2019 (8) TMI 112 - HC - Income Tax

Assessment order passed in non existent entity - assessee contended before the ITAT that company in whose name the assessment was framed had been amalgamated with other company hence assessment order framed in a name of company that had ceased to exist, the assessment was void ab initio. - HELD THAT - In the present case, HDTS long ceasing to exist at least three years prior thereto, getting amalgamated with HICS and then getting re-named as TMS. The case is squarely covered by the decision of this in Pr. CIT v. Maruti Suzuki 2018 (1) TMI 1438 - DELHI HIGH COURT as well as by the recent judgment of the Supreme Court in Pr. CIT v. Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT . Thus, there is no legal error committed by the ITAT in the impugned order. No substantial question of law arises for consideration.

Summary

Issues:
1. Appeal against ITAT order for AY 2007-08.
2. Transfer Pricing adjustment and deduction under Section 10A.
3. Validity of assessment on a non-existent company.
4. Interpretation of Section 292B of the Income Tax Act.

Analysis:
1. The appeal was filed against the ITAT order for AY 2007-08. The Assessee, a subsidiary providing IT services, had international transactions with Associated Enterprises. The AO referred the matter to the TPO for determining the Arm's Length Price (ALP). The TPO proposed an adjustment, and the final assessment order rejected the Assessee's claim for deduction under Section 10A. The CIT (A) allowed the appeal on the deduction issue and directed the inclusion of comparables for TP adjustment.

2. The Assessee contended that the assessment on a non-existent company was void ab initio due to amalgamation. The ITAT, following precedent, held the assessment void and quashed it. The Revenue argued based on Skylight Hospitality LLP case, but the Supreme Court upheld the decision in favor of the Assessee.

3. The Supreme Court's judgment in Maruti Suzuki case emphasized the importance of consistency and certainty in tax litigation. The Assessee had informed the AO about the amalgamation, but the assessment was still framed against the non-existent company. Unlike clerical errors, this case involved a significant change due to amalgamation, making it void ab initio.

4. The ITAT's decision was upheld as there was no legal error. The delay in filing the appeal was condoned. The judgment highlighted the necessity of adhering to legal principles and ensuring accuracy in assessments to maintain consistency and certainty in tax matters.