Resolution Panel [2023] 156 taxmann.com 79 (Bom.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. SASIKUMAR
• Assessee Lawyers: S. ANANDH
• Keywords: Set aside; Business income; Opportunity of being heard; Transfer pricing; International transaction; Depreciation; Period of limitation; Principle of natural justice; FORM 26AS
• Section: 143(3); 142(1); 250; 154; 263; 153; 13; 92CA; 153C; 144C; 264; 20

Judgement Text

" आयकर अपीलीय अिधकरण ‘डी’’ Ɋायपीठ चेɄई मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI माननीय ŵी मनोज क ुमार अŤवाल ,लेखा सद˟ एवं माननीय ŵी मनु क ुमार िगįर, Ɋाियक सद˟ क े समƗ। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER AND HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER आयकरअपील सं./ IT(TP)No.28/Chny/2019 (िनधाŊरणवषŊ / Assessment Year: 2012-2013) M.s. Young Buhmwoo India Co. P. Ltd, K5 Phase II, SIPCOT Industrial Park, Mambakkam Village, Sriperumbudur, Kancheepuram Dist. 631 560. [PAN: AAACY 2562N] Vs. The Deputy Commissioner of Income Tax, Corporate Circle 3(2) Chennai. (अपीलाथȸ/Appellant) (Ĥ×यथȸ/Respondent) अपीलाथȸ कȧ ओर से/ Appellant by : Shri. S. Anandh, Advocate Ĥ×यथȸ कȧ ओर से /Respondent by : Shri A. Sasi Kumar, CIT. सुनवाई कȧ तारȣख/Date of Hearing : 05.02.2025 घोषणा कȧ तारȣख /Date of Pronouncement : 24.02.2025 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member) This appeal by the assessee is arising out of the order of the Deputy Commissioner of Income Tax, Corporate Circle-3(2), Chennai passed u/s.143(3) r.w.s.144C(5) r.w.s 254 of the Income Tax Act, 1961 (in short ‘’the Act’) vide order dated 31.12.2018 for assessment year 2012-2013. 2 IT(TP)A No.28 /Chny/2019 2. Grounds of appeal filed by the assessee are as under: ‘’1. The Order of the Learned Deputy Commissioner of Income Tax is contrary to the law, facts and circumstances of the case and in any case violative of the principles of equity and natural justice. LEGAL GROUNDS 2. The transfer pricing officer has not passed a final order u/s.92CA(3). It is only based on such a final order, the assessing officer could have issued a draft assessment order u/s.144C(1). Since there is no final order u/s.92CA(3), the entire proceedings are void ab-initio. 3. In the absence of specific provisions for computing time limit available for passing a direction on remand to the DRP by the ITAT, the time limitation has to be computed by excluding the time between the date of receipt of objections by the DRP from the appellant (15/03/2016) and the date of receipt of the order of the Hon'ble Tribunal by the Principal Commissioner of Income Tax would be excluded. In such case, assuming the time limit starts from 01/06/2017, the time available to the DRP to pass directions u/s.144C(5) would end by the month of Feb 2018. Since, the DRP has not passed any order till the end of Feb 2018, the time limit for passing an assessment order u/s.144C(13) would end by March 2018. Therefore, the assessment order passed on 31/12/2018 is barred by limitation. And in the alternative, 4. The Dispute Resolution Panel, having taken a view that there is no provision under the Act whereby the Hon'ble ITAT could set aside an assessment order directly to the file of the DRP, erred in disposing of the objections raised against the draft assessment order dated 15/02/2016. 5. On determination of differential margin between the appellant and the comparable, the adjustment must be made only as a proportion of AE cost to total cost and the adjustment cannot be made to the total cost. FACTUAL GROUNDS 6. The TPO/DRP erred on facts and in law in treating depreciation as part of operational cost ignoring the basis of selection of Profit Level Indicator by the appellant. 7. The Transfer Pricing Officer/Dispute Resolution Panel erred on facts and in law in denying the adjustment in respect of additional cost of power incurred by the appellant. 8. The Transfer Pricing Officer/ Dispute Resolution Panel erred on facts and in law in denying the adjustment in respect of longer credit enjoyed by the appellant from its Associated enterprises. 3 IT(TP)A No.28 /Chny/2019 9. The Transfer Pricing Officer / Dispute Resolution Panel erred on facts and in law denying the risk related adjustments claimed by the appellant. 