Section 144C(13)

Section 144C(13) — the law in short

What the courts have decided on section 144C(13), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Benteler Automotive India Pvt Ltd v Union of India High CourtHelps taxpayerNo later treatment found
  The DRP issued its directions years ago and the Assessing Officer has still not passed a final assessment order. Is the assessment now dead, or can he pass one whenever he likes?
  It is dead. Section 144C(13) requires the Assessing Officer, on receipt of the DRP's directions under s.144C(5), to complete the assessment in conformity with them within one month from the end of the month in which the directions are received, and he need not give any further hearing. Where that month passed — here even after the extension of the outer date under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 — and no order was passed, the Bombay High Court held the assessment barred by limitation and quashed the pending proceedings on the assessee's writ petition.
• Manvendu Bharadwaj v DCIT (International Taxation) ITATHelps departmentNo later treatment found
  My client is abroad and has a reassessment for FY 2017-18 saying he sold bitcoin on an Indian exchange. If he does not engage, what happens?
  This is what happens. The Delhi Bench, hearing and pronouncing on the same day with nobody appearing for the assessee, dismissed the appeal and left standing an addition of Rs 49,12,362 as unexplained short-term capital gain on bitcoin for AY 2018-19. It said only that the income had been correctly assessed under s.147 read with s.144C(13) and that, in the absence of any assistance from the assessee, the Assessing Officer's order was just and proper. Read this entry for the fact pattern and the warning, not for any proposition of law: the Tribunal decided nothing about the head of income.
• Acronis Asia Pte Ltd v. DCIT — distribution revenue was not fees for technical services, a Singapore resident cannot be tested under the India-Switzerland treaty, and the s.10(50) exemption follows once Explanation 1 does not bite ITATHelps taxpayerNo later treatment found
  My client paid two per cent equalisation levy on its Indian receipts and the department has still assessed the same receipts as fees for technical services and denied s.10(50). In what order should the argument be run?
  Characterisation first, exemption second. The equalisation levy is charged by Chapter VIII of the Finance Act, 2016 and not by the Income-tax Act; the Act's only point of contact is section 10(50), whose Explanation 1 takes out of the exemption income chargeable as royalty or fees for technical services under the Act read with a treaty. The ITAT Mumbai held that a Singapore limited-risk distributor's revenue from Indian sub-distributors was not fees for technical services — it rendered no service, owned no intellectual property and made nothing available — and that the Dispute Resolution Panel could not test a Singapore resident under the India-Switzerland treaty merely because the group's software and intellectual property sat in Switzerland. Having so held, the Tribunal held that the bar in Explanation 1 to section 10(50) did not come into operation and the assessee was entitled to the exclusion, subject to verification of payment of the levy.
• Ravi Ramakrishnan v ITO (International Taxation) — the section 56(2)(vii)(b) addition must be added back as cost under section 49(4), even though it was never claimed in the return ITATHelps taxpayerNo later treatment found
  The DRP has refused my client's alternative plea for the section 49(4) cost step-up because it was not made in the return, citing Goetze. Is that the end of it?
  No. The Tribunal directed the Assessing Officer to recompute the capital gain in accordance with section 49(4), notwithstanding that the DRP had rejected the same plea on the footing that additional cost of acquisition could only be claimed through the return of income. Where the officer has taken a particular value into account for the section 56(2)(vii)(b) addition, that value is the deemed cost of acquisition and the capital gain must be recomputed on it.
• Hindustan Unilever Ltd v DCIT ITATCuts both ways
  Every issue in my Tribunal appeal is covered in my favour. Can the Tribunal grant an unconditional stay without my paying 20%?
  Not an unconditional one. After the Finance Act 2020 amended the first proviso to s.254(2A), the Tribunal may grant stay only on the condition that the assessee deposits not less than twenty per cent of the tax, interest, fee, penalty or other sum payable, or furnishes security of equal amount. But the deposit is not a condition precedent: the assessee may instead furnish security, and what constitutes reasonable security is for the Tribunal to decide. Stay was granted on security of Rs.35 crores against a demand of about Rs.172.48 crores.
• Statutory position — s.144C(1) to (5): the Assessing Officer must, notwithstanding anything to the contrary in the Act, forward a draft order to an eligible assessee before he makes any prejudicial variation, and the assessee has thirty days to accept or to object to the Dispute Resolution Panel AND to the Assessing Officer CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has served a final assessment order on our foreign company raising a transfer pricing addition, without ever serving a draft order. Was he obliged to serve one first, and what was I supposed to do with it if he had?
