TMI Blog2016 (8) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... Tejasvi jain, CAs For The Revenue : Sh. Amrendra Kumar, CIT DR ORDER Per N. K. Saini, AM: This is an appeal by the assessee against the order dated 29.12.2015 passed by the AO u/s 143(3) r.w.s. 144C(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act). 2. Following grounds have been raised in this appeal: 1. That on the facts and circumstances of the case and in law, the impugned order dated 29.12.2015 passed under section 143(3) r.w.s. 144C(1) of the Income Tax Act. 1961 ( the Act ) is without jurisdiction, illegal and bad in law. 2. That the assessing officer ('AO') erred on facts and in law in making transfer pricing adjustment amounting to ₹ 69,93,38,000/- on account of the alleged difference in the arm's length price of international transactions of payment of royalty entered into by the appellant on the basis of the order under section 92CA(3) of the Act. 2.1 That the Transfer Pricing Officer ('TPO') /Dispute Resolution Panel ('DRP') erred on facts and in law in holding that the international transaction of payment of royalty does not satisfy the arm's length principles as envisage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cense agreement entered into between Edmond B Cicotte and William Controls Inc provides for minimum royalty payments and is therefore not an appropriate comparable for the purpose of benchmarking the transaction of payment of royalty undertaken by the appellant. 2.11 That the TPO/DRP erred on facts and in law in arbitrarily rejecting the comparable license agreements submitted by the appellant. 2.12 That the TPO/DRP erred on facts and in law in not appreciating that the royalty paid by the appellant is pursuant to specific approval from the Secretariat of Industrial Assistance, Ministry of Commerce and Industry and therefore cannot be regarded as excessive or unreasonable. 2.13 That the TPO/DRP erred on facts and in law in not appreciating that the arrears of royalty have been appropriately benchmarked by the appellant by applying TNMM wherein such arrears were considered as part of cost of sales. 2.14 That the TPO/DRP erred on facts and in law in making adjustment in respect of royalty paid by the assessee during financial years 2006-07. 2008- 09 and 2009-10 which have already examined and accepted to be arm's length by the TPO. 2.15 That the TPO/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to its AEs was at arm s length. The AO also made an addition of ₹ 2,63,00,000/- on account of prior period expenses and framed the assessment in the hands of M/s Suzuki Powertrain India Ltd. which amalgamated with the assessee company, vide order dated 29.12.2015. 5. Now the assessee is in appeal. The ld. Counsel for the assessee at the very outset stated that the assessment framed by the AO on the amalgamating company is void ab initio. It was pointed out that the Hon ble Delhi High Court approved the scheme of amalgamation w.e.f. 01.04.2012 vide order dated 29.01.2013 and the amalgamation was taken on record by the Registrar of Companies on 17.03.2013. Therefore, in pursuant to the aforesaid order of the Hon ble Delhi High Court the erstwhile entity, M/s Suzuki Powertrain India Ltd. ceased to exist in the eyes of law w.e.f. 17.03.2013 and the said fact of amalgamation/merger of the erstwhile entity with M/s Maruti Suzuki India Ltd. was duly intimated to the Revenue authorities as under: a) Letter dated 2nd April, 2013 filed in the office of ACIT, Circle-50(1), New Delhi on 8th April, 2013; b) Letter dated 2nd April, 2013 filed in the office of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing case laws: CIT v. Amarchand N. Shroff: 48 ITR 59 (SC) Rustagi Engineering Udyog P. Ltd. v. DCIT: 382 ITR 443 (Del) CIT v. Micron Steels (P.) Ltd.: 233 Taxman 120 (Del) ACIT v. Micra India (P.) Ltd.: 231 Taxman 809 (Del) CIT v. Intel Technology India Pvt. Ltd.: 380 ITR 272 (Kar) CIT v Express Newspaper : 40 ITR 38 (Mad) [affirmed by Supreme Court in 53 ITR 250] Birla Cotton v CIT: 123 ITR 354 (Delhi) R. C. Jain v. CIT : 140 Taxman 379 (Del) CIT v. Kumari Prabhavati Gupta: 231 ITR 188 (MP) CIT vs. Fatelal (1996) 88 Taxman 320 (MP) Sajjan Kumar Saraf vs. CIT: 114 ITR 155 (Cal) CIT vs. Surendra Kumar Bhandan: 164 ITR 323 (Pat) Smt. Sudha Prasad V. Chief CIT: 186 CTR 475/133 Taxman 864 (Jharkhand) Braham Prakash vs. ITO (2004) 192 CTR 190 (Del) CIT vs. Ram Das Deokinandan Prasad (HUF): 277 ITR 197 (All) M/s Computer Engineering Services India (P.) Ltd. v. ACIT: 172 TTJ 317 (Del) M/s Mevron Projects Pvt. Ltd. vs. ACIT: ITA No.5412 to 5416/DeI/2013 (Del) Makers Development Services Ltd. v. CIT: 40 ITD 185(Bom) Late A.Y. Prabhakar (Indl.) v. ACIT: 105 TTJ 391(Chenn.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice u/s 143(2) r.w.s. 142(1) of the Act was issued to the assessee who had filed the return of income and the assessment was also framed in the name of the person who filed the return. It was further submitted that in the present case, the assessment year involved is assessment year 2011-12 and the return of income was filed on 28.11.2011 while the scheme of amalgamation was approved by the Hon ble Delhi High Court vide order dated 29.01.2013. Therefore, the income was earned for the assessment year under consideration by the erstwhile entity M/s Suzuki Powertrain India Ltd. and the AO rightly assessed the income in its hand. It was further submitted that as per the provisions of Section 170(1) of the Act. The predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession and that the successor shall be assessed in respect of the income of the previous year after the date of succession. It was pointed out that in the present case, the succession took place w.e.f. 01.04.2012 as a result of scheme of amalgamation duly approved by the Hon ble Delhi High Court vide order dated 29.01.2013, therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , justified and warranted. 12. Similarly, the Hon ble Jurisdictional High Court in the case of Spice Infotainment Ltd. Vs CIT (supra) held as under: No doubt, M/s Spice was an assessee and as an incorporated company and was in existence when it filed the returns in respect of two assessment years in question. However, before the case could be selected for scrutiny and assessment proceedings could be initiated, M/s Spice got amalgamated with M Corp Pvt. Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was dully sanctioned vide orders dated 11th February, 2004. With this amalgamation made effective from 1st July, 2003, M/s Spice ceased to exist. That is the plain and simple effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous with the sanctioning of the scheme, M/s Spice was also stood dissolved by specific order of this Court. With the dissolution of this company, its name was struck off from the rolls of Companies maintained by the Registrar of Companies. A company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional High Court in the case of CIT Vs Dimension Apparels Pvt. Ltd. (2015) 370 ITR 288 wherein it has been held as under: Section 170(2) of the Income-tax Act, 1961, makes it clear that in the case of amalgamation, the assessment must be made on the successor (i.e., the amalgamated company). Section 176 which contains provisions pertaining to a discontinuation of business, does not apply to a case of amalgamation. The language of section 159 evidently only applies to natural persons and cannot be extended through a legal fiction, to the dissolution of companies. Once it is found that assessment is framed in the name of non-existing entity it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of section 292B. Participation by the amalgamated company in assessment proceedings would not cure the defect because there can be no estoppels against law. 15. In the present case also when the assessment was framed by the AO vide order dated 29.12.2015 in the name of M/s Suzuki Powertrain India Ltd., the said company had already amalgamated with M/s Maruti Suzuki India Ltd. and therefore, it was not inexistence. Moreover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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