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TMI Blog2018 (6) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... such information has been provided by the Ld. counsel of the assessee before us that the information was provided as per the requirements of the Act. The issue of validity of making assessment on non-existence entity has been decided by the Hon’ble Delhi High Court in the case of Spice Infotainment Limited Vs. CIT, [2011 (8) TMI 544 - DELHI HIGH COURT], wherein it is held that the assessment in the name of the company which has been amalgamated with another company and stands dissolved, is null and void - however, this is the case of succession of entity and not of winding up of the entity, and is not applicable to the facts of the present case. In the instant case, the compliance of the assessment proceeding before the Assessing Officer has been made from time to time by the persons authorized in this behalf and proceedings have not been challenged due to lack of jurisdiction. According to the available records, the validity of the jurisdiction has been challenged for first time before the Ld. DRP. In view of the above circumstances, the assessment order should not be nullified. There is no information, whether the assessee complied with various provisions of the Act rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as required by provisions of section 92CA(3) read with proviso to 92C(3) of the Act. 3. Non-applicability of Transfer Pricing provisions 3.1 The learned AO / DRP / TPO erred in not appreciating the fact that Shriram was not an Associated Enterprise [ AE ] of the Appellant at the time of entering into the impugned transaction related to sale of CCDs and Form No. 3CEB was filed out of abundant caution. 3.2 The leaned AO / DRP / TPO erred in rejecting the contentions of the Appellant relating to the non-applicability of transfer pricing provisions without providing cogent reasons. 4. Erroneous rejection of valuation report and the alternate valuation Methodology 4.1 The learned AO /DRP/TPO erred in not accepting fair value at which the CCDs were sold by the Appellant to its joint venture partner, Shriram in accordance with the valuation report obtained from an independent valuer. 4.2 The learned AO / DRP / TPO erred in disregarding the prevailing business and commercial reasons surrounding the impugned transaction related to sale of CCDs. 4.3 The learned AO / DRP / TPO erred in not considering the valuation of CCDs under Rule 11UA of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed DCIT/DRP erred in re-characterising the gain on sale of CCDs as worked out by the learned DCIT/DRP due to substitution of fair market value (upward transfer pricing adjustment) as interest income under section 2(28A) of the Act read with Article 11 of India-Cyprus tax treaty, which is inappropriate and bad in law. 8.2 The learned DCIT/DRP erred in not following the decision of the jurisdictional Delhi High Court in the case of Zaheer Mauritius v. Director of Income-tax (International tax) (47 taxmann.com 247) wherein the Hon'ble High Court held that gains arising on the sale of CCDs are capital gains. 8.3 The Hon'ble DRP erred in not passing a speaking order on the objections raised by Appellant with respect of recharacterization of income (ground no. 18 in the objections filed before the DRP) in its directions and has also not considered the detailed submissions and arguments provided by the Appellant in its correct perspective without providing cogent reasons. Further, the Hon'ble DRP also dismissed the rectification application filed by the Appellant in this regard. 8.4 The Hon'ble DRP erred in observing that the AO successfully established t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of Form No. 3CEB submitted by the assessee, wherein transaction with Associated Enterprises (AEs) is found to be more than ₹ 15 crores. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short the Act ) was issued to the assessee. In response Authorized Representative of the assessee appeared before the Assessing Officer from time to time. In view of the International transactions entered into by the assessee with Associated Enterprises, the matter of determining arm s length price of the International transaction was referred to the Ld. Transfer Pricing Officer (TPO). The Ld. TPO in his order dated 27/01/2016 determined valuation of Compulsory Convertible Debentures (CCD) sold by the assessee to its AE at ₹ 83,02,98,000/-as against valuation of the CCD shown by the assessee at ₹ 74,60,00,000/-, resulting in a gain of ₹ 8,42,98,000/-as against loss declared by the assessee at ₹ 16,35,75,420/-. In the draft assessment order dated 29.03.2016 issued by the Ld. Assessing Officer included the upward adjustment of ₹ 