TMI Blog2020 (6) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... if a juridical person ceases to exist then it would not be construed as a person within the meaning of section 2(31) against whom any action can be taken. The Commissioner would not assume proper jurisdiction and such type of defect would not be cured with help of section 292B of the Act, because it is not a procedural irregularity which could be cured. We also note that this Tribunal in the case of Snowhill Agencies Pvt. Ltd. Vs. Pr. CIT [2020 (1) TMI 1029 - ITAT AHMEDABAD] involving identical facts and circumstances has decided the issue in favour of the assessee.We note that the assessment framed under section 143(3) r.w.s. 92CA of the Act is not sustainable. Hence the additional ground of appeal of the assessee is allowed. - I.T.A. Nos. 677 And 678/Ahd/2019 - - - Dated:- 4-6-2020 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Appellant : Shri S. N. Soparkar, A.R. For the Respondent : Shri O. P. Sharma, CIT. D.R. ORDER PER WASEEM AHMED - AM: Both captioned appeals have been filed at the instance of the assessee against the common order of the Commissioner of Income Tax (Appeals)-5, Ahmedabad (CIT(A) in short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as stated in Ground No. 1 (d) failed to appreciate that the appellant merged with effect from 1st April 2014 into Intas Pharmaceuticals Limited/IPL as per scheme of amalgamation sanction by order passed by Hon'ble Gujarat High Court on 1st October 2015, whereas the first order proposing transfer pricing adjustment was passed by TPO on 31st October 2016. Further, the deduction/tax holiday under section 8QIC/80IE qua undertaking and not qua assessee and therefore post amalgamation of appellant into IPL, the IPL continued to enjoy the tax holiday and the tax department also allowed benefit of the same in hands of IPL while passing assessment order for AY 2015-16. f) That in the facts and circumstances of the case and in law, the learned CIT(A) further erred in ignoring the fact that under secondary analysis, the appellant and IPL has substantiated the ALP under internal Resale Price Method by benchmarking gross margin earned IPL in reselling the products bought from IP Firm vis a vis the gross margin earned by it in reselling the products bought from third parties. 2. Grounds pertaining to Corporate tax adjustment consequent to upward Transfer Pricing adjustment as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was framed in the name of non-existent company. 5. The facts in brief are that the assessee is a Private Limited Company and the assessee was erstwhile Partnership Firm namely Intas Pharmaceuticals. The assessee is engaged in the business of manufacturing of Pharmaceuticals Products. The assessee was eligible to claim the deduction under section 80IC and 80IE of the Act. The assessee, however, in the year under consideration was subject to scrutiny assessment involving the issue of the determination of the arm s length price in relation to transactions covered under specified domestic transaction. The assessee in the meantime got amalgamated with Intas Pharmaceuticals Limited which was intimated to the TPO vide letter dated 30-10-2015 by the assessee. However the AO framed the assessment order dated 06-02-2017 under section 143(3) read with section 92CA (3) of the Act in the name of the firm namely M/s Intas Pharmaceuticals which was a nonexistent entity at that point of time. The AO framed the assessment order under section 143(3) read with section 92CA(3) of the Act by making addition to the total income amounting to ₹ 176,44,41,970/- only. 6. The Ld. AR befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scheme of amalgamation was approved by the Board of Directors in their meeting held on 9.7.2015 with appointed date being 1.4.2014. (vi) Then after the said scheme of amalgamation was filed with Hon'ble Gujarat High Court. (vii) The Hon'ble High Court on admitting the petition of ILPL and IPL seeking sanctioning of scheme of amalgamation, directed issuance of notice/serving notice of hearing to Central Government i.e. Regional Director to whom power of Central Government are delegated and Official Liquidator. In terms of General Circular No.l of 2014 dated 15th January 2014 issued by Ministry of Corporate Affairs, Government of India, invited views/objection/specific comments from the Income Tax Department on the proposed scheme of amalgamation vide his letter dated 14th August 2015. (viii) The Hon'ble Gujarat High Court sanctioned the scheme of amalgamation of ILPL with IPL, vide its order dated 28th September 2015, after taking into account the clearance/no objection given by the Regional Director and the Official Liquidator. (ix) Vide letter dated October 30, 2015, it was intimated to the department that name of M/s Intas Pharmaceuticals [the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the Headnote:- FACTS The assessee SPIL was a joint venture between SMC and MSIL. It filed its return declaring certain taxable income. The return was processed under section 143(1) and then picked up for scrutiny. Notices under section 143(2) were issued. Subsequently, the High Court passed an order approving the Scheme of Amalgamation by which SPIL (Amalgamating Company) was amalgamated with 'MSIL' (Amalgamated Company) with effect from 1-4-2012. Thereafter, assessment proceedings continued with the participation of MSIL representing SPIL in the assessment proceedings. The Assessing Officer passed the assessment order under section 143(3), read with section 144C(1) in the name of SPIL. The assessee filed appeal 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 had ceased to exist on the date of the assessment order. The Tribunal accepted the said plea of the assessee as a result of which the assessment order was set aside. On revenue's appeal the High Court following its earlier decision in the case of the assessee for ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two judges which dismissed the appeal of the revenue in CIT v. Spice Enfotainment [Civil Appeal No. 285 of 2014, dated 2-11-2017]. The decision in Spice Enfotainment Ltd. (supra) has been followed in the case of the assessee while dismissing the Special Leave Petition for assessment year 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment (supra).