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Pr. Commissioner of Income Tax-6, New Delhi Versus Maruti Suzuki India Limited (Successor of Suzuki Powertrain India Limited)

2017 (9) TMI 387 - DELHI HIGH COURT

Validity of assessment order in the name of the amalgamating company - assessment framed in the name of the non-existent company - procedural defect - successor-in-interest - Held that:- The amalgamation is a blending of two or more existing undertakings into one undertaking, the share holders of each blending Company become substantially the share holders in the Company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to .....

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g of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third Company or one is absorbed into one or blended with another, the amalgamating Company loses its entity. See Spice Infotainment Ltd. v. CIT [2011 (8) TMI 544 - DELHI HIGH COURT] - In Spice Infotainment (supra) where it was held: “once it is found that the assessment is framed in the name of a non-existent entity it does not remain a procedural irregularity of the nature whi .....

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21st July 2016 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 288/Del/2016 for the Assessment Year ( AY ) 2011-12. 2. The question sought to be urged by the Revenue in this appeal is whether the order of the ITAT is perverse inasmuch as it invalidates the assessment order dated 29th December 2015 passed by the Assessing Officer ( AO ) for AY 2011-12 on the ground that it has framed in the name of the amalgamating company. 3. On 24th January 2017, while admitting this appeal, thi .....

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me Tax Act, 1961 ( Act ) and then picked up for scrutiny. Notices under Section 143 (2) of the Act were issued. 5. On 29th January 2013, this Court passed an order in Company Petition No. 490 of 2012 approving the Scheme of Amalgamation ('Scheme') by which SPIL (Amalgamating Company) was amalgamated with Maruti Suzuki India Ltd. ( MSIL ) (Amalgamated Company) with effect from 1st April 2012 (the 'appointed date'). The Scheme inter alia provided that, all the liabilities and dutie .....

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order under Section 143 (3) read with Section 144C (1) of the Act in which the name and address of the Assessee was shown as: M/s. Suzuki Powertrain India Ltd (Amalgamated with M/s Maruti Suzuki India Ltd)., Plot No 1, Nelson Mandela Road, Vasant Kunj, New Delhi-110070 8. MSIL filed an appeal before the ITAT where one of the grounds urged was that the assessment order was without jurisdiction inasmuch as it had been passed in the name of an entity that ceased to exist on the date of the assessm .....

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being set aside. He further submits that the record of the assessment proceedings shows that MSIL participated in it fully and raised no objection as to the continuation of the proceedings on the ground of lack of jurisdiction. Mr Jain invokes Section 292B of the Act to urge that the Assessee is precluded from questioning the assessment order on the ground that it was passed in the name of a non-existent entity. He points out that below the name of the Amalgamating Company, the AO has taken care .....

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ct, two assessment orders will have to be passed: one in the name of MSIL itself for the AY in question and the other again in the name of MSIL indicating that the said assessment order is being passed under Section 170 (2) of the Act in respect of its tax liability as successor in interest of the Amalgamating company. 11.1 In Spice Infotainment (supra), the issue that arose was in the context of the AO having framed the assessment in the name of Spice Corp Limited after the said entity stood di .....

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he facts and in the circumstances of the case, the Tribunal erred in law in holding that the action of the Assessing Officer in framing assessment in the name of Spice Corp Ltd , after the said entity stood dissolved consequent upon its amalgamation with Mcorp Private Limited w.e.f. 01.07.2003, was a mere procedural defect ? (ii) whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that in view of the provisions of section 292B of the Act, the assessmen .....

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two or more companies are fused into one by merger or by taking over by another. Reconstruction or amalgamation has no precise legal meaning. The amalgamation is a blending of two or more existing undertakings into one undertaking, the share holders of each blending Company become substantially the share holders in the Company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new Company, or by the transfer of one or .....

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mation. When two companies are merged and are so joined, as to form a third Company or one is absorbed into one or blended with another, the amalgamating Company loses its entity. 11.4 The Court in Spice Infotainment (supra) thereafter held as under: 11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said dead .....

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n by the appellant would be of no effect as there is no estoppel against law. 11.5 Consequently, the aforesaid two questions were answered in favour of the Assessee and against the Revenue. 12. Even thereafter the Revenue has repeatedly brought the said issue before this Court in a large number of cases where, in more or less identical circumstances, the AO had passed the assessment order in the name of the entity that had ceased to exist as on the date of the assessment order. In many of these .....

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o. 2712 of 2016) 13. The question whether, for the purposes of Section 170 (2) of the Act, the defect of passing the assessment order in the name of an non-existent entity is a mere irregularity was answered by this Court in CIT v. Dimensions Apparels (P) Ltd. (supra), where in paras 6 and 7 it was held as under: 6. Sections 170(1) and 170(2) of the Act do not assist the revenue in their case. The revenue does not contest that in a case of amalgamation, the predecessor (being a dissolved company .....

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