9911796707
TMI Blog2016 (1) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... ase 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. - Decided in favour of assessee. - I.T.(T.P.) A. No.328/Bang/2015, I.T.(T.P.) A. No.224/Bang/2015 - - - Dated:- 4-11-2015 - SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER For The Assessee : Shri K.R. Pradeep, C.A. For The Revenue : Shri G.R. Reddy, CIT-I (D.R.) ORDER Per Shri Jason P. Boaz, A.M. : These are cross appeals by Revenue and the assessee, preferred against the final order of assessment dt.30.12.2014 passed under Section 143(3) rws 144C(13) of the Income Tax Act, 1961 (in short 'the Act') in pursuance to the directions dt.28.11.2014 issued by the Dispute Resolution Panel ( DRP ) Under Section 144C(5) of the Act. 2. The facts of the case, briefly, are as under :- 2.1 The assessee company is engaged in the manufacture and selling of Medical Equipment, undertakes engineering related services wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined at ₹ 129,48,856 which included T.P. Adjustment of ₹ 68,67,29,714. 3. Both Revenue and the assessee are aggrieved by the impugned order of assessment dt.30.12.2014 for Assessment Year 2010-11 and have revised the following grounds :- Grounds of appeal raised by the assessee are as under :- 1. That the order of the authorities below, the directions of the Dispute Resolution Panel (DRP) and the order of the transfer pricing officer in so far as it is against the appellant is against the law, facts, circumstances, natural justice, equity, without jurisdiction, bad in law and all other known principles of law. 2. That the total income computed and the total tax computed is hereby disputed. VALIDITY OF ASSESSMENT/JURISDICTION 3. The authorities below erred in framing an assessment against the appellant company which ceased to exist, consequent to the order of merger dated: 24.07.2013 of Karnataka High Court effective from 01.04.2012. Thus, the authorities erred in making an order of assessment against a non-existent entity on the date of assessment. 4. The authorities below ought to have appreciated that the successor company is assessed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 64,90,07,221/- towards the Contract Manufacturing segment, while determining the ALP of the international transactions of the appellant. 15. The learned DRP erred in summarily rejecting the objections of the appellant with regard to the non providing of adequate and sufficient opportunity as required under law by the TPO before passing order u/s 92CA. 16. The AO/TPO failed to follow/giving effect to the directions of the DRP. 17. The AO/DRP erred in upholding the TPO s contention of adopting CPM as the most appropriate method for bench marking the contract manufacturing segment. 18. The AO/DRP erred in not following the orders of the CIT(A) and DRP for earlier years in the appellant s own case on similar issue, when the facts being the same for this year. 19. The AO/TPO/DRP erred in not carrying out the adjustments sought by the assessee. 20. That the AO/DRP erred in holding that ipso facto the determination/calculation of arm s length price amounts to earning of income by the appellant, thereby taxable in its hands. 21. The order of the Transfer pricing officer, directions of DRP and that of the AO is in clear violation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability for interest u/s 234B on the adjustment made u/s 92CA of the Act and relies on the decision of the Supreme Court in the case of CIT v Kwality Biscuits Ltd reported in 284 ITR 434. 34. The appellant denies the liability for interest u/s 234D of the Act. No opportunity has been given before the levy of interest u/s 234D of the Act. 35. With prior permission of the ITAT, the appellant reserves the right to add/delete/amend any or all the ground stated above. 36. For the above and other grounds and reasons which may be submitted during the course of hearing of this appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered. Revenue s Grounds of Appeal. 1. The order of the DRP is opposed to law and the facts and circumstances of the case. 2. The DRP erred in directing the Assessing Officer to carry out the working capital adjustment as per the actual figures worked out by the assessee without putting any cap without appreciating the fact that the TPO had put a cap as the average cost of working capital of the comparables selected by the TPO was 1.71%. 3. The DRP erred in directing the exclusion of Info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Authorised Representative for the assessee sought to argue the grounds at S.Nos. 3 4 relating to the issue of validity of assessment / jurisdiction which he contended went to the root of the matter; in as much as questioning the validity and jurisdiction of the order of assessment dt.30.12.2014 for Assessment Year 2010-11. It is the contention of the learned Authorised Representative, that the order of assessment for Assessment Year 2010-11 passed under Section 143(3) rws 144C(13) of the Act vide order dt.30.12.2014 has been passed by the Assessing Officer in respect of a non-existent entity in the name of GE Medical Systems Pvt. Ltd. ( GE ). 4.1.2 The learned Authorised Representative submitted that the facts in support of the above contentions are that GE merged with Wipro GE Healthcare Pt. Ltd. ( Wipro ) w.e.f. the appointed date of 1.4.2012. The order approving the merger between GE and Wipro was passed by the Hon'ble Karnataka High Court on 24.7.2013, wherein the Court has retained the appointed date as 1.4.2012. This scheme was also approved by the Hon'ble Delhi High Court by order dt.27.8.2012, wherein also the appointed date was mentioned assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of GE the transferor company rather than Wipro the transferee company. It is submitted that thereafter, even though the assessee filed its objections in respect of the draft order of assessment before the DRP in Form No.35A in the name of Wipro GE Healthcare Pvt. Ltd. ( Wipro ), the DRP proceeded to issue its directions under Section 144C(5) of the Act vide order dt.28.11.2014 in the case of GE which was by then merged, though the objections were filed by Wipro. Consequent to these directions by the DRP, the Assessing Officer passed the final order of assessment under Section 143(3) rws 144C(13) of the Act vide order dt.30.12.2014 again in the name of GE . 