  He was obliged to serve one first, if the company is an eligible assessee and the variation is prejudicial. Section 144C(1), as printed on the departmental edition stamped Year 2025, reads: "The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order 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 which is prejudicial to the interest of such assessee." Three things follow from the words themselves. The obligation is cast in the mandatory "shall"; it operates "notwithstanding anything to the contrary contained in this Act", so it overrides the ordinary assessment machinery; and it bites "in the first instance", that is, before and not after the order that would otherwise be the assessment order. Sub-section (2) gives the eligible assessee thirty days of the receipt by him of the draft order to do one of two things: "(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." The "and" in clause (b) is conjunctive: an objection is filed with the Panel and with the Assessing Officer, not with one or the other. Sub-section (3) requires the officer to complete the assessment on the basis of the draft order if the assessee intimates acceptance of the variation or if no objections are received within the period specified in sub-section (2). Sub-section (4) fixes the time for that order — one month from the end of the month in which the acceptance is received or the period of filing objections expires, notwithstanding s.153 or s.153B. Sub-section (5) is the Panel's charging provision: where any objection is received under sub-section (2), the Panel "shall ... issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment".
• Statutory position — s.144C(2), (4), (5), (12) and (13): the thirty days to object run from receipt, but the officer's one month and the Panel's nine months both run from the END OF THE MONTH, and the two one-month clocks start on different events CBDT Circulars & InstructionsCuts both ways
  We received a draft order on 12 March. Nobody objected. When was the final order due, and if we had objected, by when must the Dispute Resolution Panel have issued its directions and by when must the officer have given effect to them?
  Four clocks, and only one of them runs from a date. Section 144C(2) gives the eligible assessee thirty days "of the receipt by him of the draft order" to file acceptance with the Assessing Officer or objections with the Panel and the Assessing Officer — that one runs from the date of receipt. The other three run from the end of a month, and that is where the counting goes wrong. Section 144C(4): where the assessee accepts or files no objection, "The Assessing Officer shall, notwithstanding anything contained in section 153 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." Section 144C(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." Section 144C(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 153 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." Note the four different starting EVENTS. The thirty days in (2) start on RECEIPT by the assessee. The nine months in (12) start at the end of the month in which the draft order is FORWARDED — the officer's act of despatch, not the assessee's receipt, so the (2) clock and the (12) clock can start in different months on the same draft order. The one month in (4) starts at the end of the month in which the acceptance is received or the thirty-day period expires. The one month in (13) starts at the end of the month in which the DIRECTION is received by the officer. Both (4) and (13) run notwithstanding s.153 and s.153B.
• Statutory position — s.144C(8) with its Explanation, and s.144C(10) and (11): the Panel may confirm, reduce or ENHANCE but may not set aside or remit, the Explanation inserted by the Finance Act 2012 is retrospective to 1 April 2009, the direction binds the Assessing Officer, and no direction may issue without an opportunity of being heard — with what s.253 and s.246A provide about appeal CBDT Circulars & InstructionsCuts both ways
  We are considering objecting to a draft order. Can the Dispute Resolution Panel make our position worse, can it send the matter back for fresh enquiry, and if we lose before it, do we appeal to the Commissioner (Appeals) or straight to the Tribunal?
  It can make your position worse; it cannot send the matter back; and the appeal lies to the Tribunal, not to the Commissioner (Appeals). Section 144C(8), as printed on the departmental edition stamped Year 2025, reads: "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." The Explanation to that sub-section reads: "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 the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee." Footnote 76 on the departmental edition stamped Year 2014 records that Explanation verbatim as "Inserted by the Finance Act, 2012, w.r.e.f. 1-4-2009" — note the date: it is retrospective to 1 April 2009, the date the section itself was inserted from, and not 2012. The original edition stamped Year 2009 prints sub-section (8) with no Explanation at all. Sub-section (10): "Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer." Sub-section (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." Sub-section (9) resolves a difference of opinion among the members by the opinion of the majority. On appeal: s.246A(1)(a), on the departmental edition stamped Year 2025, excepts from the first appeal "an order passed in pursuance of directions of the Dispute Resolution Panel", and s.253(1)(d), on the edition stamped Year 2024 (No. 2), gives a direct right of appeal to the Appellate Tribunal against "an order passed by an Assessing Officer under sub-section (3), of section 143 or section 147 or section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order". Sub-sections (2A) and (3A) of s.253 are printed as "[***]" on the current editions, and the departmental edition stamped Year 2016 carries footnotes against both reading "Omtt. by Act No. 28 of 2016 (w.e.f. 1-6-2016)."

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.