Bechtel Limited Vs ACIT (ITAT Delhi)
DRP Directions Are Binding: Delhi ITAT Quashes Bechtel Assessments for Ignoring ‘Protective Basis’ Mandate
Delhi ITAT ‘D’ Bench in Bechtel Limited, UK Vs. ACIT [ITA No. 1816/Del/2022, AY 2018-19 & ITA No. 756/Del/2023, AY 2020-21, order dated 31.12.2025] quashed final assessment orders as void ab initio for non-adherence to binding directions of DRP u/s 144C. Assessee, a UK tax resident, had rendered engineering & procurement support services to Reliance Industries Ltd. and claimed receipts as non-taxable in India in absence of PE and “make available” under Article 13 of India-UK DTAA. DRP, following its earlier directions for AYs 2016-17 & 2017-18, had held that though receipts could be treated as FTS, taxation thereof was to be made only on protective basis u/s 44DA, since AO was first required to treat income as business profits attributable to PE. Tribunal noted that AO, despite reproducing DRP directions, again taxed entire receipts as FTS on substantive basis, thereby acting in clear violation of s.144C(10) & 144C(13). Relying on earlier ITAT orders in Assessee’s own case and binding Delhi HC jurisprudence, Tribunal held that failure to follow DRP directions renders assessment without jurisdiction. Consequently, assessments for both AYs were quashed and other grounds were rendered academic
