Corporation v. Registration Of Trade Marks, 1998 (8

Rane *1/12 * WP-921-2018 (SR.25) Friday, 6.7.2018 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 921 OF 2018 Dimension Data Asia PacificPTE Ltd.….Petitioner V/s. Deputy Commissioner of Income-Tax….Respondent * * * * * Mr. Jehangir Mistri, Senior Counsel a/w. Mr. Atul Jasani, Advocate for the petitioner. Ms. S.V. Bharucha, Advocate for the respondent. -(ORAL JUDGEMENT : PER : M.S. SANKLECHA, J) 1. At the request of the Learned Counsel appearing for both sides, the petition is taken up for final hearing and disposal at the stage of admission. This petition under Article 226 of the Rane *2/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 Constitution of India challenges the assessment orderdated 31st January, 2018 passed by the Assessing Officerunder Section 143(3) read with Section 144C(13) readwith Section 254 of the Income-Tax Act, 1961 (the Act).The impugned order dated 31[st] January, 2018 disposes ofthe assessment for Assessment Year 2011-12. 3. At the outset, the Revenue contended that, thispetition should not be entertained as an alternate remedyof an Appeal under the Act from the impugned order isavailable. It is the petitioner's case that the impugnedorder is without jurisdiction as it has been filed in the faceof the mandatory provisions of Section 144C of the Act.We would therefore examine the contention of thepetitioner and if the same is found to be correct, then theplea of invoking the self impose rule of not entertainingthe petition as an alternate relief is available will notapply. It is a settled position in law that where the orderchallenged is without jurisdiction, then a writ could beentertained, as held by the Supreme Court in Whirlpool Rane *3/12 * WP-921-2018 (SR.25) Corporation vs. Registration of Trade Marks, 1998 (8) SCC 1. 4. Briefly, the facts relevant to this petition are as under : (a) The petitioner is Foreign Company andentitled to the procedure provided under Section144C of the Act as it is an eligible Assessee asdefined therein. (b) On 30[th] November, 2011 the petitioner filed itsreturn of income for the Assessment Year 2011-12.In its return, it declared Nil income. (c) Thereafter, on 20[th] March, 2015 a draftassessment order as required under Section144C(1) of the Act was passed for Assessment Year2011-12. The petitioner filed its objections interms of Section 144C(2)(b) of the Act to the Rane *4/12 * WP-921-2018 (SR.25) Friday, 6.7.2018 Dispute Resolution Panel (DRP). (d) On 4[th] December, 2015 the DRP issued directions on the petitioner's objection to the draftassessment order dated 20[th] March, 2015. (e) Consequent to the directions of the DRP, an order of assessment dated 11th January, 2016 waspassed under Section 143(3) read with Section144(C)(13) of the Act. 5. The petitioner's challenge to the impugned order dated 31st January, 2018 is that, it is withoutjurisdiction as it is passed in defiance of Section 144C ofthe Act. The petitioner is a Foreign Company. Therefore,in terms of Section 144C of the Act, a separate procedurefor passing Assessment orders and appellate procedurethereupon is provided for eligible assessee as defined inSection 144C(15) of the Act, which includes ForeignCompany. Therefore, in terms thereof, the petitioner is Rane *5/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 (e) Consequent to the directions of the DRP, an order of assessment dated 11th January, 2016 waspassed under Section 143(3) read with Section144(C)(13) of the Act. 5. The petitioner's challenge to the impugned order dated 31st January, 2018 is that, it is withoutjurisdiction as it is passed in defiance of Section 144C ofthe Act. The petitioner is a Foreign Company. Therefore,in terms of Section 144C of the Act, a separate procedurefor passing Assessment orders and appellate procedurethereupon is provided for eligible assessee as defined inSection 144C(15) of the Act, which includes ForeignCompany. Therefore, in terms thereof, the petitioner is Rane *5/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 entitled to a draft assessment order being passed underSection 144(1) of the Act before the final assessmentorder as passed in this case under Section 143(3) readwith Section 144(13) of the Act being the impugned order.Thus, the impugned order dated 31[st] January, 2018ignores the mandate of Section 144C of the Act.Resultantly, it takes away the petitioner's right to objectto the Draft Assessment Order before the DRP. Therefore,taking away a valuable right of the petitioner before theAssessing Officer passes a final order which can besubjected to appellate proceedings. In support, reliancewas placed upon the decisions of this Court inInternational Air Transport Association Vs. DeputyCommissioner of Income-Tax, 241 Taxman 249, and ofDelhi High Court in JCB India Ltd. v. DeputyCommissioner of Income-tax, [2017] 85 taxmann.com155 (Delhi). 