10. The Transfer Pricing Officer/Dispute Resolution Panel erred in not considering the benefit of +/-5 adjustments. 11. The Deputy Commissioner of Income Tax / Dispute Resolution Panel erred on facts and in disallowing unrealized forex fluctuation loss. 12. For these and such other grounds that may be raised at the time of hearing before this Hon’ble Tribunal’. 3. The assessee is a private limited company engaged in the business of manufactures of metal cutting, lubrication and rust preventing wax. The appellant filed its return of income for the assessment year 2012-13 on 26/11/2012 claiming carried forward of non speculative depreciation loss to the tune of Rs. 93,24,923/-. The Return of income was processed u/s.143(1) of the Act. The case was selected for scrutiny under CASS and notice u/s.143(2) of the Act was issued on 23/09/2013. Subsequently a notice u/s. 142(1) dated 02/07/2014 was issued calling for various details. The appellant's authorised representative furnished the details vide letter dated 10/09/2014. The appellant's case was referred to the Transfer pricing officer vide letter no. TPO/Co.Cir.3(2)/2014-15, dated 01/12/2014 for determination of arm's length price (ALP). The international transaction between the appellant and its associated enterprise in respect of import of raw materials and semi-finished products to the tune of Rs. 18.22 crores were the subject matter before the transfer pricing officer. It was pertinent to note that the value of these imports was also assessed by the deputy commissioner of customs, special valuation branch, Chennai vide order in original No. 1073/2010 dated 19/01/2010. This order was operative up to 18/01/2013. 4 IT(TP)A No.28 /Chny/2019 4. Before the transfer pricing officer, the appellant furnished the transfer pricing study wherein transaction net margin method was selected as the most appropriate method and two companies were selected as comparables. The transfer pricing officer did not dispute either the selection of most appropriate method or the selection of comparables. In the transfer pricing study, the profit level indicated was chosen as EBITDA + OR (Earnings before interest, tax, depreciation and amortisation + Operating revenue). The basis for excluding depreciation was that: a. the appellant had invested around Rs.1.2 crores in expansion of its operation by introduction of two products. b. the comparables follow straight line method whereas the appellant follows written down value method. c. The appellant is in 7th year of operations, whereas, the comparables are in their 20th & 26 year of operations. d. the appellant was using only 32% of its capacity. 5. The appellant made the following adjustments in terms of Rule 10B(2) of Income Tax Rules, 1962. Nature of adjustment Amount Rate in percentage Basis for adjustment Power adjustment related Rs. 4, 04, 904/to be added to appellant's operating profit The appellant is situated in an industrial area, wherein electricity supply from TNEB was not continuous. Therefore, company's operation relied largely on own diesel generators. This adjustment is towards the difference in cost of self- generated units and the probable cost of such units if the same were supplied by TNEB 5 IT(TP)A No.28 /Chny/2019 Adjustment towards longer credit period in respect of imports from appellants associated enterprise Rate of 2.05% to be added appellant's to operating profit ratio. Average credit period of the appellant is 135 days, Average credit period of the comparables is 55 days. Excess credit period enjoyed by the appellant is 80 days. If this excess credit period was not enjoyed by the appellant, the appellant would have borrowed funds to meet its working capital requirements and consequently incurred finance cost on such borrowings. Details working for the computation of the rate of adjustment was available in Annexure 1A to the transfer pricing study Risk related adjustments Rate of 5% to be deducted from comparable's operating profit ratio. The appellant was able to procure long term supply contract on account of the influence of the appellant's associated enterprise. The appellant did not have marketing risk as assumed by the comparables. The ratio of marketing cost to total