4.1.4 In the light of the facts of the case put forth above, it was contended by the learned Authorised Representative for the assessee that on the day the final order of assessment under Section 143(3) rws 144C of the Act was made, i.e. on 30.12.2014, GE had already ceased to exist as a corporate entity and therefore the said order of assessment passed on a non-existent entity would be a nullity and invalid in the eyes of law. In support of this contention, the learned Authorised Representative placed reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1895, 1896/Bang/04) and Monsanto India Ltd. V ITO C.O. Nos.28 to 34/Bang/06 dt.26.11.2007 (ITAT-Mumbai), wherein at paras 27, 33 and 34, it has been held as under :- 27 We have heard rival submissions and after considering the relevant material on record. the facts of the case and also the various case laws relied upon by the ld AR. we find that thc assessments in this case are void abinitio because the company on which the assessments for these two years were completed were not in existence at the time of passing the assessment on 26.3.2002. The AO was duly informed by the assessee regarding the amalgamation with MIL. Copy of intimation dated 24.4.2001 and 20.2.2002 are placed at pages 195, 196 244 of the paper book. These letters are duly stamped by the respective officers of the departmental authorities. therefore, it cannot be said that there was no information with the AO who com pieled the assessments on the assessee which was not in existence at the time of passing the assessment order. The Tribunal in the case of Makers Development Services Ltd in 40 lTD 185 has held as under: but there cannot be any doubt that, when two companies amalgamate and merge into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment was made on a non-existent entity, the mistake, if any, is only procedural and not fatal and therefore the same was curable under Section 292B of the Act. The learned Departmental Representative further contended that GE cannot object to the impugned order of assessment as it had filed the return of income for Assessment Year 2010-11 in the name of GE and had also participated in the assessment proceedings. The very fact of participation in the entire assessment proceedings by GE would take away its right to question the validity of the assessment proceedings culminating in the passing of the impugned order of assessment. The learned Departmental Representative further submitted that the objections raised by the assessee on the issue of validity of assessment / jurisdiction was frivolous and not tenable and in this regard relied on the provisions of section 170(2) of the Act. It was accordingly prayed by the learned Departmental Representative that the grounds raised by the assessee on the issue of validity of assessment / jurisdiction be rejected. 4.3.1 In his rejoinder, the learned Authorised Representative for the assessee drew the attention of the Bench to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised Representative further drew the attention of the Bench to para 3 of the Scheme of Amalgamation / Merger. 3. TRANSFER OF UNDERTAKINGS The whole of the Undertakings of the Transferor Companies, whether moveable or immovable, real or personal, corporeal or incorporeal, present or contingent, including but without being limited to all assets, fixed assets, work in progress, current assets, investments, reserves, provisions, funds, quota rights, import quotas, licenses, registrations, patents, trade name, trademarks and other industrial rights and licenses in respect thereof, leases, tenancy rights, flats, telephones, telexes, facsimile connections, installations and utilities, benefits and agreements and arrangements, powers, authorities, permits, allotments, approvals, consents, privileges, liberties, easements and all the rights, title, interest, benefit and advantage of whatsoever nature and wheresoever situated belonging to or in the possession or granted in favour of or enjoyed by the Transferor Companies shall, pursuant to the provisions of Section 394(2) of the Act, without any further act or deed, be transferred to and vested in or be deemed to be transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight of the above, the impugned order of assessment for Assessment Year 2010-11 is to be vacated on the preliminary issue of validity of assessment and jurisdiction. 4.4.1 We have heard the rival submissions and perused the records including the concerned orders of assessment, the direction of the DRP and the judicial pronouncements cited on the grounds raised by the assessee on the issue of validity of assessment / jurisdiction, and are of the view that these grounds at S.Nos.3 4 go to the very root of the matter and are therefore to be considered at the outset. We have perused the order of the Hon'ble High Court of Karnataka approving the scheme of amalgamation / merger of GE and Wipro and also that of the Hon'ble High Court of Delhi in this regard. Both the Hon'ble High Courts in their orders have confirmed 1.4.2012 as the appointed date and therefore the legal effects of these orders are w.e.f. 1.4.2012; the appointed date. The legal consequences are laid out at para 3(a) to (c) of the scheme of amalgamation under Transfer of Undertaking (cited supra) and in that regard any proceeding can be continued or prosecuted against only the transferee company afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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