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TMI Blog2017 (5) TMI 1663X X X X Extracts X X X X X X X X Extracts X X X X ..... assing assessment order. Thus hold that the assessment in the name of nonexistent amalgamating company having jurisdictional defect is not sustainable and therefore, we quash the same. - Decided in favour of assessee. - ITA No.3169/Del/2016 Assessment Year: 2006-07 - - - Dated:- 31-5-2017 - Shri R.K. Panda And Shri Sudhanshu Srivastava, JJ. Appellant by: Shri Deepak Chopra, Adv. Respondent by: Shri T.M. Shiva Kumar, CIT DR ORDER Sudhanshu Srivastava, This appeal has been filed by the assessee against the order dated 29/04/2016 u/s 254/144C r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter called the Act ) passed subsequent to the directions of the Hon ble Dispute Resolution Panel-2, New Delhi dated 26.02.2016 for assessment year 2006-07. 2. The assessee company is engaged in the business of software development services. The return for the year under consideration was filed declaring an income of Rs. 28,52,36,663/-. In the course of assessment proceedings, reference was made by the AO to the TPO in respect of the international transactions with the assessee s associated enterprise. The order under section 92CA of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nullity. Ld. Counsel admitted that this ground has not been raised before the DRP. However, he submitted that this is a purely question of law. Reliance was placed on the decision of the Hon ble Supreme Court in the case of National Thermal Power Corporation Ltd versus CIT (1998) 229 ITR 383. The Ld. DR objected the admission of the additional ground. 9. We have considered the facts of the case. We find that the facts regarding the ground are available on the file and the issue is purely issue of law. Therefore, additional ground No. 2 is admitted which is sufficient to deal with the controversy raised in both the grounds. We find that the additional ground raises the issue as to whether the order of the assessment is bad in law as it has been framed on a nonexisting entity. 10. It is an admitted position before us that the additional ground as admitted above was not agitated before the DRP. Thus, we find that the matter has neither been agitated nor decided by the DRP. Therefore, we find that the appellate process will be short-circuited if the matter is decided for the first time by us. Both the counsel fairly agreed that the matter may be restored to the file of the DRP t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of appeal- 1. That on the facts and circumstances of the case and in law, the assessment order dated April 29, 2016 passed by the Deputy Commissioner of Income-Tax, Circle-18(2), New Delhi (herein after referred as 'learned AO ) post the directions dated February 26, 2016 passed by Hon ble Dispute Resolution Panel (hereinafter referred as Hon ble DRP ), is bad in law and void ab-initio. 2. That the Hon ble DRP grossly erred in law in not appreciating that the learned AO has framed the assessment on a non-existent entity in the assessment order dated 28th October, 2010, which is bad in law and void. 2.1 That the Hon ble DRP grossly erred in law in coming to the conclusion that framing of an assessment on a nonexisting entity is merely a procedural defect, which is curable under Section 292B of the Income Tax Act, 1961 ( the Act ). 2.2 That the Hon ble DRP also erred in law in coming to the conclusion that the intimation given by the Appellant of the factum of amalgamation vide its letters intimating merger and the transfer of records did not tantamount to an intimation to the learned AO of the factum of amalgamation. 2.3 Without prejudice, that the directio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Information Technology Limited and Visualsoft Technologies Limited as a comparable by concluding that the comparable failed the filter of having onsite revenue greater than 75% of the export revenue. 4.6 That, the learned TPO has erred, on facts and in law, in not considering Goldstone Technologies Limited appearing as comparable companies without appreciating that the company satisfies the Functional, Asset and Risk ( FAR ) test vis-a-vis the Appellant in relation to impugned transaction. 4.7 That the learned TPO has erred, on facts and in law, by exercising his powers under section 133(6) of the Act to obtain information which was not available in public domain and relying on the same for comparability purposes. 4.8 That the learned TPO has erred, on facts and in law, in selecting Accel Transmatics Limited, Bodhtree Consulting Limited, Flextronics Software Systems Limited, iGate Global Solutions Limited, Infosys Limited, Kals Infosystem Limited, Lucid Software Limited, Megasoft Limited, Persistent Systems Limited, R Systems International Limited, Synfosys Business Solutions Limited and Tata Elxsi Limited as comparables without appreciating that these comparables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the notification issued by the Government of West Bengal [under Central Sales Tax Act, 1956 read with Bengal Finance (Sales Tax) Act, 1941], as remission of trading liability, taxable under the provisions of section 41(1)(a) of the Act. 5.1 Without prejudice, based on the facts and circumstances of the case and in law, learned AO has erred in not appreciating that waiver of deferred sales tax loan was in fact settled as per the provisions of Rule 127A of the West Bengal Sales Tax Rules, 1995, which provides for settlement of such loan at equivalent to Net Present Value and accordingly, there was no remission of trading liability so as to attract section 41(1 )(a) of the Act. 5.2 That the AO erred in not appreciating that, for the provision of Section 41(1) of the Act to be applicable, the amount in question had to be allowed as a deduction in the preceding years and on the facts of the present case upon a deferral of the sales tax liability, the amount got converted into a loan which was never claimed as a deduction by the Appellant. 