sales would highlight this difference. The appellant has operated only around 32% of its capacity and the adjustment for this difference is subsumed in the risk adjustment sought for. 6. As per the ld. Authorizsed Representative in terms of section 92CA(3), the transfer pricing officer is required to pass order in writing. But in the instant case the Transfer pricing officer has passed only a draft order u/s. 92CA(3) on 14/01/2016. Final order u/s. 92CA(3) was never passed by the transfer pricing officer. In the draft order u/s. 92CA(3) dated 14/01/2016, the adjustments claimed by the appellant under rule 10B(2) were denied. Service income was not considered as operating revenue. Difference in margin between the appellant and comparable 6 IT(TP)A No.28 /Chny/2019 was computed at 20.36%. Adjustment was made on the proportion of association enterprise's cost to the total cost. Consequently, a downward adjustment of Rs.4,11,01,776/- to the cost of import purchases from appellant's associated enterprise was considered necessary by the transfer pricing officer. As per the ld. Authorized Representative, without waiting for the final order from the transfer pricing officer and based on the draft order passed by the transfer pricing officer, the assessing officer passed a draft assessment order dated 15/02/2016. In the order the assessing officer adopted the downward adjustment of Rs. 4,11,01,776/ to the cost of import purchases made from appellant's associated enterprise. Further, the assessing officer disallowed foreign fluctuation loss amounting to Rs. 55,13,210/- and added an amount of Rs. 34,62,069/-towards the difference in service income as reflected in form 26AS and as credited to profit and loss account. AR). The appellant filed its objection against the draft assessment order with Dispute Resolution Panel on 16/03/2016. The Dispute Resolution Panel vide its order dated 03/08/2016 directed the AO/TPO to do the following:- ‘’a) Include the Service Income of Rs.2,94,29,011/- in operating sales revenue of the assessee b) Work out the ALP cost for the total cost base of assessee and effect full downward adjustment rather than restricting the same proportionately to AE Cost only c) Provide an opportunity to the assessee to produce details and evidence in respect of the difference in service income between Form 26AS d) Allow an amount of Rs.51,00,940/- towards realised forex loss out of the total forex loss of Rs.55,13,210/- (In effect unrealised forex loss of Rs.4,12,270/- was disallowed)’. 7 IT(TP)A No.28 /Chny/2019 7. The transfer pricing officer passed an order dated 24/08/2016 giving effect to the order of the Dispute Resolution Panel. In the order dated 24/08/2016, the transfer pricing officer computed the adjustment on proportion of AE Cost to Total Cost. The assessing officer passed an order u/s.143(3) r.w.s 144C(5) dated 27/09/2016 making a downward adjustment of Rs.2,47,40,797/- to the cost of import purchases from appellant's associated enterprise and disallowing unrealised forex fluctuation amounted Rs.4,12,270/-. Total income of the appellant was assessed at Rs.1,58,28,140/- and tax demand of Rs.66,58,080/-was raised on the appellant. The assessing officer ignored the brought forward business loss and did not give credit for brought forward MAT Credit. The appellant filed an appeal before the Tribunal against the order of the assessing officer. The Co-ordinate Bench of the Tribunal vide its order in ITA No. 3181/Mds/2016 dated 19/04/2017 has set aside the grounds raised with regard to determination of arm's length price to the file of the Dispute Resolution Panel. The issue of set-off of brought forward business loss and set-off of MAT credit was restored to the file of the assessing officer. The Dispute Resolution Panel passed an order pursuant to order of the Tribunal on 30/11/2018. The Dispute Resolution Panel observed that in its view there is no provision under the Act whereby the Hon'ble ITAT could set aside an assessment order directly to the file of the DRP. It further observed that the DRP is neither empowered to issue any direction u/s.144C(5) of the Act in a case set aside by the Hon'ble ITAT directly to the DRP, nor is there any limitation laid down by the Act for issuance of any Direction u/s.144C(5) of the Act in such circumstances. Without prejudice to its view, the DRP issued directions in its order. 