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TMI Blog2020 (12) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... , CIT-DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER Appellant, M/s. Vedanta Limited (hereinafter referred to as 'the taxpayer') by filing the present appeal sought to set aside the impugned order dated 28/11/2019 passed by the Assessing Officer (AO) in consonance with the orders passed by the ld. DRP/TPO under section 143 (3) read with section 144C of the Income-tax Act, 1961 (for short 'the Act') qua the assessment year 2015-16 on the grounds inter alia that :- "1. That on the facts and circumstances of the case & in law, the draft assessment order (and the consequential final assessment order) passed by Asstt Commissioner of Income Tax, Circle 26(2), New Delhi ('Ld AO') is void ab initio for the reason that the draft order itself has been passed in the name of a non-existent entity and accordingly vitiates the whole assessment proceedings. 1.1 That on the facts and circumstances of the case & in law, the transfer pricing order passed by Learned. Transfer Pricing Officer ('Ld. TPO') in the name of non-existent "Cairn India Ltd." is void ab-initio thereby rendering consequent proceedings under section 143(3) read with 144C of the Act as invalid. 1.2 Without prejudice to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO/DRP erred in adding back the disallowance of ₹ 6,77,00,000 under section 14A of the Act read with Rule 8D of the Rules in computing book profit under section 115JB of the Act. 4.1 That while adding back the disallowance u/s 14A for MAT computation, the Ld. AO/DRP conveniently failed to take cognizance of the order passed by the Hon'ble 1TAT in the Appellant's own case for AY 2011-12 to AY 2013-14. 5 That on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in allowing additional depreciation amounting to 1NR 1,84,30,287/- under section 32( 1) (iia) of the Act despite the fact that Appellant had not claimed the same in its return of income. 5.1 That on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in observing that the claim of additional depreciation was to be mandatorily allowed in terms of Explanation 5 to section 32(1) of the Act, without appreciating that additional depreciation being optional in nature, is not covered within the purview of the said Explanation. 6 That on the facts and circumstances of the case & in law, the Ld. AO/DRP grossly erred in adding INR 191,13,00,000/- both under the normal provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reserve expenses of INR 4,65,61,425/- to book profits under section 115JB of the Act, which were debited to profit & loss account in terms of Accounting Standard ('AS') 19-Leases. 9.1 That the Ld. AO/DRP grossly erred in stating that AS 19 does not apply to lease of building more so when for the purpose of section 115JB of the Act they do not have the power of recasting the accounts of the Appellant certified by its statutory auditors. 10. That on the facts and circumstances of the case & in law, the Ld. AO/TPO/DRP erred in not appreciating that the transactions of reimbursement of expenses of INR 62,62,135/-, Manpower, general and administrative ('MGA') cost of INR 397,54,81,625/- and Parent Company Overheads ('PCO') cost of INR 46,29,715/- totaling to INR 398,63,73,475/- are not in the nature of international transaction under section 92B(1) of the Act and hence outside purview of transfer pricing provisions. 10.1 That on the facts and circumstances of the case & in law, the Ld. AO/TPO/DRP erred in not appreciating that as prescribed in Production Sharing Contract/Petroleum Resource Agreement / Joint Operating Agreement, partners of Unincorporated Joint Venture (UJV) are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AO/TPO/DRP also erred in disregarding the detailed and proper comparability analysis submitted by the Appellant in gross violation of section 92(c)(3) of the Act. 12. That on the facts and circumstances of the case & in law, the Ld. AO erred in imposition of interest under section 234C of the Income-tax Act, 1961." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : M/s. Vedanta Limited, the taxpayer is into the business of exploring & drilling, developing, producing refining, marketing of minerals and oil bye-products and other activities incidental to the above. Apart from its business activities, the taxpayer also holds interests in its subsidiary companies which have been granted right to explore and develop oil exploration blocks in the Indian sub-continent. The main source of revenue is sale of crude oil and natural gas from the blocks at Rajasthan and Canbay Offshore and Ravva Block (KG Basin). During the year under assessment, the taxpayer entered into international transactions and specified domestic transactions as mentioned in Form 3CEB with its Associated Enterprises (AEs) as under :- International Transaction S. No. Nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous grounds challenging the addition/adjustment made by the AO/DRP/TPO, however ld. AR for the taxpayer brought to the notice of the Bench that he has specifically raised ground no.1 challenging the impugned order passed by the AO/DRP/TPO on the ground that the same was void ab initio having been passed in the name of non-existent entity vitiating the whole assessment proceeding. 7. So, firstly, we would deal with ground no.1 raised in the appeal so as to decide issue as to whether assessment order passed by the AO on non-existent entity i.e. Cairn India Limited is void ab initio vitiating the entire assessment proceedings. 8. Ld. AR for the taxpayer challenging the impugned transfer pricing order passed on a non-existent entity and the validity of draft assessment order contended inter alia that the factum of amalgamation of Cairn India Ltd. with Vedanta Ltd. was duly intimated to the AO; that the order passed by the TPO in the name of amalgamating company is nullity/non-est ; that final assessment order passed by the AO is also barred by limitation having been passed on 28.11.2019 and relied upon the decision of Hon'ble Supreme Court in cases of PCIT vs. Maruti Suzuki India Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial to the interest of such assessee." "(15) For the purposes of this section - (a) ---- (b) "eligible assessee" means - (i) Any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company." 12. When we adhere to the provisions contained u/s144C(15)(b)ii of the Act "eligible assessee" needs to be an entity namely M/s. VEDANTA LIMITED , whereas transfer pricing order has been passed in the name of erstwhile M/s. Cairn India Limited which was not in-existence as on the date of order i.e 29th October, 2018, because M/s. Cairn India Ltd. got amalgamated with M/s. Vedanta Ltd. with effect from 11th April, 2016. Similarly draft assessment order dated 28th December, 2018 has been passed in the name of M/s. Vedanta Ltd. formerly known as Cairn India Ltd. which can not be considered as an "eligible assessee" u/s 144C(15)(b) (ii). 13. Identical issue has been decided by the Hon'ble Delhi High Court in case of Spice Entertainment Ltd. bearing ITA No. 475 and 476 of 2011 with date of order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions condones the invalidity which arises merely by mistake, defect or omission in a notice, if in substance and effect it is in conformity with or according to the intent and purpose of this Act. Since no valid notice was served on the assessee to reassess the income, all the consequent proceedings were null and void and it was not a case of irregularity. Therefore, Section 292B of the Act had no application. 16. When we apply the ratio of aforesaid cases to the facts of this case, the irresistible conclusion would be provisions of Section 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." 15. Hon'ble Supreme Court also decided identical issue in case of Pr. Commissioner of Income Tax, New Delhi vs. Maruti Suzuki India Ltd. Civil Appeal No. 5409 of 2019 as to framing the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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