[Para33] There is no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for assessent year 2011-12 must be adopted in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uzuki India (supra). 7. On the other hand the Ld. DR has strongly objected on the admission of additional grounds of appeal and further submitted that the notice under section 143(2) of the Act was issued on 8-9-2014 in the name of the erstwhile partnership firm and therefore the assessment is valid. 8. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the additional ground of appeal was not raised by the assessee before the authorities below. However, all the facts related to the additional ground of appeal are arising from the order of the authorities below and no additional fact needs to be referred. Further, we also note that the issue raised by the assessee in the additional ground of appeal is legal in nature which can be admitted at any stage during the proceedings in view of the judgment of the Hon ble Supreme Court in the case of NTPC Ltd Vs.CIT reported in 229 ITR 383. Accordingly, we admit the additional ground of appeal raised by the assessee and proceed to adjudicate the same. 9. Now coming to the legality of order framed by the AO under section 143(3) read with section 92CA(3) of the Act vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiated the assessment proceedings by issuance of notice under section 143(2) on 26.9.2013 followed by a notice under section 142(1) of the Act to the amalgamating company. MSIL participated in the assessment proceedings of erstwhile amalgamating entity i.e. SPIL through its authorized representative and officers. The assessment was framed. Thereafter during the appellate proceedings before the Tribunal the assessee took an objection that final assessment order was passed on 31.10.2016 in the name of SPIL which was amalgamated with MSIL. The assessee took an objection that the assessment order has been passed in the name of company which ceased to exist and therefore, the assessment order is void ab initio. This plea of the assessee was accepted by the Tribunal. This order of the Tribunal was upheld by the Hon'ble High Court. Ultimately issue travelled upto Hon'ble Supreme Court. While taking cognizance of the submissions, and the proposition laid down in various High Courts' decisions, the Hon'ble Supreme Court made the following observations: 19. While assessing the merits of the rival submissions, it is necessary at the outset to advert to certain significan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 143 (2) was issued on 26 September 2013. To the amalgamating company, SPIL, which was followed by a notice to it under Section 142(1); (vi) Sixthly, prior to the date on which the jurisdictional notice under Section 143 (2) was issued, the scheme of amalgamation had been approved on 29 January 2013 by the High Court of Delhi under the Companies Act 1956 with effect from 1 April 2012; (vii) Seventhly, the assessing officer assumed jurisdiction to make an assessment in pursuance of the notice under Section 143 (2). The notice was issued in the name of the amalgamating company in spite of the fact that on 2 April 2013, the amalgamated company MSIL had addressed a communication to the assessing officer intimating the fact of amalgamation. In the above conspectus of the facts, the initiation of assessment proceedings against an entity which had ceased to exist was void ab initio. 20. In Spice Entertainment, (supra) a Division Bench of the Delhi High Court dealt with the question as to whether an assessment in the name of a company which has been amalgamated and has been dissolved is null and void or, whether the framing of an assessment in the name of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct nomenclature in addressing the Assessee; stated the fact that the company had amalgamated and mentioned the correct address of the amalgamated company. It was the Revenue's contention that the omission on the part of the assessing officer to mention the name of the amalgamated company is a procedural defect. The Delhi High Court rejected this contention. In doing so, it relied on the holding in Spice Entertainment, (supra) where the High Court expressly clarified that the framing of assessment against a non-existing entity/person is a jurisdictional defect. The Division Bench also relied on the holding in Spice Entertainment (supra) that participation by the amalgamated company in proceedings does not cure the defect as there can be no estoppel in law , to affirm the quashing of the assessment order. 22. In Micron Steels, (supra) a notice was issued to Micron Steels Pvt Ltd (original assessee) after it had amalgamated with Lakhanpal Infrastructure Pvt Ltd. A Division Bench of the Delhi High Court upheld the setting aside of assessment orders, noting that Spice Entertainment (supra) is an authority for the proposition that completion of assessment in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment (supra) on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment (supra). 34. We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011- 12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency,uniformity and certainty. To detract from those principles is neither expedient nor desirable. In the case of Emerald Company Ltd., ITAT Kolkatta Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X
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