8 IT(TP)A No.28 /Chny/2019 8. The Dispute Resolution Panel rejected all the grounds sent back to its file by the Tribunal and directed the AO/TPO to make a downward adjustment to the cost to the tune of Rs.3,33,45,325/-. The transfer pricing officer passed an order dated 20/12/2018 giving effect to the order of the Dispute Resolution Panel, in which downward adjustment to the cost to the tune of Rs.3,33,45,325/- was considered necessary by the transfer pricing officer. Thereafter, the assessing officer passed an order u/s. 143(3) r.w.s. 144C(5) r.w.s. 254 dated 31/12/2018 making downward adjustment of Rs.3,33,45,325/- and disallowing unrealised forex fluctuation amounting Rs.4,12,270/-. The total income of the appellant was assessed at Rs.2,44,32,672/- after allowing set off of brought forward business loss and set off of MAT credit, a demand of Rs.57,90,590/- was raised on the appellant. Aggrieved by the order, the assessee is in appeal before us. 9. During the course of hearing the appeal, the appellant filed petition for admission of additional grounds. The petition for admission of additional grounds and additional grounds raised are as under: PETITION FOR ADMISSION OF ADDITIONAL GROUNDS ‘’Directions were given by the Dispute Resolution Panel on 30/11/2018. As per Section 144C(13), the assessing officer should, in conformity with the directions, complete the assessment. In this case, the Transfer Pricing Officer had passed an order dated 20/12/2018 (Copy enclosed) giving effect to the directions of the Dispute Resolution Panel and the assessing officer in his order dated 31/12/2018 (See page 11 of the blue paper book) had adopted the downward adjustment as per the Transfer Pricing Officer's order dated 20/12/2018. The assessing officer has not independently applied his mind to the statutory duty cast on him in terms of section 144C(13) of the Income Tax Act, 1961. This fine legal aspect missed the attention of the petitioner at the time of filing the appeal before this Hon'ble Tribunal. Therefore, the petitioner seeks the permission of this Hon'ble bench to raise the below mentioned additional grounds. 9 IT(TP)A No.28 /Chny/2019 These grounds do not require appraisal of any other fresh facts. These grounds are purely legal grounds. These grounds go to the root of the matter and therefore, as per the law laid down by the Hon'ble Supreme Court of India in the case of National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383, these grounds can be raised at any stage of the appeal’. ADDITIONAL GROUNDS ‘’1. The transfer pricing officer has passed an order termed 'Order giving effect' dated 20/12/2018 giving effect to the directions of the Dispute Resolution Panel, when no such power is vested in him, nor is a duty cast on him to do such an act. 2. The assessing officer has relied on such a non-est order which has interfered with the independent exercise of the statutory power that the assessing officer is expected to exercise in terms of section 144C(13) of the Income Tax Act, 1961, thereby rendering the order dated 31/12/2018 void’’. Order Giving effect by TPO is as under: ‘’[PROCEEDINGS OF THE DEPUTY COMMISSIONER OF INCOME TAX, TRANSFER PRICING OFFICER 3(2), CHENNAI - 6 PRESENT: SHRI. P SRIDHARAN.IRS Deputy Commissioner of Income-tax Y-602/ΤΡΟ-3(2)/AY 2012-13 Dated: 20 December 2018 Sub: Order giving effect Company Pvt. Ltd. DRP in the case of M/s. Young Buhmwoo (India) AAACY2562N FY 2012-13- Reg. Ref: Order of DRP-2, Bangalore in F.No.47/Setaside/DRP- 2/BANG/2017-18, dated 30/11/2016 The order giving effect to the order of DRP's order in F.No. 47/Setaside/DRP- 2/BANG/2017-18 dated 30/11/2016 is as below: The revised computation of the adjustment as per the direction of the DRP is worked out as below: Operating Revenue 32,67,14,250 Comparable margin as per order dated 14.01.2016 6.16% Arm's Length Cost (93.84% of Operating Revenue 30,65,88,652 Cost as per Books 33,99,33,977 Downward Adjustment 3,33,45,325 10 IT(TP)A No.28 /Chny/2019 Therefore, a downward adjustment of Rs 3,33,45,325/- is considered necessary to the value of International transactions entered into by the assessee as per the directions of the DRP’’. 