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SC Johnson Products Pvt Ltd (For Erstwhile Karamchand Appliances P Ltd.) Versus Deputy Commissioner of Income Tax Circle 7 (1) New Delhi

2015 (7) TMI 1015 - ITAT DELHI

Validity of assessment order passed u/s 143(3) - in the name of M/s Karamchand Appliances Pvt.Ltd. company as no more in existence, consequent to its merger with M/s S.C.Johnson Products Ltd. - Held that:- As the assessment order is made on a non existing person, we respectfully follow the decision of the Jurisdictional High Court in the case of Spice Entertainment Ltd. (2011 (8) TMI 544 - DELHI HIGH COURT ) and quash the assessment order as confirmed by the First Appellate Authority. - Decided .....

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see company M/s Karamchand Appliances Pvt.Ltd. (hereinafter called KAPL) amalgamated with the assessee company S.C.Johnson Products Private Ltd. (hereinafter known as SGAPPL) w.e.f. 1st June, 2005. A scheme of amalgamation was filed before the Hon ble Delhi High Court and this was duly approved u/s 391 and 394 of the Companies Act, 1956 vide order dt. 09th October, 2006. This was duly filed before the Registrar of Companies. 2.1. The erstwhile company M/s KAPL filed a return of income on 30.11.2 .....

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in para 3(a) at page 1 of his order which reads as under: "The assessee company has been merged with SC Johnson Products Pvt.Ltd. with retrospective effect from 1st June, 2005 as per the scheme of amalgamation, duly approved by the Hon ble High Court of Delhi vide its order dt. 9th October, 2006 and which was duly filed with Registrar of Companies, NCT, Delhi and Haryana on 22nd November, 2006 (being effective date of merger). In short in this assessment order the profit and gains of the a .....

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s no more in existence, consequent to its merger with M/s S.C.Johnson Products Ltd. 3. Heard Sh. KM Gupta along with Sh. Mayur Toshiwal, the Ld.Counsel for the assessee and Shri BRR Kumar, Ld.Sr.D.R. on behalf of the Revenue. 4. The assessee relied on two judgements of the Jurisdictional High Court and submitted that the issue is no more res integra and that no assessment can be framed on non existing amalgamating company, i.e. judgement dt. 3rd August, 2011 in the case of Spice Entertainment Lt .....

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have jurisdiction to adjudicate the appeal in terms of S.260A of the Act; (b) Precedents value is only for issues on which questions are framed and answered by the High Court; (c ) When no substantial question of law arises in a case, the High Court does not admit such appeals and in such circumstances the order of the High Court is not binding precedent. He relied on the case law State of Punjab & others vs. Surinder Kr. And others reported in 194 ITR 434 (SC). (d) He referred to S.124(3) .....

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lt by the High Court is whether the ITAT was right in holding that the AO committed a procedural error or not and whether S.292B is applicable. He vehemently contended that S.124(3) has not been brought to the notice of the High Court and under such circumstances this judgement of the Jurisdictional High Court is not a binding precedent. In reply the Ld.Counsel for the assessee submitted that it was pleaded before the AO that M/s KAPL is a non existing entity. He further relied on the following .....

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ritten arguments were not considered by the Bench in the case of M/s Computer Engineering Services P.Ltd. and hence that decision should not be taken as a binding precedent. 7. The Ld.Sr.D.R. Sri BRR Kumar, on the other hand took us through the order of the First Appellate Authority on this issue and submitted that the assessment has been framed only for a period of 2 months i.e. prior to the date on which the amalgamation took place and in such circumstances the assessment cannot be held as bad .....

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es for consideration is as to whether the assessment in the name of a company which had been amalgamated and had been dissolved with the said amalgamating company will be null and void or whether framing of assessment in the name of such a company is a mere procedural defect which can be cured. The appeals were, thus, finally admitted and heard on the following questions of law. (i) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the action of .....

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ver, 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 u/s 143(2) of the Act. In these circumstances, it would be incumbent upon the AO to first substitute the name of the appellant in place of M/s Spice and then issue notice to the appellant. However, such a course of action can be taken by the AO only if .....

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