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TMI Blog2016 (1) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... n 4.10.2010 declaring income of Rs. 61,30,89,140. The return of income was processed under Section 143(1) of the Act and the case was subsequently taken up for scrutiny. In the course of assessment proceedings, the Assessing Officer; on noting that the assessee had reported international transactions in Form No.3CEB made a reference under Section 92CA of the Act to the Transfer Pricing Officer ('TPO') for determining the Arm's Length Price ('ALP') of the said international transactions. The TPO after examining the assessee's T.P. documentation rejected the same for all three segments, namely (i) Contract manufacturing, (ii) Software development services and (iii) Engineering Support Services and ITES. The TPO then undertook his own T.P. Study and after obtaining the assessee's submissions in the matter passed an order under Section 92CA of the Act dt.30.1.2014 wherein the T.P. Adjustments proposed were as under :- S.No. Particulars Amount Rs. 1. Software development services 4,40,47,940 2. IT Enabled Services 13,81,98,347 3. Contract Manufacturing 64,90,07,221 Total Adjustments u/s.92CA 83,12,53,508 The Assessing Officer then completed the dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons, conclusions and directions of Dispute Resolution Panel (DRP) u/s 144C are a bundle of contradictions and clearly unsustainable in law requires to be rejected. Consequently the addition based on such directions requires to be deleted. 7. The DRP erred in not considering the relevant materials, evidences and data and the directions issued are without application of mind. 8. That the order of the DRP and the directions given therein are bad in law and not as per law requires to be cancelled. 9. That the AO/TPO/DRP erred in not providing adequate and sufficient opportunity as required under law thus violating the principle of natural justice, hence on this ground alone the orders requires to be annulled. 10. The appellant denies the tax liability on the surplus arising on the computation of arms length price for the impugned assessment year. 11. The Learned Assessing Officer erred in bringing to tax u/s 92CA as outlined below in the table as per the communication/order of the Transfer Pricing Officer and the directions of DRP. Sl.No Description Amount 1 Arm's Length Price difference in Software services Rs. 2,65,22,495/- 2 Arm's Length Price difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire order requires to be vacated. 24. The authorities below erred in ignoring the method followed by the appellant. The authorities below ought to have adduced cogent reasons for rejecting the method followed by the appellant before substituting and prescribing a new method. 25. The onus is on the department to establish there is any tax avoidance and it is essential that incontrovertible evidences are in the possession of the AO before a reference is made as held by the Supreme Court in 131 ITR 597 and further has erred in not relying on the circular. 26. The Learned AO/TPO/DRP have failed to identify comparables in terms of Rule 10B(3). 27. The Learned AO/TPO/DRP failed to make the necessary adjustments as is required in terms of Rule 10B(2). 28. The AO/TPO/DRP erred in not granting the variances deduction of 5% envisaged in the Act and Circular. 29. No opportunity was given to the assessee before making the reference and before according the approval by the CIT. This is against the principles set out by the Hon'ble Supreme Court in Rajesh Kumar vs. DCIT - 287 ITR 91. ISSUE OF INTEREST U/S 234B AND 234C 30. The appellant denies the liabilities for interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of other benches of ITAT, ought to have decided the comparability of these companies on the basis of specific facts brought on record by the TPO in the case of the assessee. 7. The DRP erred in directing the Assessing Officer to follow the ratio of the Hon'ble Court in the case of Tata Elxsi Ltd 349 ITR 98 and exclude Rs. 57,93,554 being the expenses incurred in foreign exchange on travel and Rs. 1,085,000 insurance expenses respectively form the total turnover also while computing the deduction under Section 10A of the IT Act as the decision of the High Court is binding, without appreciating the fact that there is no provision in section 10A that such expenses should be reduced from the total turnover also, as clause (iv) of the explanation to section 10A provides that such expenses are tobe reduced ony from the export turnover. 8. The DRP erred in not appreciating the fact that the jurisdictional High Court's decision in the case of Tata Elxsi Ltd. 349 ITR 98 has not been accepted by the department and an appeal has been filed before the Hon'ble Supreme Court. 9. For these and such other grounds that may be urged at the time of hearing, it is humbly pray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rced by or against the Transferor Companies, if this Scheme had not been made." In the above context, the learned Authorised Representative contended that, any proceedings may be continued, prosecuted and enforced by or against the transferee company in the same manner and to the same extent as it would be or might have been contained, prosecuted and enforced by or against the transferor company. 4.1.3 The learned Authorised Representative submitted that the facts in the case on hand were that, 'GE' filed the return of income for Assessment Year 2010-11 on 4.10.2010, after which the case was taken up for scrutiny by issue of notice under Section 143(2) of the Act dt.29.8.2011 which was duly served on the assessee. Subsequently, the Assessing Officer made a reference to the TPO for determining the ALP of the international transactions reported by the assessee in the year under consideration, who then passed an order under Section 92CA of the Act on 30.1.2014 suggesting T.P. Adjustments amounting to Rs. 83,12,53,508. The Assessing Officer therefore concluded the proceedings by passing a draft order of assessment dt.28.2.2014. It is submitted by the learned Authorised Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sanction of the scheme. The Hon'ble Delhi High Court by its order dt.12.2.2004 sanctioned the scheme of amalgamation. Thus consequent to the orders of the Hon'ble High Court and the scheme of amalgamation H.P. India stood dissolved with effect from the appointed date without the process of winding up. Thus w.e.f. 1.4.03 H.P. India ceased to exist as an entity. 