10. In the light of the law laid down by the Hon’ble Supreme Court of India in the case of National Thermal Power Co. Ltd. Vs CIT [1998] 229 ITR 383 we admit the additional grounds raised by the assessee as these grounds goes root of the matter and a legal grounds which does not require any evidence or fresh facts. 11. Following chronology of events is summarized below for the purpose of adjudication aforesaid additional grounds: - Sl.No Particulars Relevant dates 1 Assessment Year 2012-13 2 Period of limitation for making an order of assessment as per Section 153 of the Act 31.03.2015 3 Extension of period of limitation in case reference is made under Sec 92CA of the Act (as per section 153 (1) proviso as amended by Finance Act, 2012). 31.03.2016 4 Proceeding for assessment should be completed on/before this date. 31.03.2016 5 A date prior to the date on which period of limitation expires. 30.03.2016 6 Sixty-day period expires on: 30.03.2016 7 Transfer Pricing order u/s 92CA(3) of the Act ought to be passed on/or before 29.03.2016 8 Date on which Transfer pricing order u/s 92CA(3) is passed. 1st round 14.01.2016 2nd round 20.12.2018 (after ITAT order dated 19.04.2017) 11 IT(TP)A No.28 /Chny/2019 9 Draft Assessment order passed on: 1st round 15.02.2016 10 DRP Directions passed on: 1st round 30.08.2016 2nd round 30.11.2018 (after ITAT order dated 19.04.2017) 11 Final Assessment order passed on: 1st round 27.09.2016 2nd round 31.12.2018 (after ITAT order dated 19.04.2017) 12. The learned Advocate for the assessee seeks to raise additional grounds of appeal challenging the legality and validity of the Transfer pricing order u/s 92CA(3) dated 20/12/2018 and impugned final assessment order dated 31/12/2018, passed under section 143(3) r.w.s section 144C(5) r.w.s 254 of the Act of the Act. 13. In this case, after set aside to the ‘Dispute Resolution Panel’ (‘DRP’ in short), the ld. DRP in its fresh directions observed as under: ‘’1.1 ITAT vide order dated 19.04.2017 set side the case to DRP for re-adjudication on grounds no. 1.1 to 7 & 11 before ITAT With regard to the \"assessment order\" having been set aside directly to the DRP by the Hon'ble ITAT, the legal situation as per the Income Tax Act 1961 (\"the Act hereinafter) and the Income Tax (Dispute Resolution Panel) Rules 2009(the Rules hereinafter) is as under: (1) As per sub-section (2) of s. 144(C) of the Act an 'eligible assessee\" may file \"Objection before the Dispute Resolution Panel (DRP hereinafter) against the draft assessment order passed by the assessing officer (AO hereinafter); (ii) The DRP, on receipt of such objection' is required to issue \"Directions\" for the \"guidance of the AO (iii) As per sub-section (13) of s. 144(C) of the Act the AO is mandated to complete the assessment in accordance with the DRP's directions. 12 IT(TP)A No.28 /Chny/2019 (iv) As per clause (d) of s. 253 of the Act only an assessment order passed by an assessing officer under sub-section (3) of s. 143 or 3.147 or s.153A or s. 153C in pursuance to the directions of the DRP (or an order passed u/s 154 in respect of such order) is appealable to the Appellate Tribunal. 1.2 Thus, the DRP is empowered by the Act to issue Directions only when an \"Objection filed by the assessee against a draft assessment order passed by the AO, or a draft assessment order passed during fresh assessment proceedings, u/s 144C(1) of the Act. Further, while the Directions of the DRP are not appealable u/s 253 of the Act, as long as the 'assessment order is not set aside or cancelled and restored to the file of the AO by the Hon'ble ITAT and a 'fresh draft assessment order is not framed u/s 144C(1) of the Act, and consequent thereto an \"objection is not filed u/s 144C(2)(b)(i) of the Act, the DRP does not have jurisdiction to issue any Directions u/s 144(5) of the Act. Furthermore, even no limitation for issuing Directions by the DRP has been laid down in terms of the provisions of s.153(2A) of the Act in a situation where the Hon'ble ITAT set aside an assessment order directly to the file of the DRP, which also is suggestive of the legislative intent as elaborated herein above. 