6. As against the above, it is the respondent'scontention that the order dated 5[th] May, 2017 of the Rane *6/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 Tribunal does not set aside the original assessment order dated 11[th] January, 2016 and merely restores it to theAssessing Officer to give effect to its order dated 5[th] May,2017. This restoration to the Assessing Officer is only todetermine the profits attributable to the P.E in India. Inabove circumstances, it is contended by the Revenue thatthe requirement of passing a draft assessment order interms of Section 144C of the Act is not called for, as theorder dated 31[st] January, 2018 is only an order givingeffect to the order dated 5[th] May, 2017 of the Tribunal.The remedy, if any, of the petitioners according to theRevenue is filing an Appeal from the impugned orderdated 31st January, 2018 to the Income Tax AppellateTribunal and/or the Commissioner of Income-Tax(Appeals). 7. We note that, it is an undisputed position before us, that the petitioner is a Foreign Company and aneligible assessee as defined in Section 144C(15)(b)(ii) ofthe Act. It has been held by this Court in International Rane *7/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 Air Transport Association (supra) that a ForeignCompany is entitled to being assessed in accordance withSection 144C of the Act. It is the above Section 144C ofthe Act, which provides a separate scheme for the mannerin which the Assessing Officer would pass assessmentorders under the Act and a separate procedure tochallenge an draft order i.e. before an assessment orderwhich is subject to appeal under the Act is passed. Theentire object is to ensure that the disputes of ForeignCompanies are resolved expeditiously and finalassessment orders are not passed without a re-look to theproposed order (draft order), if so desired by the ForeignCompany. In essence, it obliges the Assessing Officer tofirst pass a draft of the proposed assessment orderindicating the proposed variation in the income returned.This draft Assessment Order is to be passed under Section144C(1) of the Act, which entitles an eligible assesseesuch as a Foreign Company to approach the DRP with itsobjection to the Draft Assessment order. This is soprovided, so that an eligible assessee can have his Rane WP-921-2018 (SR.25) Rane WP-921-2018 (SR.25) grievance addressed before the final assessment order ispassed. In case, an assessee does not object to the draftassessment order, then a final assessment order is passedin terms of the draft assessment order by the AssessingOfficer. It is only on passing of the final assessment orderthat the assessee, if aggrieved by it, would be able toapproach the appellate authorities under the Act. Thesespecial rights are made available under Section 144C ofthe Act to an eligible assessee such as the petitioner.Therefore, it cannot be ignored by passing an final orderunder Section 144(13) of the Act without preceding itwith a Draft Assessment order as required therein. 8. The contention of the Revenue that therequirement of passing a draft Assessment Order underSection 144C of the Act would only extend to the orderspassed in the first round of proceedings or in respect of anorder passed by the Assessing Officer in remandproceedings by the Tribunal which has entirely set asidethe original assessment order. This distinction which is The contention of the Revenue that the Rane *9/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 sought to be drawn by the Revenue is not borne out bySection 144C of the Act. Infact, the Delhi High Court inJCB (India) Ltd. (supra) held that, even in partial remandproceedings from the Tribunal, the Assessing Officer isobliged to pass a draft assessment order under Section144C(1) of