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2017 (12) TMI 652

Validity of assessment against non existent amalgamated company - Held that:- In the present case the assessment was framed by the AO on the non-existent amalgamated company, not on the amalgamating company. Therefore, the assessment framed was void ab initio and accordingly the same is quashed. Since, we have quashed the assessment framed by the AO therefore no separate finding is being given on the issues raised in the Departmental appeal. - Decided in favour of assessee. - I.T.A. No. 2697/Del .....

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oss objections are following: 1. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the orders of the Assessing Officer (AO) / Transfer Pricing Officer (TPO) which were arbitrary, bad in law and / or void ab initio. 1.1. That on the facts and circumstances of the case and in law, the AO / TPO have grossly erred in passing the order under section(s) 143(3) / 92CA of the Act, on non-existent (amalgamated) entity, namely, Heartland Delhi Transcription & .....

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parable to the Assessee, such as, i. Bodhtree Consulting Limited; ii. Informed Technologies India Limited; and iii. Apex Knowledge Solutions. 6. That the CIT(A) erred on facts and in law in upholding the order of the AO / TPO in selecting company with abnormal profit margin, namely, Iservices India Private Limited. 7. That the CIT(A) erred on facts and in law, in not allowing adjustment on account of difference in working capital and / or risk assumed by the Assessee vis a vis the comparable com .....

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alue of those international transactions declared by the assessee at ₹ 15,38,37,583/-. Accordingly the addition of ₹ 1,54,79,764/- was made and assessment was framed at an income of ₹ 3,85,65,380/- by making transfer pricing adjustment and disallowance of deduction u/s 10A of the Act amounting to ₹ 2,28,87,852/-. 5. Being aggrieved the assessee carried the matter before the learned CIT(A) who sustained the addition made by the AO on account of Transfer Pricing Adjustment .....

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on 17th September, 2008. It was stated that M/s HDTS has ceased to exists i.e. dissolved without binding up and HICS has taken over the assessee s liabilities, responsibilities and obligations. It was further stated that aforesaid information was also given to the TPO and the ld. CIT(A)-4, Delhi vide letters of the even dates. Our attention was drawn towards page nos. 900 to 907 of the assesee s paper book which are the copies of the said letters written to the respective authorities. It was fu .....

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val submissions, the learned DR strongly supported the order of the learned CIT(A) and further submitted that the assessee did not raise the objections either before the AO or before the learned CIT(A) and participated in the assessment proceedings, therefore, in view of the provisions contained in Section 292 B of the Act, the assessee has no right to challenge the validity of the assessment at this stage. 8. We have considered the submissions of both the parties and perused the material availa .....

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so passed the assessment order dated 22.2.2011 u/s 144C / 143(3) of the Act on the aforesaid entity i.e. HDTS which amalgamated in HICS, therefore, it is crystal clear that the entity M/s (HDTS) was not in existence when the TPO as well as the AO passed their respective order. 9. On a similar issue, the ITAT Delhi Bench I-1, New Delhi having the same combination passed a detailed order authored by the AM in the case of Maruti Suzuki India Ltd. vs. Dy. CIT reported in (2016) 72 taxmann.com. 164. .....

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to the TPO and -sued the notice dated 07.11.2014 to the non-existent entity i.e. M/s Suzuki Powertrain India Ltd. 11. A similar issue the Hon'ble Jurisdictional High Court in the case of Micra India (P.) Ltd. {supra) under: In the instant case, no doubt there was participation during the course of assessment; however, the Assessing Officer, despite being told that the original company was no longer in existence, did not Le remedial measures and did not transpose the transferee as the company .....

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itiated, 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 le 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 dis .....

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nt, 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 AO made the assessment in the name of M/s Spice which was nonexisting entity on that day. In such proceedings and assessment order passed in the name of M/s Spice would clearly be void such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel a .....

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rn of income and when the income was earned, it was inexistence. This controversy has been settled by the Hon'ble Jurisdictional High Court in the case of CIT v. Dimension Apparels (P.) Ltd. [2015] 370 ITR 288/[2014] 52 taxmann.com 356 (Delhi) 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 pertaini .....

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ted company and not on the predecessor i.e. amalgamating company. Therefore, in the present case, the assessment framed by the AO vide order dated 29.12.2015 on the amalgamating company i.e. M/s Suzuki Powertrain India Ltd. which was not inexistence on the date of passing the assessment order was not valid and as such the same is quashed. Since we have allowed ground No. 1 of the assessee and assessment order is quashed, therefore, no finding is given on the other issues raised by the assessee. .....

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d in the assessment proceedings was negatived in Spice Infotainment Ltd. v. CIT [2012] 247 CTR (Del.) 500 wherein it was held that once it was found that the assessment was framed in the name of a non-existent entity, it did not remain a procedural irregularity of the nature which could be cured by invoking the provisions of section 292-B. The legal position having been made abundantly clear, there is no hesitation in holding that impugned order passed by Tribunal does not require any interferen .....

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