1.3 In this view of the legal position, this Panel is of the considered view that there is no provision under the Act whereby the Hon'ble ITAT could set aside an assessment order directly to the fi'e of the DRP. Further, the DRP is neither empowered to issue any Direction u/s 144C(5) of the Act in a case set aside by the Hon'ble ITAT directly to the DRP, nor is there any limitation laid down by the Act for issuance of any Direction u/s 144C(5) of the Act in such circumstances. Notwithstanding, and without prejudice to the above opinion of this Panel, the Directions are being issued in the facts of this case, to protect the interest of revenue’. 14. Let us find in view of chronology of events as per table mentioned supra whether the ld.DRP has jurisdiction u/s 144C of the Act to direct the TPO or AO in 2nd round after set aside by ITAT, when the A.O. had already passed the final assessment order under section 143(3) r/w section 144C(3) of the Act on 27/09/2016, the directions issued by the learned DRP on 15/02/2016. 5. Relevant sections 144C and 153 of the Act are as under: [Reference to dispute resolution panel. ‘’144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward26 a draft of the proposed order 13 IT(TP)A No.28 /Chny/2019 of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation 27[***] which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,— (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with,— (i) the Dispute Resolution Panel; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if— (a) the assessee intimates to the Assessing Officer the acceptance of the variation; or (b) no objections are received within the period specified in sub-section (2). (4) The Assessing Officer shall, notwithstanding anything contained in section 15328[or section 153B], pass the assessment order under sub-section (3) within one month from the end of the month in which,— (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub- section (5), after considering the following, namely:— (a) draft order; (b) objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and (g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),— (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. 29[Explanation.—For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of 14 IT(TP)A No.28 /Chny/2019 the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee.] (9) If the members of the Dispute Resolution Panel differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members. (10) Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 15330[or section 153B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. (14) The Board may make rules31 for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. 32[(14A) The provisions of this section shall not apply to any assessment or reassessment order passed by the Assessing Officer with the prior approval of the 33[Principal Commissioner or] Commissioner as provided in sub-section (12) of section 144BA.] 34[(14B) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of issuance of directions by the dispute resolution panel, so as to impart greater efficiency, transparency and accountability by— (a) eliminating the interface between the dispute resolution panel and the eligible assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a mechanism with dynamic jurisdiction for issuance of directions by dispute resolution panel. (14C) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (14B), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 35[2025]. (14D) Every notification issued under sub-section (14B) and sub-section (14C) shall, as soon as may be after the notification is issued, be laid before each House of Parliament.] (15) For the purposes of this section,— (a) \"Dispute Resolution Panel\" means a collegium comprising of three 33[Principal Commissioners or] Commissioners of Income-tax constituted by the Board for this purpose; (b) \"eligible assessee\" means,— 15 IT(TP)A No.28 /Chny/2019 (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and 36[(ii) any non-resident not being a company, or any foreign company:]] 37 [Provided that such eligible assessee shall not include person referred to in sub-section (1) of section 158BA or other person referred to in section 158BD. ] 37 [ (16) The provisions of this section shall not apply to any proceedings under Chapter XIV-B. ] ………………………….. Section 153(3) & 153(5):- It is relevant to refer to Sub-section (3) and Sub-section (5) of Section 153 of the Act. The same are set out below: \"153.