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ITAT deletes Assessment Order against Nikon India [Read Order]

Nikon India - ITAT - Taxscan

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently deleted an assessment order passed by the income tax department against Nikon India.

The assessee, Nikon India Private Limited, was a wholly-owned subsidiary of Nikon Corporation, Japan. The assessee company is inter-alia engaged in import, sales, and distribution for Nikon Imaging products in India through a network of local distributors.

Rejecting the return filed by the assessee for the assessment year, the TPO held that the assessee was incurring excessive Advertisement, Marketing, and Promotion Expenditure (AMP) for the development of the brand owned by its foreign AE, therefore such excessive AMP expenditure would amount to ‘international transaction’. The assessing officer, based on the said view, made an addition of around 57 crores rupees.

The Tribunal held that as per Section 144C of the Act, it is mandatory for the Assessing Officer to pass draft Assessment Order“but in the present case, the Assessing Officer vide order dated 18.10.2019 merely captioned the final Assessment Order as Draft Assessment Order along with the issuance of notices under Section 156 and 274 read with Section 271(1)(c) of the Act which means a final assessment order u/s 144C was passed without following the mandatory provisions of Section 144C of the Act,” the Tribunal said.

Relying on a catena of judicial decisions, the Tribunal held that final Assessment order passed in remand proceedings without passing a draft Assessment order is in violation of Section 144C of the Act and is therefore null and void.

“The Ld. DR could not bring any case law contrary to these decisions. In fact, the statute itself gives a mandatory direction to the Assessing Officer under Section 144C that in the first instance the Assessing Officer should forward the draft of the proposed order of assessment. When the Tribunal remanded back the matter for fresh determination, it has set aside the earlier Assessment and hence the Assessing Officer has to conduct a fresh Assessment as per the mandate of Section 144C. Thus, the Assessment order itself is bad in law and void ab initio, hence quashed,” the Tribunal said.

To Read the full text of the Order CLICK HERE
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