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CA Final · Direct Tax Laws & International Taxation · Dispute Resolution

Four assessees receive draft assessment orders with prejudicial variations. Applying section 275 as given, who is an 'eligible assessee' entitled to approach the DRP?

Kestrel Holdings Inc, the foreign company, is an eligible assessee. The Act covers persons whose variation arises from a Transfer Pricing Officer's order, and any non-resident non-company or foreign company. Resident domestic assessees without a transfer pricing variation are not eligible, and orders passed with prior approval under section 274(12) are excluded.

  1. ASundaram Traders Ltd, a domestic company whose variation arises from a routine scrutiny addition, with no transfer pricing adjustment
  2. BPriya Sharma, a resident individual whose assessment variation is a disallowance of Rs 4 lakh
  3. CKestrel Holdings Inc, a foreign company, with variations proposed in its draft orderCorrect
  4. DAnand Bros, a resident partnership firm whose order was passed with prior approval of the Principal Commissioner under section 274(12)

Explanation

Under section 275(17)(b), eligible assessees are persons whose variation arises from a Transfer Pricing Officer's order, or any non-resident (not a company) or any foreign company. Kestrel, a foreign company, qualifies. The domestic company and the resident individual have no transfer pricing variation. Section 275(16) excludes orders passed with prior approval under section 274(12).

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