(3) Notwithstanding anything contained in sub-sections (1), (1A) and (2), an order of fresh assessment or fresh order under section 92CA, as the case may be, in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, or an order under section 92CA, as the case may be, may be made at any time before the expiry of nine months from the end of the financial year in which the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be: Provided that where the order under section 250 or section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, on or after the 1st day of April, 2019, the provisions of this sub- section shall have effect, as if for the words \"nine months\", the words \"twelve months\" had been substituted. ** ** ** (5) Where effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 is to be given by the Assessing Officer or the Transfer Pricing Officer, as the case may be, wholly or partly, otherwise than by making a fresh assessment or reassessment or fresh order under section 92CA, as the case may be, such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 16 IT(TP)A No.28 /Chny/2019 263 or section 264 is passed by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be: Provided that where it is not possible for the Assessing Officer or the Transfer Pricing Officer, as the case may be, to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer or the Transfer Pricing Officer, as the case may be, if satisfied, may allow an additional period of six months to give effect to the order: Provided further that where an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 shall be made within the time specified in sub-section (3).\" 16. We find that the DRP derives its authorities and powers from the provisions of section 144C of the I.T. Act and its procedures are governed by Income-tax (Dispute Resolution Panel) Rules, 2009. The provisions of the Act or Rule do not give power to the DRP to direct TPO or AO in 2nd round. If the Legislature had intended to give such powers, it had been expressly implied in section 144C itself. Therefore, we are of the view that the DRP does not have powers to direct TPO or AO in 2nd round of proceedings. Our view is also strengthening by the judgment of the Hon’ble Delhi High Court in the case of Undercarriage and Tractor Parts (P.) Ltd. Vs. Dispute Resolution Panel [2023] 156 taxmann.com 79 (Bom.) which held that the learned DRP can give directions only in pending assessment proceedings, and once the assessment order is passed, the learned DRP would have no power to pass any directions as contemplated under 17 IT(TP)A No.28 /Chny/2019 section 144C(5) of the Act. We also take note of the fact that in this case even section 144C(5) has not been complied with. 17. Hence, in the light of the above facts and circumstances of the case, we are of the considered view that Transfer pricing order u/s 92CA(3) dated 20/12/2018 and impugned final assessment order dated 31.12.2018, passed under section 143(3) r/s section 144C(5) r.w.s 254 of the Act are void ab-initio hence quashed. 18. We further note that there is no specific time limitation or provision in section 144C of the Act which provides ld. DRP to pass direction within such time in a set aside matter to DRP by the Tribunal. 19. In result, the additional grounds raised by the assessee are allowed. Since, we have allowed the appeal on the additional grounds therefore, other grounds raised became academic hence infructuous. Order pronounced in open court on 24th day of February, 2025 at Chennai. Sd/- Sd/- (मनोज क ुमार अŤवाल) (मनु क ुमार िगįर) (MANOJ KUMAR AGGARWAL) लेखा सद˟ / ACCOUNTANT MEMBER (MANU KUMAR GIRI) Ɋाियक सद˟ / JUDICIAL MEMBER चेɄई Chennai: िदनांक Dated : 24-02-2025 KV आदेश कȧ ĤǓतͧलͪप अĒेͪषत /Copy to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT, Chennai/Coimbatore/Madurai/Salem. 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF 18 IT(TP)A No.28 /Chny/2019 "