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2018 (4) TMI 708 - AT - Income TaxValidity of assessment passed in the name of non-existing entity - scheme of amlagamation adopted - Held that - The documents on record reveal that the erstwhile assessee namely M/s Synovate India Pvt. Ltd. stood amalgamated with another entity namely IPSOS Research Private Limited in terms of order of Hon ble Bombay High Court dated 03/05/2013. Pursuant to same, M/s Synovate India private Limited filed relevant Form No. 21 intimating aforesaid change in the name of the assessee company to Registrar of Companies on MCA portal vide SRN No. B79186417 dated 11/07/2013 and the same has been approved on 23/07/2013 meaning thereby that the erstwhile assessee has completely ceased to exist with effect from 23/07/2013. We find that it is settled law that passing of assessment order in the name of non-existent entity is a jurisdictional defect and is not merely a technical defect which could not be cured by the provisions of Section 292B. - Decided in favour of assessee.
Issues Involved:
1. Arm’s Length Price (ALP) of Synovate Shared Resources Fees. 2. Transfer Pricing adjustment. 3. Documentary evidence for intra-group services. 4. Benchmarking of Synovate Shared Resources fees. 5. Demonstration of costs incurred by the Associated Enterprise. 6. Disallowance under section 40(a)(i) on a protective basis. 7. Disallowance of expenses reimbursed to Associated Enterprises. 8. Employees’ contribution to Provident Fund and ESIC. 9. Interest levied under section 234A. 10. Validity of assessment order passed on a non-existent entity. Detailed Analysis: 1. Arm’s Length Price (ALP) of Synovate Shared Resources Fees: The Assessing Officer (AO) and Transfer Pricing Officer (TPO) held that the ALP for Synovate Shared Resources Fees paid by the appellant was Nil. The appellant contested this, arguing that the payment was justified and supported by agreements and documents. 2. Transfer Pricing Adjustment: The AO/TPO made a Transfer Pricing adjustment of ?5,80,47,258/- for Synovate Shared Resources Fees paid. The appellant argued that the adjustment was unwarranted as the payments were supported by various agreements and documents. 3. Documentary Evidence for Intra-Group Services: The AO/TPO held that the appellant had not filed sufficient documentary evidence to support the receipt of intra-group services. The appellant contended that the services were adequately documented and beneficial. 4. Benchmarking of Synovate Shared Resources Fees: The AO/TPO held that the appellant had not properly benchmarked the transaction of payment of Synovate Shared Resources Fees. The appellant argued that the benchmarking was done in accordance with an external comparability study. 5. Demonstration of Costs Incurred by Associated Enterprise: The AO/TPO held that the appellant failed to demonstrate the incurrence of costs by the Associated Enterprise and its allocation among various group entities. The appellant contested this, arguing that the costs were adequately demonstrated. 6. Disallowance under Section 40(a)(i) on a Protective Basis: The AO disallowed part of the Synovate Shared Resources Fees amounting to ?1,46,15,847/- under section 40(a)(i) on a protective basis, resulting in double disallowance of the same expenditure. The appellant argued that this action was incorrect. 7. Disallowance of Expenses Reimbursed to Associated Enterprises: The AO disallowed expenses reimbursed by the appellant to its Associated Enterprises aggregating to ?84,60,428/- under section 40(a)(i). The appellant argued that the disallowance was unwarranted as the expenses were legitimate and documented. 8. Employees’ Contribution to Provident Fund and ESIC: The AO disallowed the employees’ contribution to Provident Fund and ESIC aggregating to ?8,196/- paid before the due date of filing the Return of Income. The appellant cited binding decisions of the jurisdictional High Court to argue against this disallowance. 9. Interest Levied under Section 234A: The AO levied interest under section 234A amounting to ?2,17,586/-. The appellant contested the levy of interest. 10. Validity of Assessment Order Passed on a Non-Existent Entity: The appellant raised an additional ground, arguing that the final assessment order was passed on a non-existent entity, Synovate India Pvt. Ltd., which had merged with IPSOS Research Pvt. Ltd. The tribunal found that the assessment order was indeed passed on a non-existent entity, rendering the assessment invalid and void-ab-initio. The tribunal quashed the assessment order on this ground. Conclusion: The tribunal quashed the final assessment order dated 12/01/2015 for AY 2010-11 and the final assessment order dated 28/01/2016 for AY 2011-12, both passed in the name of a non-existent entity. Consequently, the appeals filed by the assessee were allowed.
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