6. HP India for A.Y. 2002-03 filed its return of income on 30.10.2001. In the course of assessment proceedings vide letter dt.26.7.04 it informed the Assessing Officer that pursuant to the amalgamationof HP India with HP Sales, HP India stood dissolved eventhenotice u/s.143(2) had been issued on 23.10.2003. HP India pointed out that no assessment can be made on a company which is not in existence. The Assessing Officer however, considered this claim of the assessee and proceeded to frame the order of assessment. 7...... 8..... 9...... 10...... 11.... 12. In view of the legal position as laid down in the aforesaid decisions, it is clear tha the assessment made in the present case in the name of HP India after the date of its dissolution is not valid. The fact that this company filed a return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, we find that the ratio of these decisions is squarely applicable on the facts of the prescn l case. In the present case, the assessee company was amalgamated w.c.f 1.4.2000 and the assessments were completed on 26.3.2002 which was after the date of amalgamation of the assessee into MIL, therefore, the assessments completed on non existence entity, in our considered view voi ab-initio. Accordingly we hold that the assessments for these years were invalid, therefore, they are quashed." 4.1.5 The learned Authorised Representative submits that the above orders, placed reliance upon, have been passed after considering and following the decisions of the Hon'ble Apex Court in the case of Marshall Sons & Co. Ltd. V ITO (223 ITR 890), Saraswathi Industrial Syndicate Ltd. V CIT (186 ITR 278) (SC) and of the Hon'ble Madras High Court in CIT V Express Newspaper Ltd. 40 ITR 38 (Madras High Court). The learned Authorised Representative prays that in the light of the factual matrix of the case and in law, the impugned order of assessment for Assessment Year 2010-11 dt.30.12.2014 be held to be null and void. 4.2 Per contra, the learned Departmental Representative for Revenue submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be charged as beneficiary of the estate, it is open to him, if he is not really liable at law, to appeal in proper time against the order of assessment against him and point out the invalidity of the assessment though he might have, by his conduct, acquiesced in the assessment proceedings. There can be no estoppel against statute. An assessment is to be governed by the provisions of the Act and not on the view which the parties may take as to their rights and labilities. In CIT vs. Bharat General Reinsurance Co. Ltd. (1971) 81 ITR 303 (Del), the Hon'ble Delhi High Court held, where the assessee itself included the dividend in his return but later challenged the assessment of the same in the year in question, then it must be taken that the assessee had resiled from the position which it had wrongly taken while filing the return. In the light of these authorities, the conduct of the assessee before us in filing the return of income and in participating in the proceedings for assessment does not confer jurisdiction upon the AO to assess it, which must really depend upon the effect of the provisions of the IT Act. In the absence of any provision in the Act to assess a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd delivered, as the case may be, to the Transferee Company to the end and intent that the property therein passes to the Transferee Company, on such delivery or endorsement and delivery, pursuant to the provisions of Section 394(2) of the Act without requiring any deed or instrument of conveyance for transfer of the same, subject to the provisions of the Scheme. Such delivery and transfer shall be made on a date mutually agreed upon between the respective Board of Directors of the Transferor Companies and the Board of Directors of the Transferee Company, within 30 (thirty) days from the Effective Date. (c) In respect of movables other than those specified in sub-clause (b) above, including sundry debtors, outstanding loans and advances, if any, recoverable in cash or in kind or for value to be received, bank balances and deposits, if any, with government, semi- government, local and other authorities and bodies, the following modus operandi shall, to the extent possible, be followed...." 4.3.3 The learned Authorised Representative submitted that consequent to the vesting of such assets/liabilities, the corporate entity 'GE' ceased to exist. It was also submitted with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings in the hands of 'GE' rather than 'Wipro'. We also find that the impugned final order of assessment for Assessment Year 2010-11 has also been passed by order dt.30.12.2014 in the hands of 'GE' which was nonexistent as on the date of the order of assessment. In our view, the legal position is very clear in that any order made on a non-existent entity is a nullity and invalid. Applying these principles to the case on hand, we hold that the impugned final order of assessment for Assessment Year 2010-11 dt.30.12.2014 passed in the name of 'GE' is null and void and the assessment is therefore held to be invalid and accordingly cancelled as the same has been passed after the appointed date 1.4.2012 on a non-existent entity. We hold and direct accordingly. Consequently Ground Nos.3 and 4 of the assessee's appeal are allowed. 5. In view of our decision on the preliminary grounds at S.Nos.3 & 4 on the issue of validity of assessment / jurisdiction (supra), the other grounds and issues raised by the assessee at S.Nos.1, 2 and 5 to 36 and by Revenue at S.Nos.1 to 10 of their respective appeals, are not taken up for consideration. 6. In the result, the Assessee's appeal for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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