6. The AO has erred in law and in facts in reducing the data communication charges incurred in foreign currency amounting to ₹ 53,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under Section 234B of the Income-tax Act, 1961 ( Act ) beyond January 31, 2011, being the date on which whole of the tax demand for subject AY was adjusted against the refund determined for AY 2009-10. 10.2 Without prejudice, on the facts and circumstances of the case and in law, the learned AO has erred in levying interest under Section 234D of the Act upto order dated April 29, 2016 even when the base tax demand remained same as calculated in order dated October 28, 2010 which shall be the terminal point of levy of interest under Section 234D of the Act. 10.3 Without prejudice to the above Ground 10.2 above, on the facts and circumstances of the case and in law, the learned AO has erred in levying interest under Section 234D of the Act upto the date of order passed under Section 254 read with Section 143(3) and Section 144C of the Act (i.e. till April 29, 2016) in complete ignorance of the fact that refund granted to the appellant for subject AY was recovered on January 31, 2011, by way of adjustment of refund determined for AY 2009-10. 10.4 Without prejudice, that on the facts and circumstances of the case and in law, the learned AO has erred in computing int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (,NSNIPL') in Bangalore to the jurisdictional officer of Nokia Siemens Networks Private Limited ( NSNPL ) in Delhi. The letters were filed with the following Income Tax Authorities: July 02, 2009 Chief Commissioner of Income-tax, Bangalore - 1 June 30, 2009 The Commissioner of Income Tax - Ill, Bangalore June 30, 2009 The Commissioner of Income-tax (Appeals) - IV, Bangalore June 30, 2009 The Additional Commissioner of Income Tax, Range 12, Bangalore June 30, 2009 The Chief Commissioner of Income Tax -V, New Delhi June 30, 2009 The Commissioner of Income Tax - V, New Delhi June 30, 2009 The Deputy Commissioner of Income Tax, Circle 13(1), New Delhi July 17, 2009 Joint Director of Income-tax (TPO), Banqalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on amalgamating company is a curable defect and therefore directed AO and TPO to issue notice in the name of amalgamated company and frame the assessment b) givinq the assessee an opportunity of being heard. 13 April 27, 2016 Received a notice dated April 22, 2016, from the AO giving opportunity of being heard as per the directions of Hon'ble DRP Case was fixed for hearing on April 29, 2016 14 April 29, 2016 Final assessment order passed under Section 143(3) of the Act by the Respondent in the name of Nokia Siemens Networks Private Limited (,NSNPL') wherein the tax demand of ₹ 13,85,05,350 was raised against the Appellant. 3.3 The Ld. AR referred to the various dates as mentioned in the date chart and submitted that it is undisputed that the fact of amalgamation of the assessee company was very much within the knowledge of the AO/ revenue authorities. He reiterated that in view of the undisputed facts, the assessment made on a company which had ceased to exist and was non-existent as on the date of passing of the assessment order was bey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainment Ltd. (supra) the assessee had brought it to the notice of the AO that there had been an amalgamation but the same was not the case in the case of this assessee. 4.1 It was further submitted by the Ld. CIT DR that in the assessee s case the notice under section 143 (2) of the Income Tax Act was issued 12/10/2007 and at that point of time the assessee company was very much existence. It was submitted that as per provisions of section 124 (3) of the Act, the assessee was not authorised to question the jurisdiction of the AO at that point of time. It was further submitted that the assessee s letter to the income tax authorities did not mention the fact of the pendency of assessment proceedings and, therefore, the assessee s contention that the Department was aware of the amalgamation during the pendency of assessment proceedings itself was factually incorrect. 4.2 It was also submitted that the assessee had participated in the assessment proceedings but had not raised any objection regarding the name and, therefore, this issue could not be raised at a later stage. 4.3 The Ld. CIT DR also filed written submissions which are being reproduced as a under: 1. The fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Hon'ble High Court s order that the appellant on receipt of notice in the old name had promptly approached the AO and appraised him of the mistake and still the AO had gone ahead with proceedings and order in the old name. Relevant portion is reproduced below: Para 11 When notice under Section 143(2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day 9. The above is not the case in the instant appeal. The Assessee never pointed out this issue to the AO and TPO and raised it as a around only for the first time before DRP. Thus the facts are clearly distinguishable and that too in a manner that has a material bearing. In this kind of facts, Hon ble High Court would not have come to the same conclusion. 