Statutory position — s.144C(15)(b): who is an "eligible assessee", the two limbs, and the substitution by Act No. 12 of 2020 with effect from 1 April 2020 that brought in every non-resident not being a company
CBDT Circulars & InstructionsCuts both ways
The Assessing Officer has forwarded a draft order to our partnership firm, which is non-resident but is not a company, and there is no Transfer Pricing Officer's order in the case. Is the firm an eligible assessee at all, and does it matter which assessment year we are in?
It matters a great deal which year you are in. As s.144C(15)(b) stands on the departmental edition stamped Year 2025 it reads: "(b) 'eligible assessee' means,— (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 (ii) any non-resident not being a company, or any foreign company:". Sub-clause (ii) in that form was substituted by Act No. 12 of 2020 with effect from 1 April 2020 — footnote 97 on the departmental edition stamped Year 2021 reads verbatim "Sub. by the Act No. 12 of 2020, w.e.f. 1-4-2020.", and footnote 91 on the Year 2022 edition repeats it. Before that substitution, and as printed on the editions stamped Year 2009 and Year 2019 (No. 2), sub-clause (ii) read simply "any foreign company". So a non-resident firm, a non-resident individual, a non-resident association of persons — any non-resident that is not a company — became an eligible assessee in its own right on 1 April 2020 and was not one before, unless it was brought in by limb (i). Limb (i) is independent of status: it catches ANY person, resident or not, company or not, where the variation in sub-section (1) arises as a consequence of an order of the Transfer Pricing Officer under s.92CA(3). Two things were added with effect from 1 September 2024 by Act No. 15 of 2024: a proviso to clause (b) reading "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.", and s.144C(16), "The provisions of this section shall not apply to any proceedings under Chapter XIV-B."
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".
