TMI Blog2018 (7) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Y. 2009-10 and 2010-11 respectively. Since identical ground are involved in both the appeals, therefore, these were heard together and are being disposed of by this common order for the sake of convenience. ITA No. 554/Del/2015 ( A. Y. 2010-11) 2. This is the second round of litigation before the Tribunal. Facts of the case, in brief, are that the assessee had filed its return of income for the impugned assessment year on 05.10.2010 declaring an income of ₹ 17,07,57,513/-. The assessee company is primarily engaged in the business of importing buying and selling and distributing wide range of mobiles phones in India and providing related post sale support services. Since the assessee had undertaken international transaction with its AEs, the Assessing Officer referred the matter to the TPO for determination of the ALP of the international transaction entered into by the assessee with its AE. The TPO determined an upward adjustment of ₹ 56,30,78,638/- . The assessee approached the DRP who declined to interfere with the transfer pricing adjustment made by the Assessing Officer. The assessee approached the Tribunal and Tribunal gave some part relief against wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly compensated by the AE since the Appellant s business model allows it to earn an arm s length margin on all costs incurred including AMP expenses? 7. Whether the AO/TPO/DRP erred in not appreciating that once the net operating margins of the Appellant had met the arm s length test, there arose no occasion to conclude that the Appellant had performed any non-routine function or had incurred non-routine AMP expenditure? 8. Without prejudice, whether the bright line method could be applied to determine any excessive/non-routine AMP expenses? 9. Without prejudice, even if expenses are held to be non-routine , whether any compensation was required from the AE considering that the purported benefit caused to the AE on account of incurring of A M expenses by the Appellant was only incidental? 10. Whether sales promotion expenses could partake the character of AMP expenses for the purposes of making any adjustment on account of alleged excessive AMP expenses? 11. Whether the AO/TPO/DRP erred in concluding that the non-routine functions (being the alleged excessive AMP expenditure) amounted to a service being rendered by the Appellant to its AE and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 27.01.2014 has mentioned the name of the assessee as M/s. Sony Mobile Communication India Private Ltd (earlier known as M/s. Sony Ericson Mobile Communication (India) Private Ltd.). Referring to the order of the Assessing Officer dated 22.12.2014 he submitted that the Assessing Officer has passed the order in the name of M/s. Sony Ericson Mobile Communications (India) Private Ltd. He accordingly submitted that even after the order was passed by the DRP mentioning that the company has now merged with Sony India Private Limited, the Assessing Officer has passed the final order in the old name i.e. a nonexistent company. 8. Referring to the sequence of events the Ld. Counsel for the assessee drew the attention of the Bench to the following dates which are crucial. S. No. Date Particulars Documents Reference 1. 18 April 2012 Change in the name of the entity from Sony Ericson Mobile Communications ( India) Private Limited to Sony Mobile Communications (India) Private Limited Certificate of incorpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnology India (Private) Limited reported in 380 ITR 272, he submitted that the Hon ble High Court in the same decision has held that the framing of an assessment against a non-existing entity is not a procedural irregularity but a jurisdictional defect which goes to the root of the matter. While dismissing the appeal filed by the revenue, it was held that since the proceedings were initiated against a non-existing assessee company even after amalgamation with the successor company, therefore, the assessment was not valid and the department was not entitled to the benefit of section 292 B of the IT Act. He submitted that the Hon ble Karnataka High Court while holding so relied on the decision of Hon ble Delhi High Court in the case of Spice Enfotainment Limited Vs. CIT reported in 247 CTR (Delhi) 500. 10. Referring to the decision of Bangalore Bench of the Tribunal in the case of BMM Ispat Ltd. Vs. DCIT reported 93 taxman.com 76, he submitted that the Tribunal following the above two decisions has held that the assessment on a non-existent entity is not valid. 11. Referring to the decision of the Hon ble Delhi High Court in the case of Pr. CIT vs. Maruti Suzuki India Ltd. vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee are concerned, he submitted that in none of the cases provisions of section 170 (1) has been considered. It has not been answered as to why provisions of section 170 (1) are not applicable. Therefore, the decisions relied on the Ld. Counsel for the assessee are not applicable. He accordingly submitted that this being a procedural irregularity, the assessment cannot be considered as null and void. 16. The Ld. Counsel for the assessee in his rejoinder referring to the decision of the Hyderabad Bench of the Tribunal in the case of DCIT Vs. B.A. Continuum India ( P.) Ltd reported in 167 ITD 640 submitted that the Tribunal in the said decision has held that where in case of amalgamation, assessment order had been passed by Assessing Officer having jurisdiction over amalgamated company, in such a case mere mentioning of PAN of merged company only to differentiate between amalgamated and amalgamating companies for period when both of them were in existence, would not make assessment order invalid. He also relied on various other decisions. 17. We have considered the rival arguments made by the both the sides and pursued the material available on record. We have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or according to the intent and purpose of this Act. 13. The Punjab Haryana High Court stated the effect of this provision in CIT Vs. Norton Motors, 275 ITR 595 in the following manner:- A reading of the above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the provisions of the Act. To put it differently, Section 292B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other words, if the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the validity of any assessment order to be passed under section 147 of the Act and when such a notice is not issued and assessment made, such a defect cannot be treated as cured under Section 292B of the Act. The Court observed that this provisions 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 fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason for the inapplicability of Section 292-B was additionally premised on the decision of the Punjab Haryana High Court in CIT v. Norton Motor, [2005] 275 ITR 595/146 Taxman 701, that while Section 292B can cure technical defects, it cannot cure a jurisdictional defect in the assessment notice. In Spice Entertainment Ltd. (supra), therefore, this Court expressly classified the framing of assessment against a non-existing entity/person as a jurisdictional defect. This has been a consistent position. As early as 1960, in CIT v. Express Newspapers Ltd. [1960] 40 ITR 38 (Mad), the Madras High Court held that there cannot be an assessment of non-existent person. The assessment in the instant case was made long after the Free Press Company was stuck off from the register of the companies, and it could not be valid. ( Emphasis Supplied) 22. On the last contention, i.e with respect to participation by the previous assessee, i.e the amalgamating company (which ceases to exist), again Spice Entertainment Ltd. (supra) is categorical; it was ruled on that occasion that such participation by the amalgamated company in proceedings did not cure th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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