the Act. According to us, the AssessingOfficer, is obliged to, in terms of Section 144C of the Act topass a Draft Assessment Order in all cases where heproposes to assess the Foreign Company under the Act bymaking a variation in the returned income. In this case,the impugned order dated 31st January, 2018 has beenpassed in terms of Section 143(3) read with Section 144Cread with Section 254 of the Act and it certainly makes avariation to the returned income filed by the petitioner.This even if, one proceeds on the basis that the returnedincome stands varied by the order of the Tribunal in thefirst round, to the extent the petitioner accepts it.Therefore, the Assessing Officer correctly invokes Section144C of the Act in the impugned order. Once havinginvoked Section 144C of the Act, the Assessing Officer is Rane *10/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 obliged to comply with it in full and not partly. Thisimpugned order was passed consequent to the order of theTribunal dated 5th May, 2017 restoring some of the issuesbefore it to the Assessing Officer for fresh adjudication. 9. This “fresh adjudication” itself would imply thatit would be an order which would decide the lis betweenthe parties, may not be entire lis, but the dispute whichhas been restored to the Assessing Officer. According tous, the order dated 31st January, 2018 is not an ordermerely giving an effect to the order of the Tribunal, but itis an assessment order which has invoked Section 143(3)of the Act and also Section 144C of the Act. Thisinvocation of Section 144C of the Act has taken place asthe Assessing Officer is of the view that it applies, thenthe requirement of Section 144C(1) of the Act has to becomplied with before he can pass the impugned orderinvoking Section 144C(13) of the Act. Infact, Section144C(13) of the Act can only be invoked in cases wherethe assessee has approached the DRP in terms of sub- This “fresh adjudication” itself would imply that Rane *11/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 Section 144(C)(2)(b) of the Act and the DRP givesdirection in terms of Section 144C(5) of the Act. In thiscase, the assessment order has invoked Section 144C(13)of the Act without having passed the necessary draftAssessment Order under Section 144C(1) of the Act,which alone would make an direction under Section144C(5) of the Act by the DRP possible. Thus, theimpugned order is completely without jurisdiction. This “fresh adjudication” itself would imply that Rane *11/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 Section 144(C)(2)(b) of the Act and the DRP givesdirection in terms of Section 144C(5) of the Act. In thiscase, the assessment order has invoked Section 144C(13)of the Act without having passed the necessary draftAssessment Order under Section 144C(1) of the Act,which alone would make an direction under Section144C(5) of the Act by the DRP possible. Thus, theimpugned order is completely without jurisdiction. 10. Moreover, so far as a Foreign Company isconcerned, the Parliament has provided a specialprocedure for its assessment and appeal in cases wherethe Assessing Officer does not accept the returned income.In this case, in the working out of the order dated 5[th] May,2017 of the Tribunal results in the returned income beingvaried, then the procedure of passing a draft assessmentorder under Section 144C(1) of the Act is mandatory andhas to be complied with, which has not been done. In the above view, the impugned order is Rane *12/12 * WP-921-2018 (SR.25)Friday, 6.7.2018 without jurisdiction. Thus, the plea of alternate remedyadvanced by the Revenue so as to not entertain thispetition, does not merit acceptance in the present facts. 12. In the above view, the impugned order dated 31[st ] January, 2018 has been passed without complyingwith the mandatory requirements of Section 144C of theAct which is applicable to a Foreign Company such as thepetitioner. Therefore, the impugned order is quashed andset aside. Needless to state, this order would not, in anyway, stop the Revenue from taking such steps as areavailable to it in law and the petitioner also fromcontesting the action of the Revenue in accordance withlaw, if it so desires. 13. as to costs. Petition allowed in above terms. No order (SANDEEP K. SHINDE, J) (SANDEEP K. SHINDE, J) (M.S. SANKLECHA, J)