24,78,73,420/- proposed by the Ld. TPO. Against the draft assessment order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal, the appeal has been filed in prescribed form no. 36B and verified by Sh. Dilshaad Rajabalee, authorized signatory of Sun Apollo India Real Estate LLC, Mauritius. The contention of the assessee is that company was wound up on 24/05/2013, whereas the assessment under section 143(3) read with section 144C(13) of the Act has been completed on the said company on 30/01/2017, thus, the assessment has been completed on a non-existence entity, which is illegal and void. This issue was raised by the assessee before the Ld. DRP, however, the Ld. DRP dismissed the ground of the assessee observing as under: We considered the objection as above which pertains to the validity of the assessment order passed by the AO. In this connection, the panel s considered view is that under Chapter XIV of the Act the DRP has not been equipped with the power to go into the validity or otherwise of a draft assessment order. Hence, for want of competence and authority we refrain from addressing ourselves to this ground. Accordingly, the said ground is dismissed. 4.4 As far as facts of the case are concerned, on perusal of the assessment order, we find that the assessee filed return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: Discontinued business. 176. (1) . ( 2) .. ( 3) .. ( 3A) .. ( 4) ( 5) Where an assessment is to be made under the provisions of this section, the Assessing Officer may serve on the person whose income is to be assessed or, in the case of a firm, on any person who was a partner of such firm at the time of its discontinuance or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under clause (i) of sub-section (1) of section 142 and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under clause (i) of subsection (1) of section 142. 4.8 Further, section 178 of the act has provided the liability of a liquidator of a company, which is in the process of liquidation. For ready reference, the relevant section is reproduced as under: Company in liquidation. 178. ( 1) Every person - ( a) who is the liquidator of any company which is being wound up, whether under the orders of a court or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amalgamated with another company and stands dissolved, is null and void. The Hon ble high court further held that assessment framed in the name of non-existent entity is a jurisdictional defect and not merely a procedural irregularity of the nature which can be cured by invoking the provisions of section 292B of the Act. The above decision has been confirmed by the Hon ble Supreme Court by dismissing the appeal of the Revenue vide order dated 2nd Nov., 2017 in Civil Appeal No. 285 of 2014 . 4.12 Further, the Hon ble Delhi High Court in the case of Skylight Hospitality LLP Vs. ACIT, (2018) TIOL 275 HC-DEL on Writ Petition filed by the assessee against the order of the Assessing Officer rejecting the objections against the initiation of the proceedings under section 147 of the Act, held that the assessee received the notice and objected to as issued in the name of the company, which ceased to exist, but the assessee understood notice was for it. Notice was addressed to Skylight Hospitality Private Limited, a company, which had been dissolved, was an error and technical lapse on the part of the Revenue. Such mistake should not nullify the proceedings which are otherwise valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to the available records, the validity of the jurisdiction has been challenged for first time before the Ld. DRP. In view of the above circumstances, following the finding of the Hon ble Gujarat High Court in the case of Sumantbhai C Munshaw (supra) the assessment order should not be nullified. 4.17 Similarly in the case of Vijay Sarin Vs ITO (1993) 201 ITR 249 (Delhi), the assessee after filing return of income died during assessment proceeding against him. The assessment was made after serving a notice under section 143(2) of the Act on the advocate of the assessee, without giving any notice to the legal representative of the deceased assessee. Some of the legal representative of the assessee challenged the assessment before the first appellate authority, who set aside the assessment directing the Assessing Officer for making a fresh assessment after issuing notice to the legal representative and making them a party to the proceedings. This finding of the first appellate authority was upheld by the Tribunal. On further reference, the Hon ble High Court held the direction of the first appellate authority as valid and legal. The Hon ble High Court observed that lack ..... X X X X Extracts X X X X X X X X Extracts X X X X
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