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TMI Blog2014 (8) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants : Shri Rohit Jain Rohit Garg, CAs For the Respondent : Shri S N Bhatia, DR ORDER :- This appeal, by the assessee, is directed against the order dated 16-10- 2003 passed by the ld. CIT(A)-XX, New Delhi, in appeal no. 22/2003-041, relating to A.Y. 2000-01. 2. Brief facts of the case are that the assessee, a closely held domestic company, incorporated in India with the primary objective of carrying on business of an investment company and to, inter alia, buy, invest, underwrite, acquire, shares/ other securities. The assessee had acquired shares of various companies since its inception. Some of the shares were held by the assessee in stock in trade and the balance were held in investment portfolio with the primary intention of acquiring and retaining controlling stake of the companies within the fold of HCL group. 2.1. The assessee filed its return of income for A.Y. 2000-01 declaring income of ₹ 10,68,95,940/-. The assessment was completed at a total income of ₹ 13,39,76,121/- vide order dated 31-3-2003 passed on M/s Vama Sundari Investment (P) Ltd. 2.2. Before ld. CIT(A) the assessee, inter alia, took a ground that assessment u/s 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The power of attorney was filed by VSIPL and all replies were furnished on the letter head of M/s VSIPL. Therefore, AO pointed out that this new ground could not be raised. 2.4. Ld. CIT(A) rejected the assessee's contention, inter alia, pointing out that assessee had not challenged the AO's jurisdiction as required u/s 124(3) and had submitted to the jurisdiction of a particular AO and, therefore, cannot turn around and say that the officer had no jurisdiction to assess him. Ld. CIT(A) relied on the decision in the case of Ram Kumar Sitaram v. Certificate Officer 49 ITR 797 (Cal.). He also relied on the decision in the case of Raja Bahadur Kamakhya Narain Singh Vs. Union of India 51 ITR 596 (Pat.). 2.5. On merits the ld. CIT(A) partly allowed the assessee's appeal. 2.6. Being aggrieved, with the order of ld. CIT(A), the assessee is in appeal before us and has taken following grounds of appeal: 1. That on the facts and in the circumstances of the case, the impugned order is based upon irrelevant considerations, incorrect application of law, bad in law and void ab initio. 1.1. That the CIT(A) erred on facts and in law in confirming the impugned as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Act. 3.2. That the CIT(A) erred on facts and in law in confirming the disallowance under section 14A of the Act of interest/ expenditure incurred, without appreciating that dividend from shares could not be treated as 'income which does not form part of the total income of the appellant. 3.3. That the CIT(A) erred in confirming the disallowance in terms of section 14A of the Act without appreciating that the expenditure incurred for acquiring shares held as investment could not be said to have been incurred for the purpose of earning dividend income. 3.4. That the CIT(A) erred in holding that the appellant failed to discharge the onus of proving that the finance charges are allowable under section 36(1)(iii)/37 of the Act. 4. Without prejudice, the CIT(A) erred in facts and in law in not giving direction for addition of the element of finance charges (held relatable to investment in shares) as cost of acquisition/ cost of improvement of such shares for computing capital gains on sale thereof. 5. Without prejudice, the CIT(A) erred in confirming the disallowance of interest/ expenditure incurred under section 14A without appreciating that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at page 5 of the PB and the assessment order had been passed on 31-3-2002. Therefore, the order is clearly not sustainable in law. He relied on following decisions to submit that issue of notice to the amalgamated company/ the completion of assessment in the name of the amalgamated company, subsequent to the amalgamation became effective and the fact of such amalgamation having been brought to the notice of the assessing officer, is bad in law and void ab initio:- - CIT Vs. Amarchand N. Shroff 48 ITR 59 (SC); - Birla Cotton v. CIT 123 ITR 354 (Del.); - CIT v. Express Newspaper 40 ITR 38 (Mad.); - R.C. Jain v. CIT 140 Taxman 379 (Del); - CIT v. Kumari Prabhavati Gupta 231 ITR 188 (MP); - Smt. Sudha Prasad V. Chief CIT 186 CTR 475 (Jharkhand); - Makers Development Services Ltd. Vs. CIT 40 ITD 185 (Bom); - Impsat (P) Ltd. Vs. ITO 91 ITD 354 (Del.); - Better Inv. Ltd. v. DCIT in ITA no. 301/D/2005). - Indian Management Advisors Ltd. (Del. ITAT) - Slocum Investment (P) Ltd. 101 TTJ 558 (Del) - Hewlett Packard (I) (P) Ltd. Vs. ACIT (ITA 4016/D/2005). - Modi Corp. Ltd. v. JCIT 105 TTJ 303 (Del.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No doubt, M/s Spice was an assessee and as an incorporated company and was in existence when it find the returns in respect of two assessment years in questions. However, before the case could be selected for scrutiny and assessment proceedings could be initiated, M/s Spice got amalgamated with/MCorp Pvt. Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was duly sanctioned vide orders dated 11th February, 2004. With this amalgamation made effective from 1st July, 2003, M/s Spice ceased to exist. That is the plain and simple effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous/with the sanctioning of the scheme, M/s Spice was also stood dissolved by specific order of this Court. With the dissolution of this company, its name was struck off from the rolls of Companies maintained by the Registrar of Companies., A company incorporated under the Indian Companies Act is a juristic person. It takes its birth/and gets life with the incorporation. It dies with the dissolution as per the provisions of the Companies Act. It is trite law that on amalgamation, the amalgamating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -11-2001 and, therefore, it was issued against a company which was non-existent. Therefore, all subsequent proceedings including passing of the assessment order in consequence to this notice were bad in law, as has been held in various judicial pronouncements noted earlier including the decision of Hon'ble Delhi High Court in the case of Spice Entertainment Ltd. (supra). Further, the assessing officer was duly informed of amalgamation vide letter dated 15-2-2002, contained at pages 5 6 of the PB and which fact has been taken note by the assessing officer in his assessment order also. Under such circumstances, the assessment order cannot be sustained because now it is well settled law that on amalgamation a company ceased to exist from the appointed date. 6.2. Ld. CIT(A) has relied on section 124(3) which, in our opinion, is not at all applicable to the present facts. Section 124 deals with a situation where jurisdiction of assessing officer is under challenge on the ground of area but here it is not in dispute that the erstwhile M/s Vama Sundari Investment (P) Ltd. was within the jurisdiction of assessing officer. The issue is regarding the legality of assessment order on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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