10. It is submitted here that even when the letter is addressee is the old amalgamating company, it is the amalgamated company that has been presenting itself before the authorities below. AO has accorded proper hearing to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below which is covered by provisions of S.292B of the Act. 17. The same error has also been committed by the Appellant also when it tiled the application in Form no 35A tiled before Ld.DRP Bangalore - the appellant had given the name of assessee as Nokia Siemens Networks India Pvt. Ltd which is the name of the amalgamating company. 18. Further in the decision of Hon ble High Court of Delhi in the case of Spice Infotainment Ltd. vs. CIT: 1TA No. 475 of 201 I, decided on August 3, 2011 (on which every other case laws on the issue are based) the following pronouncements of Hon ble Apex court on the battle between technical considerations and substantial justice have not been considered. It is therefore submitted with due respect that the said decision is per incuriam and need not be taken as a valid precedent in the given facts. a. The Hon ble Supreme Court in Hindustan Steel Limited vs. Dilip Construction Company, Air 1969 S.C. 1238(5) has held,- THE Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments. It is not enacted to arm a litigant with a weapon of I technicality to meet the case of his opponents. The stringent pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of the interpretation of the expression sufficient cause . So also the same approach has to be evidenced in its application to matters at hand with the end in view to do evenhanded justice on merits in preference to the approach which scuttles a decision on merits. c. The Division Bench of Madhya Pradesh in Rameshwar Prasad and anr. Vs. Narayandas, AIR 1969 S.C. 1238(5), while following aforesaid judgment in Hindustan Steel (supra) has observed as under: ONE has only to bear in mind that the Stamp Act is a fiscal measure enacted to secure revenue for the State and it has not been enacted to arm a litigant with a weapon of technicality. d. The obligation of the Court to do substantial justice has been reiterated in Mrs. Margaret Lalita Samuel vs. Indo Commercial Bank Ltd. 1979 AIR 102. The Court has observed in this case as under: IF the Supreme Court is satisfied that as a result of the order of remand substantial justice has been done to the parties in the consequential proceedings, the Supreme Court may decline to exercise its discretionary power to interfere. The jurisdiction under Art. 136 is not meant to correct an illegality brought to the notice of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was settled in favour of the assessee be applying the ratio of decision of the Hon ble Delhi High Court in the case of Spice Infotainment Ltd. Vs. CIT (Supra). The Hon'ble Jurisdictional High Court held as follows:- 16. When we apply the ratio of aforesaid cases to the facts of this case, the irresistible conclusion would be provisions of s. 292B of the Act are not applicable in such a case. The framing of assessment against a non- existing entity/person goes to the root of the matter which is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a 'dead person'. 17. The order of the Tribunal is, therefore, clearly unsustainable. We, thus, decide the questions of law In favour of the assessee and against the Revenue and allow these appeals. 18. We may, however, point out that the returns were filed by M/s Spice on the day when it was in existence it would be permissible to carry out the assessment on the basis of those returns after taking the proceedings afresh from the stage of issuance of notice under s. 143(2) of the Act. In substitute, the name of the appellant in place of M/s Spice and then issue notice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act, 1956, with is registered office at 2nd Floor, Commercial Plaza, Radisson Complex, National Highway - 8, New Delhi 110037 with effect from April 1, 2008. Thus, this contention of the Department does not have any basis and the same is rejected. It is also borne out from the records that the Assessing Officer issued notice u/s 143(2) on 12/10/2007 when the company was in existence. However, another notice u/s 142(1) of the Act was issued in the name of assessee company on 10/08/2009 although the assessee had already informed the department about the merger through various communications between 02/07/2009 and 17/07/2009. Thus, the undisputed fact remains that the AO issued notice in furtherance of the assessment proceedings for the assessment year to a company which had ceased to exist in the eyes of law and was non-existent on the date of the issue of notice u/s 142(1). Thus, on the facts and the circumstances of the case, we have no hesitation in holding that the framing of assessment against a non- existing entity/person goes to the root of the matter and is a jurisdictional defect as there cannot be any assessment against a 'dead person'. Accordingly, the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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