2023 (6) TMI 819 - AT - Income Tax

Assessment in the name of company amalgamated - order was passed in the name of non-existent entity - HELD THAT - Both the A.O. and the Assessee/appellant herein were aware of the amalgamation and the Representative of the Assessee has participated in the assessment proceedings. The assessment order came to be passed on 14.01.2015 in the name of M/s. Bioseed Research India Ltd. (since amalgamated with DCM Shriram Limited) . It is also gathered from the assessment order that, though order mentioned the name as M/s. Bioseed Research India Ltd., but in the bracket, it has also been mentioned that since amalgamated with DCM Shriram Limited . Accordingly it cannot be said that order has been passed in the name of non existing company as the name of the amalgamated company has clearly been mentioned by the AO in the assessment order. Assessee (M/s DCM Shriram Ltd.) has participated in the assessment proceedings and the A.O. has rightly mentioned the name of Assessee as M/s. Bioseed Research India Ltd. (since amalgamated with DCM Shriram Limited) and mere mentioning the name of both the Companies has not resulted in any hardship to the Assessee. Disallowance u/s 80IB(8A) - proof of carrying on research activities - royalty income from Hybrid Cotton Seeds - CIT(A) allowed deduction - HELD THAT - As trade value received and paid by assessee in respect of technology of Mahyco Mansanto Biotech (I) Ltd. was separate from royalty income which have been received by the assessee company on which deduction u/s 80IB(8A) has been claimed - in the absence of anything on record to prove that the assessee has not carried out any research activities during the year under consideration in respect of Hybrid cotton seeds the disallowance has been deleted. The said observation of the ld CIT(A) neither erroneous nor suffers from infirmity, which requires no interference. Ground of the revenue dismissed. Disallowances u/s 80IB (8A) - miscellaneous income derived from operation profit - CIT-A allowed the claim - HELD THAT - Since the Ld. CIT(A) has gone into the factual details of the miscellaneous income earned by the assessee and given a conclusion that the amount of Rs. 3,92,972/- is nothing but items of income related to research activities of the company, the same would be considered as business income on which the deduction u/s 80IB (8A) of the Act would be allowable, we find no error or infirmity in the order of CIT(A). Accordingly Ground of the Revenue is dismissed.

Summary

Issues Involved:
1. Deletion of disallowance under Section 80IB(8A) on royalty income from hybrid cotton seeds.
2. Deletion of disallowance under Section 80IB(8A) on miscellaneous income.
3. Validity of assessment order passed in the name of a non-existent entity.

Summary:

Issue 1: Deletion of Disallowance under Section 80IB(8A) on Royalty Income from Hybrid Cotton Seeds
The Revenue challenged the deletion of disallowance under Section 80IB(8A) of Rs. 14,78,15,335/- made by the Assessing Officer (AO) on the grounds that hybrid seeds were not developed directly by the assessee company. The CIT(A) observed that the company had developed hybrid seeds and used technology from Mahyco Monsanto Biotech (I) Ltd. (MMB) to increase insect tolerance in the seeds. The CIT(A) noted that the company had been developing hybrid seeds even before the agreement with MMB and that the royalty income was earned from both cotton and other hybrid seeds developed by the company. Since the AO did not provide evidence that the assessee did not carry out research activities, the CIT(A) deleted the disallowance. The Tribunal upheld the CIT(A)'s decision, finding no error or infirmity in the order.

Issue 2: Deletion of Disallowance under Section 80IB(8A) on Miscellaneous Income
The Revenue contested the deletion of disallowance under Section 80IB(8A) on miscellaneous income of Rs. 3,92,972/-. The CIT(A) examined the details of the miscellaneous income, which included contributions received for research activities and training costs, and concluded that these were related to the company's research activities and should be considered as business income. The CIT(A) only disallowed the income from the sale of scrap material amounting to Rs. 8,419/-. The Tribunal found no error in the CIT(A)'s factual analysis and upheld the deletion of the disallowance on the remaining miscellaneous income.

Issue 3: Validity of Assessment Order Passed in the Name of a Non-Existent Entity
The assessee argued that the assessment order dated 14.01.2015 was invalid as it was passed in the name of M/s. Bioseed Research India Ltd., which had amalgamated with DCM Shriram Ltd. effective from 01.04.2013. The Tribunal noted that the AO was aware of the amalgamation and mentioned both the names in the assessment order. Since the assessee participated in the assessment proceedings and there was no hardship caused by the mention of both names, the Tribunal held that the assessment order was not passed in the name of a non-existent entity and dismissed the cross-objection filed by the assessee.

Conclusion
The Tribunal dismissed both the appeal filed by the Revenue (ITA No. 4261/Del/2019) and the cross-objection filed by the assessee (C.O. No. 116/Del/2022), upholding the CIT(A)'s deletions of disallowances and the validity of the assessment order.